In a move that will push it deeper into the upstream for oil and gas but also deeper into the software needed to optimize those operations, Emerson has agreed to acquire Paradigm for $510 million. The purchase—whose price is 13 times the expected 2017 EBITDA—will expand Emerson’s existing Roxar software portfolio in exploration and production (E&P), particularly in seismic acquisition, processing and interpretation.
As oil and gas producers work to adapt to a market where $50 to $60 per barrel continues to be the norm, they must put more emphasis on keeping existing wells producing and profitable—rather than the days of old, when it was easier to just drill another hole. Automation suppliers are finding the need to turn increasingly to software to optimize production in all industries. Paradigm’s software offering will enable Emerson to better help oil and gas operators increase efficiency, reduce costs and improve return on investment.
In its discussion of optimization, Emerson likes to focus on the top-quartile performers—with their fewer safety incidents, higher uptime, lower operating costs, lower energy emissions, etc.—and how to help those in the lower 75 percent reach those top performance levels. With Emerson’s acquisition of Paradigm, the supplier expects to further enhance top-quartile performance in the management of oil and gas reservoirs and production costs. Interpreting data and generating high-fidelity representations of existing brownfield assets allows oil and gas companies to maximize production and avoid non-productive drilling and exploration spending. Emerson’s expanded services will also enable oil and gas operators, through machine learning and cloud computing, to make decisions in the field to improve operation efficiency. Together, the two companies will be positioned to digitally integrate reservoir planning and management with topside operations, leveraging Emerson’s DeltaV distributed control system (DCS).
“This acquisition is a significant technology investment that meets our customers’ growing demand for an independent, global provider of E&P software solutions,” said David N. Farr, Emerson’s chairman and CEO. “Paradigm broadens our leadership in the upstream oil and gas market by adding a range of subsurface software tools that complement our growing Automation Solutions portfolio.”
Paradigm, headquartered in Houston, provides an array of tools that enables customers to gain deeper insight into the subsurface, reduce uncertainty and support responsible asset management.
“When combined with Emerson’s Roxar Software Solutions portfolio, Paradigm expands the global upstream oil and gas capability of our Plantweb digital ecosystem, creating a more comprehensive digital portfolio for our customers from exploration to production,” said Mike Train, executive president of Emerson Automation Solutions. “Our offering can now help customers better maximize the value of their existing investments and reach top-quartile performance.”
The acquisition is expected to close within the next 60 days, subject to various regulatory approvals.
