Oil prices spiked on Monday…
Low prices are surprisingly enough…
Oil and gas services companies French Technip and American FMC Technologies have reached a merger agreement to create a joint company, TechnipFMC, worth $13 billion and expected to generate sales of around $20 billion.
The pending merger will reportedly allow the two to save US$400 million annually beginning in 2019.
The new venture will employ more than 49,000 people in over 45 countries.
Expected to close in early 2017, the deal still requires the approval of both companies’ shareholders and regulators.
Related: Nigerian Oil Output Falls 800,000 Barrels As Militants Step Up Attacks
Both are major players in the oil and gas services sector, with strong portfolios in onshore and offshore drilling, as well as subsea construction.
It’s not their first foray together: Last year, they jointly created Forsys Subsea. The JV is focused on design and construction advancements for subsea oil and gas fields.
But the big story here is the competitive behemoth this merger will create. The merger would render TechnipFMC a potential rival to the American giants, Schlumberger, Halliburton and Baker Hughes. They are bullishly joining forces at at cancelled contracts, and the deferment or cancellation of US$270 billion in oil and gas projects since 2014.
On 1 May, Halliburton and Baker Hughes announced the termination of their merger agreement, as the companies were unable to get past federal antitrust regulators. The planned US$35-billion merger faced opposition from regulators on both sides of the Atlantic who argued that the deal would stifle sector competition.
Other top oilfield services provider Schlumberger announced in March that it had obtained approval from the Chinese antitrust authorities for its US$14.8 billion acquisition of Cameron International, a provider of oilfield technology and equipment.
By James Burgess of Oilprice.com
More Top Reads From Oilprice.com:
James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also…