- Liberty Oilfield Services (LBRT +36.1%) soars to its highest in seven months after its acquisition of Schlumberger's (SLB -0.5%) North American fracking business more than doubles the size of its frack fleet in a market that has sidelined 75% of U.S. crews this year.
- The deal makes Schlumberger the biggest oil service industry player yet to abandon frack work in North America after similar exits in recent years by Baker Hughes and Weatherford; Halliburton (HAL +1.2%) is now the only global provider of well completions for shale.
- The sale is "consistent with CEO Olivier Le Peuch's comments about not needing to own frack assets, his strategy for SLB to become asset light and licensing SLB technology to other companies," says RBC Capital's Kurt Hallead.
- The deal is positive for the battered U.S. pressure pumping sub-sector and looks "solid" for Liberty, according to Johnson Rice analyst Daniel Burke.
- The combined company likely will have strong free cash flow generation and should maintain ~20% market share in U.S. land drilling, Capital One’s Luke Lemoine says.
- Oil service stocks, especially Schlumberger, have badly lagged the broader market this year.