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Case Study

Gas Turbine Lease Pool for Multinational Oil & Gas Corporation

Multinational Oil & Gas OEM

The customer is a multinational Oil & Gas OEM with operations in over 120 countries.
Location
Houston, TX

Customer Problem / Need

Customer had working capital needs and was looking to monetize balance sheet assets.

The customer had a pool of spare turbines that were used as short term rentals to end-customers (1-6 months) during repairs and overhauls.

Challenges

Customer required no disruptions to current operations, neutral or positive impact to margins, and commercial flexibility.

Customer needed the ability to swap turbines in the event they sold a rental to an end-customer.

Solution

Sale and lease back to the customer with a sublease clause allowing for short-term rentals to end customers.

Provisions within the lease provided commercial flexibility by allowing the customer to swap assets in and out of the pool.

Swap provisions, allowed international transferability.

Outcome

The Chain AMS team was able to deliver $175MM in cash to the customer.

The lease cost was equivalent to the depreciation expense, resulting in a neutral P&L impact.

The equipment sale resulted in a gain for the customer.

The asset swap optionality ensured no disruption to the customers commercial operations.

Structure

▪ Product: Sale & Leaseback on rental assets

▪ Amount: $175MM to date

▪ Equipment: Aeroderivative turbines

▪ Term: 72-98 months

▪ Pricing: Indicative of parent credit profile

▪ Early Buyouts: two options, providing interest ratet ransparency (no longer available on SLB’s post 2019 lease accounting changes)

What we did
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