Schlumberger, based in Houston and Paris, ranks No. 10 on the Transport Topics Top 100 list of private carriers in North America.
Cameron stockholders will receive 0.716 Schlumberger shares and a cash payment of $14.44 in exchange for each Cameron share, according to a regulatory statement Aug. 26. The deal valued at $66.36 a share is a 56% premium to Cameron’s closing share price Aug. 25.
The agreement would help Schlumberger become a one-stop shop for crude explorers, adding Cameron’s valves, pumps and blowout preventers to its in-house engineering expertise. The slump in oil prices over the past year has forced oil companies to cut back on costly exploration and investment, fueling competition among service providers for a chunk of that shrinking spending.
“This is a sign that Schlumberger sees a market bottom,” Matt Marietta, a Houston-based analyst of Stephens Inc. who rates the stock a buy and owns none, said Aug. 26 in a telephone interview. “Schlumberger didn’t have to agree to it this week. They could have waited for things to worsen. It can probably bring some confidence back to energy investors that we are approaching a bottom.”
The acquisition is designed to change the oil field service and equipment industries, which generally have stayed at arm’s length from one another.
Cameron is the world’s largest provider of the so-called surface wellheads, a vital set of valves that sit atop the well to control the flow of oil from the underground reservoirs. Schlumberger is looking to create even more efficiency with drilling and production by creating a single operating system that marries its well engineering and digital mapping of oil pockets with Cameron’s critical gear.
“Cameron is a great hardware company, and we have all these digital capabilities and the leading downhole portfolio,” Schlumberger CEO Paal Kibsgaard told analysts and investors on a conference call. “The combination of all these factors is why we’re very excited about the transaction.”
The deal follows the proposed merger between the world’s second- and third-largest oil field service providers, Halliburton Co. and Baker Hughes Inc., in a deal valued at about $35 billion when it was announced in November.
The Cameron purchase is diversification into oil field equipment supply rather than consolidation of a rival service company, so it is unlikely to face an antitrust challenge, Marietta said.
The companies had been partners in a joint venture they created in 2012 called OneSubsea in a long-term bid to lower the overall cost and improve performance in deepwater development. By owning its joint venture partner, Schlumberger will be able to work that plan more effectively, Kibsgaard said.