The worldwide consolidation trend among service and supply companies continues apace, while several exploration and production companies recently disclosed some cross-border acquisitions of their own.
In service company news, Lone Star Technologies Inc., Houston, agreed to buy the tubular steel division of Edina, Mich.-based North Star Steel Co. for $430 million. North Star is a subsidiary of Cargill Inc., Minneapolis.
Other service company deals include:
- Gulf Drilling & Production Services, a unit of Arabian International Petroleum Corp. (AIPC) of Qatar, acquired 90% of the shares in ITAG Group, Celle, Germany.
- ABB Group, Zurich, bought equipment supplier FIP SA, Mexico City, from Wal- worth de Mexico SA.
- Baker Hughes Inc., Houston, acquired OCRE (Scotland) Ltd., a division of Aker Maritime ASA, Norway, in what company executives called "a small cash deal."
- Petroleum Geo-Services ASA (PGS), Oslo, purchased Diamond Geophysical Service Corp. (DGSC), Houston.
- Jacobs Engineering Group Inc., Pasadena, Calif., signed a letter of intent to acquire two engineering, construction, and maintenance services subsidiaries from McDer- mott International Inc., New Orleans.
- Flotek Industries Inc., Houston, said it will merge with Chemical & Equipment Specialties Inc. (CESI), Duncan, Okla., by year- end.
- Sandvik Group, Sandviken, Sweden, announced plans to form a joint venture with Smith International Inc., Houston, creating a company that will develop, manufacture, market, and service roller cone bits for the mining and construction industries.
- Layne Christensen Co., Mission Woods, Kan., has extended an offer to acquire the remaining 50% of stock it does not yet own in West African Drilling Services from Ausdrill Ltd.
- Atlas Copco Inc., New York, acquired Layne Christensen's Christensen Products business.
- M-I LLC, Houston, bought BW Group PLC of Aberdeen, a provider of drilling and completion fluids and other well-related chemicals to the North Sea market.
- Weatherford International Inc., Houston, acquired the assets of American Casedhole Specialists Inc., Robstown, Tex., and ACE Crane & Equipment Co., Weatherford, Okla.
- Schlumberger Oil & Gas Information Solutions (SIS) has acquired DAEX Data Exchange from Oilfield Systems Ltd., South Hampton, UK.
- Gwich'in Development Corp. and Ensign Drilling Inc., Calgary, a unit of Ensign Resource Service Group Inc., jointly established Gwich'in Ensign Oilfield Services Inc. (GEOS) to provide oil field services in the Gwich'in Settlement Area of Canada's Northwest Territories.
- PPL Shipyard Pte. Ltd., Singapore, and P&A Group, Houston, jointly acquired Sabine Offshore Service Inc., Sabine Pass, Tex.
Meanwhile, Talisman Energy Inc., Calgary, said its Swedish subsidiary, Talisman Energy AB, has closed its tender offer for stock and warrants of Lundin Oil AB, Stockholm.
In other exploration and production company news:
- Lukoil Overseas Holding Ltd. agreed to acquire the remaining 50% of joint venture Permtex LLC from SOCO International PLC, London, for $50 million.
- Russian oil company OAO Yukos Oil Co. and Marathon Oil Co., part of the USX-Marathon Group, Pittsburgh, plan to form a strategic alliance to evaluate joint energy investments worldwide.
Lone Star, North Star
Lone Star Technologies said North Star's tubular steel division has plants in Houston and Youngstown, Ohio.
The division makes line, standard, and mechanical pipe; coupling stock; and casing used primarily in the oil and gas exploration and transmission industry.
Both firms' boards have approved the deal, which will be completed in the fourth quarter, pending regulatory approval. No management or employment changes are planned.
The division's net income for the fiscal year ended May 31 was $45.3 million. Assets were $157.4 million. Lone Star is a management and holding company whose operating companies are Lone Star Steel, Fintube Technologies, and Bellville Tube.
Lone Star's companies make and market oil field casing, tubing, and line pipe; specialty tubing products, including finned tubes used in heat recovery applications; and flat-rolled steel and other tubular products and services.
AIPC-ITAG acquisition
ITAG said the acquisition by a Middle Eastern leader would open new markets it could not gain access to on its own.
AIPC Pres. Jaber A. Al-Marri said, "The Middle East, with its huge oil and gas reservoirs, will be the future market for ITAG."
The group includes six companies: ITAG (Hermann von Rautenkranz Inter- nationale Tiefbohr GMBH & Co. KG), a holding and gas production company; ITAG Tiefbohr GMBH & Co. KG, drilling and workover; Austrian Drilling & Production Services GMBH, drilling and workover; ITAG AG GMBH, logistics and warehousing; ITAG L&R GMBH, drillstring components; and ITAG Valves & Oilfield Products GMBH, ball valves and oil field equipment.
ABB-FIP deal
ABB intends to market FIP products and services worldwide. FIP supplies wellheads and gate valves. The terms of the deal were not disclosed.
"The acquisition will broaden ABB's product range as well as open new markets for ABB products in the growing Mexican oil and gas market," said Gorm Gundersen, head of ABB's oil, gas, and petrochemicals division.
"Part of our expansion strategy is to build up our presence in sectorsellipsewhere we can bundle products and services from other parts of our business," Gundersen said. "This acquisition fits well with that approach."
Baker Hughes-OCRE buy
Baker Hughes said its acquisition of Aberdeen-based OCRE is expected to enhance Baker Hughes's deepwater completion capabilities by adding another interventionless oil and gas well completion product.
OCRE specializes in interventionless oil and gas well completion products.
"We can now offer a complete suite of interventionless settings and reach a wider market with these niche products," said Enrique M. Proaño, director of global business development for Baker Oil Tools, a division of Baker Hughes.
PGS-DGSC deal
PGS, which also has offices in Houston, acquired DGSC in exchange for stock and cash.
During the last 7 years, DGSC has ex- clusively marketed much of PGS's Gulf of Mexico multiclient library.
PGS historically has used companies such as DGSC to penetrate a broader base of customers and to establish a third-party marketing network. The acquisition will cut costs because PGS will no longer have to pay DGSC a sales commission and a monthly retainer for its services.
Reidar Michaelsen, PGS chairman and CEO, said, "As part of the geophysical [unit] reorganization announced earlier this year, we have focused on efforts to increase accountability within PGS. Some of the disappointing results that PGS experienced in the past were exacerbated by a decentralized business approach and an undue reliance on third-party marketing firms."
Jacobs-McDermott purchase
Jacobs is acquiring McDermott En- gineers & Constructors (Canada) Ltd., including the latter's Delta Catalytic and Delta Hudson Engineering units.
Executives declined to disclose the terms, but they expect the deal to be finalized this fall.
McDermott Engineers & Constructors and Delta Hudson, both based in Calgary, have operations in Canada, the UK, and the US.
McDermott CEO Bruce W. Wilkinson said, "The potential sale of these companies supports our focus on our core marine construction, power generation, and government businesses."
Flotek-CESI merger
The boards of both Flotek and CESI have approved the merger that will create a company with pro forma revenues of $25 million for calendar 2001.
The deal will be accretive for Flotek shareholders.
Flotek's preferred shareholders will own 30.75% of the combined company and can increase their ownership to 38.5% upon exercising warrants.
After the merger, CESI Pres. and CEO Glenn Penny will become Flotek president and COO, while Jerry Dumas will continue as chairman and CEO.
Flotek manufactures and markets downhole technologies for the oil field service industry.
Sandvik-Smith JV
The joint venture of Sandvik and Smith will involve Sandvik Tamrock's roller cone bit business in Koping, Sweden, and the Smith Bits Mining & Industrial Tools division of Smith International.
The new company-Sandvik Smith, will be a 50:50 joint venture between the two firms. Sandvik Smith will have more than 200 employees.
The manufacturing units are located in Sweden, the US, and Italy. The head office will be in Koping, which is home to the largest plant.
The jointly owned company will commence business Oct. 1 and will be consolidated within Sandvik Mining & Construc- tion.
Anders Ilstam, president of Sanvik Mining & Construction, said the new company will increase the parent com- pany's cemented-carbide tool operations.
Layne Christensen deals
Layne Christensen will pay $2.5 million in exchange for Ausdrill's stake in WADS.
In addition, Layne Christensen is surrendering-by way of an Ausdrill share repurchase agreement-6 million shares of Ausdrill.
The agreement is subject to Ausdrill shareholders' consent to the repurchase of Ausdrill shares. The deal is expected to close in early September.
WADS, Accra, was formed in October 1998 through the combination of Aus- drill's and Layne Christensen's African businesses.
Andrew B. Schmitt, Layne Christensen president and CEO, said, WADS "is a strong, well-capitalized, profitable company that has considerable upside potential."
Meanwhile, in an unrelated deal, Layne Christensen has completed the sale of its Christensen Products Business to Atlas Copco.
Total consideration, including a 5-year earn-out, was $19 million.
Schmitt earlier said that Layne Christensen decided that being "backward integrated in diamond bits, rig, and consumable drilling products no longer makes strategic sense."
M-I, BW purchase
M-I will integrate BW into its existing UK operations.
The purchase price was not disclosed. BW reported revenues of $11.3 million for the first half of 2001.
M-I Pres. and CEO Loren Carroll said, "The acquisition, along with the opening of our state-of-the-art research center in Aberdeen, demonstrates M-I's commitment to the UK drilling sector and provides a solid and substantial base for future growth."
Smith International owns 60% of M-I, while Paris-based Schlumberger Ltd. owns 40%.
Weatherford acquisition
Financial terms of Weatherford's purchase were not disclosed.
American Casedhole Specialists provides cased hole wireline services, particularly in deep, high-pressure, high-temperature wells. The acquisition will help expand Weatherford's Well Intervention Services unit.
The addition of Ace Crane brings cranes and high-pressure lubricators.
SIS's DAEX buy
SIS's acquisition of DAEX from Oilfield Systems enhances the company's exploration and production data integration products and services, executives said. Terms of the transaction were not disclosed.
"A solid data transfer framework helps operating companies reduce costs and increase efficiency," said Ihab Toma, vice-president and general manager, information management for SIS. "DAEX will help us exploit its existing data links."
The DAEX system provides a data integration framework for transferring data between applications databases.
GEOS JV
Gwich'in Development will own 51% of GEOS, while Ensign Group will hold 49%.
The joint venture's initial plans are to negotiate oil and natural gas drilling contracts for projects within the Gwich'in Settlement Area.
The 22,422 sq km settlement area is on the Mackenzie Delta. Gwich'in Devel- opment is a Northwest Territories corporation that is owned by the Gwich'in Tribal Council.
Tom Connors, Gwich'in Development CEO, said, "The success of GEOS will en- able the Gwich'in peoples to participate directly in the development of their natural resources."
PPL, P&A purchase
SOS will continue to offer fueling services to offshore vessels.
The 50:50 jointly owned acquisition consortium has formed Sabine Shipyards Inc., which will repair rigs. The JV will use more than 200 acres and more than 1,600 ft of bulkhead on the Sabine-Port Neches waterway. Sabine Shipyards will offer an array of mobile offshore drilling rig repairs, both in the yards and offshore, plus technical support.
J.P. Marks Jr., a principal of the P&A Group, will serve as CEO of the new venture.
Talisman-Lundin buy
Talisman acquired all shares and warrants of Lundin Oil.
Jim Buckee, Talisman president and CEO, said, "We are ready to further align and consolidate our core areas in the North Sea."
The acquisition involved all of Lun- din's assets in the North Sea, Malaysia, Viet Nam, and Papua New Guinea. Talis- man Energy expects Malaysia to become a core area by 2004 with production of more than 50,000 boe/d (OGJ Online, June 21, 2001).
A total of 95.44 million shares and 2.1 million warrants were tendered, representing 89.8% of the shares and 90.3% of the votes in Lundin Oil.
Upon announcing the cash offer, Talisman Energy said it was worth $344 million, equivalent to $3.43/share for each Class A and Class B share of the Swedish oil and gas company.
To expedite the offer's completion, Talisman AB reduced the minimum acceptable take-up percentage to 88% from 90%.
Talisman AB said it will become the holder of at least 91.2% of the shares and 91.6% of the voting rights in Lundin Oil on a fully diluted basis.
Lukoil-Permtex acquisition
Upon completion of the transaction, Lukoil will hold 100% of Permtex. Lukoil will also guarantee Permtex's $11 million in obligations to the European Bank for Reconstruction and Development (EBRD).
Permtex owns licenses to develop several fields in Perm Oblast, including Ozernoye, Tarkhovskoye, Mysinskoye, Borovitskoye, Magovskoye, and Logov- skoye.
Lukoil-Perm Chairman Ravil Maganov said, "The new acquisition means further consolidation of the oil assets of Lukoil for the purpose of increasing volumes of oil production. This is the realization of the earlier asserted strategy of Lukoil to bring the company's share in joint ventures to 100%." Maganov noted that the Permtex project was given a positive evaluation by EBRD, which pledged to continue financing the project under existing terms.
Yukos-Marathon alliance
As part of the Yukos-Marathon alliance, a joint business development group will be formed and based in London.
Marathon Oil Pres. Clarence Cazalot said, "An integral part of our strategy is to develop profitable new core areas in participation with important national oil companies and growth-oriented international players."
Yukos CEO Mikhail Khodorkovsky said the planned alliance will promote expansion of the company's international business.