Ecolab to spin off oil field chemical business

Ecolab plans to spin off its upstream energy unit, which consists of its oil field chemicals and WellChem well completion chemistry businesses, to shareholders in 2020. The company is retaining businesses in chemicals for petrochemical plants and refineries. The upstream energy unit generated $170 million in operating income on $2.4 billion in sales in 2018. The operations were acquired largely through Ecolab’s acquisitions of Nalco in 2011 and Champion Technologies in 2013. The rise of shale in the US has changed the upstream businesses, Ecolab says, and they no longer align with other company operations such as water treatment and institutional cleaning. They “evolved into more specialty chemical–type businesses, which require increasingly different operating disciplines and expertise,” Ecolab CEO Douglas M. Baker Jr says. The new firm will raise debt and distribute it to Ecolab as a dividend. “We expect a positive response to the spin-off announcement,” Morgan Stanley analyst Vincent Andrews wrote in a report on the plan.