Italian oil field services provider Saipem has announced a strategic merger with its rival Subsea7, forming a new entity called Saipem7 in a deal valued at over $4.6 billion. The move is poised to significantly reshape the global oil services landscape.
The combined company is set to generate approximately €20 billion ($21 billion) in revenue, with earnings before interest, tax, depreciation, and amortization (EBITDA) surpassing €2 billion ($2.1 billion). Furthermore, Saipem7 will boast a combined backlog of €43 billion ($45 billion), positioning it as a formidable player in the sector.
According to Saipem, the merger leverages highly complementary strengths, including geographical presence, technical capabilities, vessel fleets, and technology. This union is expected to benefit the global client base of both companies, enhancing service delivery and operational efficiency.
The merger comes at a time when consolidation in the oil field services industry is seen as increasingly necessary. Saipem and Subsea7 had previously explored the idea of a merger in 2019 to address challenges within the sector. Industry analysts believe the current climate, marked by significant consolidation in exploration and production—particularly in the United States—presents an ideal opportunity for further mergers in oil field services.
Eni CEO, the majority shareholder in Saipem, praised the transaction, calling it a step toward creating a “global leader” with substantial industrial and technological capabilities. He highlighted Saipem’s recent improvements in operational and financial performance, noting that this progress positions the company to play a pivotal role in the transformation of the industry.
Despite the growth momentum in 2022 and 2023, industry consultancy Rystad Energy forecasts a slowdown for the oil field services sector. The firm anticipates a modest 2.4% industry increase in 2024, driven by challenges in the onshore oil and gas sectors, particularly shale and tight oil services. However, Rystad identified offshore oil and gas as an area of opportunity, projecting a 1.8% growth for the year ahead.
The Saipem7 merger is seen as a strategic move to strengthen both companies in an evolving market, as the oil services industry navigates shifting demands and opportunities.