BAKER HUGHES is tying up with two equity funds to form a new onshore fracking company focussed on the North American market.
Baker Hughes is contributing its North American cementing and hydraulic fracturing businesses to the new company, which will operate under the name BJ Services. The second partner, CSL Capital Management will give over its Allied Energy Services platform, which also provides hydraulic fracturing and cementing services. The third partner, WSEP, will inject cash; together with CSL they will provide US$325m to the new company.
Martin Craighead, CEO of Baker Hughes, said the new “pure-play” fracking company will respond quickly to market dynamics while its ownership model will allow Baker Hughes to reduce capital intensity.
Baker Hughes will license its pressure pumping technology to BJ Services, while keeping its international fracking business and offshore Gulf of Mexico operations. It will own 46.7% of the new business and receive US$150m in cash.
The move furthers the shake-up felt at Baker Hughes in the past year. In May, its tie-up with rival oil services firm Halliburton terminated following resistance from competition authorities. In October, it reached an agreement to merge with GE’s oil and gas unit, forming a company with combined revenue of US$32bn and a presence in 120 countries.
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