Schlumberger Ltd. plans to acquire equipment manufacturer Cameron International Corp. for $14.8 billion, including debt and other costs.
Executives said Schlumberger wants to combine its reservoir engineering expertise with Cameron's valves and pumps.
Plunging oil prices have forced oil companies to reduce budgets, increasing competition among service providers.
The transaction is not the only recent service-related consolidation. Halliburton Co. and Baker Hughes Inc. agreed to a $35 billion merger during 2014, but it has yet to be finalized.
Executives said the Cameron acquisition will allow Schlumberger to bundle its services with Cameron equipment. Schlumberger expects closing by early 2016.
Analyst comments
J. Marshall Adkins of Raymond James & Associates in Houston said, "Optically, the deal wasn't particularly inexpensive." Adkins said the resulting combination will merge reservoir and manufacturing expertise. He expects that "should reduce overall cost per barrel."
"Schlumberger's greatest strength was the company's technological and subsurface expertise, so the acquisition is driven by the addition of Cameron's surface technology," Adkins said. "Schlumberger has recently been discussing the focus on efficiency, integration, technology, and reliability. This acquisition exemplifies the company strategy as it should advance Schlumberger's integrated offerings package, supports performance-based contracts, and improves integration of company solutions onshore."
Schlumberger forecast the combined company would have pro-forma revenue of $59 billion, 20% more than Schlumberger's 2014 revenue.
Analysts say divestitures are likely before the Halliburton-Baker deal wins government authorization, but Schlumberger executives expect few or no antitrust hurdles.