Wednesday, 26 February, 2025 / Edition 47

This week marks the three-year anniversary of Russia's invasion of Ukraine on February 24, 2022. I wish the war would end soon and people could return to normal life.

Now, let’s look at two pieces of energy news from last week.

Shangyou Nie

Editor, Well Read

Saipem and Subsea7 Announce Merger

Eak Sikgun/ Shutterstock.com

Italian company Saipem and Norwegian company Subsea7 signed a memorandum of understanding to merge. The deal is valued at $4.9 billion. The new company, Saipem7, will be the world’s largest oil, gas, and wind services company.

Driving the deal:

• According to an analysis by Barclays cited by the WSJ, the most important driver is a larger and more diversified fleet would be able to operate more efficiently.

• Another reason is the combined geography reach and operation synergies, according to Upstream.

• “Our fleets are very compatible… and also the graphic fit shows that putting these two companies together will allow our clients to have one global service provider,” said John Evans, CEO for Subsea7.

Deal details:

• Subsea7 will be wholly owned by Saipem. The combined company will be headquartered in Milan and focus on drilling, engineering, and construction.

• Saipem7 will have four business segments: Offshore Engineering & Construction, Onshore Engineering & Construction, Sustainable Infrastructures, and Offshore Drilling.

• Current Saipem and Subsea7 shareholders will own 50 percent each of the share capital of the new combined company.

• Immediately before the merger, Subsea7 shareholders will receive an extraordinary cash dividend of 450 million euros.

• Siem Industries, the largest shareholder of Subsea7, as well as ENI and Italian state lender Cassa Depositi e Prestiti, the largest shareholders of Saipem, have also signed a separate memorandum of understanding in support of the merger.

• Completion is anticipated in H2 2026.

By the numbers:

• Saipem has a market cap of $4.8 billion; Subsea7 has a market cap of $5 billion.

• Shares of Subsea7 went up by 7.8 percent and Saipem increased 1 percent upon the news of the merger, according to the Wall Street Journal.

• According to Saipem, the combined company will have 45,000 people, including more than 9,000 engineers and project managers.

• According to Subsea7, the combined company will have an estimated 20 billion euros revenue and a backlog of some 43 billion euros.

• Saipem7 is expected to pay a dividend of “at least 40 percent” of Free Cash Flow.

Market share stats:

• Currently, Saipem has greater than 30 percent market share in the Middle East, while Subsea7 has greater than 30 percent market share in the North Sea.

• Subsea7 has greater than 20 percent of market share in Latin America, while Saipem has greater than 10 percent of market share in Africa and Latin America.

• The combined company will have about 20 percent market share in the Middle East, Latin America, and the North Sea.

What will happen after the merger:

• Saipem CEO and General Manager Alessandro Puliti will be nominated as the CEO for the combined company.

• Subsea7 will be headed by John Evans, the company’s current CEO. Evans will take charge of all offshore business units, including those from Saipem.

• Saipem7 will be traded on the Milan and Oslo stock exchanges.

• “We don’t expect any significant impact on headcount—it’s more about offices and yards,” said Evans.

Broader implications:

• This is the first multi-billion-dollar merger announcement within the oil service industry in 2025.

• The deal implies a growing importance of Latin America and Middle East and the declining importance for the North Sea.

A message from AAPG Academy and AWS for Energy and Utilities

Join AAPG Academy and Amazon Web Services for Energy and Utilities for a free upcoming webinar on 27 February at 9am CST to learn more about how cutting-edge AI applications are empowering geoscientists to drive critical business decisions. 

Entitled From Data to Discovery: AI's Game-Changing Role in Geoscience, the webinar will showcase a presentation from expert speaker Chris Hanton, product lead-energy data insights AI and HPC application at AWS. Hanton will discuss how industry leaders are:

• Using AI to transform complex data into actionable insights
• Streamline workflows
• Solve real-world challenges

CNPC Finds Oil and Gas in the Fastest-Drilled Onshore Well Deeper than 10,000 Meters

FOTOGRIN/ Shutterstock.com

China’s largest national oil company, CNPC, recently completed drilling an R&D ultradeep well in the Tarim Basin in Northwestern China. The “Shenditake 1” well found oil and gas at more than 10,000 meters—a technological discovery that the company claims is the first of its kind globally.

Well details:

• According to the Global Times, The Shenditake 1 well was spudded on 30 May 2023. It was completed on 20 February 2025, after reaching a depth of 10,910 meters.

• Several technological breakthroughs were achieved along the way, including deepest liner cementing, deepest wireline imaging logging, and fastest onshore drilling to exceed 10,000 meters.

• The first 10,000 meters was drilled in 279 days, but the final 1,000 meters took more than 300 days.

• Oil and gas were found in the deep layers.

• “The team overcame numerous obstacles, including heavy loads, wellbore instability, drill fatigue, tool failures, and severe formation loss,” said Wang Chunsheng, CNPC’s chief expert for the Tarim Oilfield.

The deepest well ever dug:

• Russia’s Kola Superdeep Borehole SG-3 is considered the world’s deepest well, reaching a vertical depth of 12,262 meters.

• The well originally started drilling in 1974; and it took almost 20 years for the research well to reach the final depth.

Broder implications:

• China is the world’s largest crude importer: More than 70 percent of its oil demand depends on imports.

• China’s government has instructed its national oil companies to raise the game for domestic E&P, so as not to increase foreign dependency.

• Chinese NOCs have been exploring deeper reservoirs onshore and ultradeep water areas offshore.

• More than 300 wells of more than 8,000 meters have been drilled in the Tarim Basin, representing more than 80 percent of China’s total wells drilled.

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✉️ To get in touch with Shangyou, send an email to editorial@aapg.org.