CALGARY (Reuters) – Schlumberger Ltd (SLB.N) is buying French drilling analysis firm Geoservices for just over $1 billion, further consolidating a sector that is grappling with flat energy demand and weakened margins.
The world’s largest oilfield services company, just a month after its deal for rival Smith International, said on Wednesday it was buying Geoservices from majority-owner Astorg Partners, a private-equity firm specializing in industrial firms.
Geoservices, with 5,000 employees, earned $491 million in revenue last year providing services such as mud-logging in more than 50 countries.
Mud logging gives oil and gas producers a continuous stream of data about what they have reached underground as they drill.
“The addition of mud logging technology to the Schlumberger portfolio is an important step in the development of higher-performance drilling systems,” Schlumberger Chief Executive Andrew Gould said in a statement.
The Geoservices deal is worth $1.07 billion, including net debt. Astorg said the management team and strategic positioning of Geoservices had been through a dramatic transformation in the five years since it was involved in the company.
With energy demand still flat, bankers and analysts see oilfield services mergers as a way for the companies both to remove the market capacity weighing down profits and to extend their skillsets and geographic reach.
Schlumberger, with 77,000 employees and principal offices in Paris, Houston and The Hague, already made a splash this year by striking a deal to buy Houston-based Smith International Inc (SII.N) in a transaction initially valued at more than $11 billion.
That acquisition has come at a price for Schlumberger, however. Its stock is down 5 percent since news of the deal first surfaced, while the benchmark Philadelphia Stock Exchange oil service index .OSX is flat over that period.