Baker Hughes, Akastor in JV
By Jack Burke03 March 2021
50-50 ownership, two headquarters
Baker Hughes and Akastor ASA will create a joint venture to bring together Baker Hughes’ Subsea Drilling Systems (SDS) business with Akastor’s wholly-owned subsidiary, MHWirth AS (MHWirth).
The companies said the new joint venture will deliver a global full-service offshore drilling equipment offering that will provide customers with a broad portfolio of products and services and will be owned 50-50 by Baker Hughes and Akastor. Following the closing of the transaction, the company’s operations will be managed from current offices in Houston, Texas, and Kristiansand, Norway. Merrill A. “Pete” Miller will serve as chairman and chief executive officer. Miller has been in the oil and gas industry over 40 years holding various leadership roles including chairman, president and chief executive officer of National Oilwell Varco.
“The oil and gas industry is rapidly evolving, and we are constantly looking at new and innovative ways of delivering value to our customers,” said Neil Saunders, executive vice president of Oilfield Equipment at Baker Hughes. “This Company is the perfect fit between our respective portfolios and further transforms our core operations for long-term success, bringing complementary solutions to market and offering our customers a full offshore drilling equipment package.”
MHWirth is a global provider of advanced drilling solutions and services designed to offer customers a safer, more efficient and reliable alternative. MHWirth has a global span covering five continents with offices in 13 countries.
The new joint venture’s broader scope of services will also provide a more solid foundation for future growth, including the capability to participate in the oil and gas industry’s transition towards more energy-efficient solutions, as well as deploying technologies and service solutions to make the sector more competitive through increased drilling efficiency.
“I would like to express sincere gratitude to the good work and dedication shown by the respective teams of Baker Hughes and Akastor for making this happen despite the current challenges caused by the global COVID-19 pandemic,” said Karl Erik Kjelstad, CEO of Akastor. “I strongly believe that this Company will give a solid basis for both organizations to meet the current challenges in today’s market and to continue as a leader in developing advanced and efficient drilling solutions that support the industry’s transition towards more sustainable operations.”
“This transaction is a major step for MHWirth, and the transformation strategy announced in February 2019,” said Kristian M. Røkke, chairman of Akastor. “The Company will offer customers a strengthened product offering and investors attractive value creation. This transaction will also allow Akastor to maximize, and ultimately realize, value to its shareholders.”
Baker Hughes’ SDS business is a division of the Oilfield Equipment segment of Baker Hughes and is headquartered in Houston. SDS provides integrated drilling products and services worldwide, with service and manufacturing facilities in 11 countries and a competitive portfolio, including world-class blowout preventor (BOP) systems, controls and riser equipment.
The closing of the transaction is subject to customary conditions, including regulatory approvals, and is expected to occur in the second half of 2021. Morgan Stanley, Paul Weiss, Thommessen, and EY are acting as advisors for Baker Hughes. Goldman Sachs, BAHR, Sidley Austin, and EY are acting as advisors for Akastor.
Following completion of the transaction, it is expected that SDS will no longer be accounted for under Baker Hughes’ Oilfield Equipment segment. Instead, it is expected that BKR shall treat the Company as a joint venture for accounting purposes, following which BKR shall recognise 50% of the equity of the Company and 50% of the Company net profits in its accounts based on the “equity method.”
MHWirth, with its subsidiaries, is a self-sufficient group which is a global provider of integrated drilling solutions and services with world class technology, leading engineering and project management capabilities. The MHWirth group delivered in the range of 25% of all offshore drilling packages for floaters between years 2000 and 2018. With its headquarters in Kristiansand, MHWirth’s global operations covers five continents with offices in 13 countries.
Akastor is a Norway-based oil-services investment company with a portfolio of industrial holdings and other investments. The company has a flexible mandate for active ownership and long-term value creation.