Schlumberger to buy Smith International. Drilling companies unite.

By Kathrine Schmidt
Staff Writer


Published: Tuesday, February 23, 2010 at 11:43 a.m.
Last Modified: Tuesday, February 23, 2010 at 11:43 a.m.
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HOUMA — The world’s largest oil-service company will buy another firm that specializes in drilling bits and chemicals, company executives said Monday.

Schlumberger Ltd. will buy the Houston-based Smith International for $11 billion.

“Smith’s drilling technologies, other products and expertise complement our own, while the geographical footprint of Schlumberger means we can extend our joint offerings worldwide,” Andrew Gould, Schlumberger’s chairman and CEO, said in a written release. “We believe this transaction brings significant benefits to the customers and shareholders of both companies, and we look forward to welcoming Smith employees to Schlumberger.”

Local calls to the corporate and local offices of both companies went unreturned Monday.

Schlumberger has a significant presence in the Houma-Thibodaux area, with five divisions in Houma and one in Larose, its Web site says.

Directory listings show at least two Houma offices for Smith International.

“This transaction brings our shareholders significant value and the opportunity to integrate with and own a meaningful share of a recognized technology leader in an extensive number of fields,” John Yearwood, CEO of Smith, says in a release.

Oilfield-service companies have increasingly diversified to provide their customers with a wider range of products and services, keeping costs down in the process, says Pierre Conner, a stock analyst with Capital One Southcoast in New Orleans.

“There’s a trend towards service companies being able to supply the complete range of products and services,” Conner said. “The (oil-and-gas) prices are volatile, you can’t control them. The best thing to do is reduce costs.”

No. 3 oil-service player Baker Hughes’ acquisition of BJ Services last year is another example, he said.

Conner said Smith is strongly concentrated in North American markets and best known for its drilling-bit and oil-tool technology. That will help strengthen services offered by Schlumberger, which already has a strong presence in directional drilling, a technique that mines oil from harder-to-reach deposits.

While he can’t say for sure, Conner said he doesn’t see the merger as one that will result in mass layoffs. That’s because the technologies being brought under the company umbrella are new.

“Most of the duplication is going to be at the corporate level,” he said.

Staff Writer Kathrine Schmidt can be reached at 857-2204 or kathrine.schmidt@houmatoday.com.