Lufkin Industries Inc.,
Lufkin, Tex., and the General Electric Co. agreed jointly to the $3.3 billion cash acquisition of Lufkin Industries to $88.50/share—a 38% premium to its closing price in the stock market the day before the agreement. The deal will broaden the artificial lift capabilities of the GE Oil & Gas division, based in Florence, Italy, beyond electric submersible pumps (ESPs) to include rod lift, gas lift, plunger lift, hydraulic lift, progressive cavity pumps, and a sophisticated array of well automation and production optimization controls and software. The ESP category of artificial lift is the only segment in which Lufkin does not currently compete.
According to officials, artificial lift is used in 94% of the roughly 1 million oil-producing wells in the world. Founded in 1902, Lufkin Industries is a vertically integrated company with 4,500 employees in more than 40 countries, 110 service centers, and 9 manufacturing facilities. It recently opened a large manufacturing facility in Romania to service Eastern Hemisphere markets. The Texas company designs, engineers, manufactures, sells, installs, and services high-quality and high-value-added oil field equipment and power transmission products around the globe. It already supplies turbo gearing and specialty bearings products for GE.
The merger was unanimously recommended by Lufkin's board of directors and is expected to close in the second half of 2013 subject to approval by regulators and Lufkin shareholders, with the customary closing conditions.
The global artificial lift business is expected to approach $13 billion in 2013, fueled by development of unconventional shale plays and liquids-rich resource plays, according to Spears & Associates Inc. In 2010, rod lift systems represented about 19% of the artificial lift sector (as measured by dollars of equipment sold annually). By 2012, rod lift had grown to 31% of the sector, according to Spears. Lufkin Industries is a leader in rod lift solutions, and its beam pump units are a universal symbol of oil field production. Other artificial lift systems are in demand as well including progressive cavity pumps for heavy oil and gas lift for unconventional shale and offshore production.
GE Oil & Gas is the parent company's fastest-growing business, and the addition of Lufkin's artificial lift products and automation and optimization solutions will greatly expand its portfolio. In 2012, Lufkin posted record revenues of $1.3 billion, reflecting 37% growth with new business bookings up 38%, driven by a 47% increase in its artificial lift business. With synergies from the merger, GE said the business is "well positioned for significant top and bottom line growth."
GE Oil & Gas has made acquisitions valued at a total $11 billion since 2007, including the recent additions of Wellstream Holdings PLC and Dresser Inc. GE entered the lift business in 2011 through its acquisition of Wood Group's well support division, which gave the company a strong presence in electric submersible pumps.
The GE-Lufkin transaction is "further confirmation of the strong secular growth tailwinds of the artificial lift business, particularly rod lift's leverage to the oil shale revolution in North America," said Barclays Capital Equity Research analysts. GE's bid represents fair value for Lufkin Industries, and no other suitors are expected to materialize, they said.
"GE has historically been the highest bidder for companies it's looking to acquire. Additionally, with Lufkin's power transmission segment, the company fits better into GE's portfolio than it would in many other competitor's," said analysts in the Houston office of Raymond James & Associates Inc.
Parker Drilling Co. (PKD),
Houston, acquired International Tubular Services Ltd. in Aberdeen and certain affiliates of ITS Tubular Services (Holdings) Ltd., a privately held international rental tools and well services company, for $125 million, boosting Parker's exposure in growing international rental tools markets and additional well services. The purchase was financed with a 6.5% 5-year term loan provided by Goldman Sachs Bank USA.
ITS's principal activities are renting drilling tubulars and pressure control equipment and providing casing running and fishing services to an extensive customer base of exploration and production companies, drilling contractors, and service companies from 22 operating facilities primarily in the Middle East, Latin America, Europe, and the Asia-Pacific region. Under terms of the agreement, an initial purchase price of $101 million was paid at the closing and an additional $24 million was deposited into an escrow account to be paid to the parent ITS company when certain consents are obtained or released to Parker.
Analysts at Barclays Capital Equity Research said, "We think obvious concerns regarding a large scale foray into the international markets while the Eastern Hemisphere drilling fleet is in the midst of a prolonged and potentially costly transformation are outweighed by the increased leverage to rental tools (PKD's most profitable business) and the growth potential for ITS's operations. Operating margins for ITS are well below the levels achieved by PKD's rental tools unit (23.5% for ITS vs. 60% for PKD) and while geographic dispersion for the international unit will likely prevent the full efficiencies realized in PKD's legacy business, we think there is ample room for improved profitability. Cost synergies derived from spending leverage and a lower tax rate due to a larger presence in foreign tax jurisdictions could also have a positive impact."
LoneStar Geophysical Surveys LLC,
Edmond, Okla., named Mitch R. Thilmony as director of its health, safety, environment, and quality management system. Before he was recruited by privately held LoneStar, Thilmony spent several years abroad on oceanic seismic operations in Trinidad, Turkey, and Poland with Viking International.
Black & Veatch Holding Co.,
Overland Park, Kan., announced the production startup of the Bazhou liquefied natural gas facility south of Beijing built for Hebei Huaqi Natural Gas Co. Using its patented PRICO single mixed refrigerant process, Black & Veatch designed the facility to liquefy a nominal 37 MMscfd of feed gas to provide LNG for transportation fuel in the Beijing area and other markets. Detailed engineering, equipment procurement, and construction management were provided by Chemtex Group, Tortona, Italy, the global engineering and technology division of Gruppo Mossi & Ghisolf, which also designed, supplied, and commissioned a storage and loading system. The plant is the eighth LNG project by Chemtex and Black & Veatch now operational in China. Another 10 LNG projects by the team are commissioned over the next 2 years.
Meanwhile, Black & Veatch announced the commercial availability in the third quarter of its trademarked LNG production plant, PRICO E-Pack, based on its successful PRICO LNG technology, that will allow companies in transportation, power generation, and other sectors to switch to LNG fuel. "For on-road and off-road vehicle fleets, railroads, and marine vessel operators, the PRICO E-Pack standard plant is the most economical and efficient LNG solution," said Kerry Erington, director within Black & Veatch's oil and gas business. It integrates key PRICO components with shop fabricated modules that can be shipped by truck, minimizing field assembly. Its modular, standard design also expedites delivery and construction time to enhance return on investment. Black & Veatch works with clients to integrate the pack into a complete LNG fuelling solution, including design elements addressing storage, loading, utilities, and other key plant component needs.
Black & Veatch also signed a memorandum of understanding with Shanghai-based Wison Offshore & Marine Ltd., a subsidiary of the Wison Group, to jointly pursue barge-based natural gas liquefaction facility projects on an exclusive basis. Under the agreement, Wison manage barge design and engineering and overall project management, construction, delivery, and financing of the integrated facility. Black & Veatch will provide the basic and detailed LNG plant designs and supply certain LNG equipment and components as well as provide commissioning services and process guarantees. The solution deploys Black & Veatch's patented PRICO liquefaction technology. The agreement formalizes a relationship between the two parties developed through their collaboration on delivery of the first floating LNG liquefaction, storage, and regasification facility. Announced in June 2012, this unit is under construction at Wison's fabrication facility in Nantong, China. The companies also signed an agreement earlier this year for plans to develop similar units for clients in other markets.
Aker Solutions ASA,
Oslo, was awarded a contract from Paris-based Technip SA to deliver two dynamic power and control steel tube umbilicals, one dynamic power cable, and ancillary equipment for the Girassol Resources Initiative phase two development in 1,300 m of water in Block 17, located 210 km west of Luanda, Angola. Contract value was undisclosed. The umbilicals will be manufactured at Aker Solutions' facility in Moss, Norway, with project management, design, and engineering support from the company's office at Fornebu, Norway.
In other news, the Aker Offshore Partner Ltd. subsidiary won a contract from Premier Oil PLC to provide hook-up, commissioning, and facility management services involving the tie-back of subsea production and two subsea injection wells to a fixed production platform in the Solan oil field, Block 205/26a of the UK North Sea. Premier Oil is operator of that field development west of Shetland. Officials said the project is the first of its kind west of Shetland. The platform, which will not be permanently manned, will produce oil and store it in a subsea tank prior to transferring it via an oil-offloading system to shuttle tankers. The contract is valued at more than £30 million and covers 3 years from first oil with two 1-year extension options. Work will be led by Aker Solutions' Aberdeen office. First oil is expected in the fourth quarter of 2014. The UK Department of Energy and Climate Change approved Premier's plans for the Solan oil field in April 2012. Once online, Solan is expected to produce 40 million bbl of oil at an initial rate of 24,000 b/d.
Proserv,
Aberdeen, launched a state-of-the-art global research and development hub in Trondheim, Norway, to design innovative subsea controls and communications technologies. It features an advanced electronics workshop spanning 500 sq. m, a technology showroom for demonstrations, and 1,100 sq. m of space for 50 new offices. The new facility is part of Proserv's evolving international infrastructure in support of its subsea production systems business, which includes facilities in the UK providing subsea systems test and assembly in Aberdeenshire and subsea controls systems design & manufacture in Great Yarmouth.
Schlumberger Ltd.,
Paris, signed a definitive agreement with Forest Oil Corp. to supply technology, information solutions, and integrated project management for future development of Forest's Eagle Ford shale acreage in Gonzales County, Tex. Under terms of the agreement, Schlumberger will pay a $90 million drilling carry in the form of future drilling and completion services and related development capital in return for a 50% working interest in Forest's Eagle Ford shale acreage position. Upon completion of the phased drilling carry, Forest and Schlumberger will participate in future drilling on a 50/50 basis. The agreement applies to wells spud since Nov. 28, 2012, but not yet in production by April 2013. Forest retains all of its interests in wells spud prior to Nov. 28. Forest will be the operator of the drilling program and currently expects the drilling carry will be fully realized by the end of 2014. As part of the agreement, Schlumberger will provide assistance to Forest in the development and production enhancement of its Eagle Ford acreage in the form of integrated service offerings and asset management support including but not limited to drilling, completion, and lifting technologies; reservoir management technologies; and development of unconventional resources workflows. Analysts with Barclays Capital Equity Research in New York said, "While we think this may be a first step towards greater adoption of integrated production projects (with performance-based incentives) in North America, the agreement's inclusion of an equity stake for Schlumberger appears to be a ‘one-off' rather than a shift in strategy. Schlumberger does not have an interest in becoming an exploration and production company; however, we think this could become a sort of showcase ‘technology lab' in the oil shales that allows the company a direct route to deploy new technology and demonstrate their efficacy to E&Ps."
Offshore Installation Services Ltd. (OIS),
Aberdeen, part of the Acteon Group, named Mike Earlam president. Based in the company's Aberdeen office, Earlam will play a key role in exploiting opportunities to work with other Acteon companies. He has wide experience of the subsea market and joined OIS from his position as managing director with Fugro Salt Subsea Ltd. where he was responsible for establishing and building the company's subsea construction and trenching business in the North Sea and Europe. Previously, he was the global chartering manager for Subsea 7 SA and played a major role in developing the company's fleet. His other career experience includes 10 years with ASCO Group Ltd. running marine operations and logistics and managing a subsea construction contractor in Australia and the Far East.
Multi Products Co.,
Millersburg, Ohio, named Andy Rickly as operations manager responsibile for all manufacturing production, work processes, quality, and plant safety; and Dave Schuman as senior technical advisor and chief liaison between customers and Multi's in-house engineering department. Schuman will interface with engineering through product field trials and early commercialization to help ensure newly developed technology meets customer and market needs.
Rickly previously was with Dometic Corp. where he served in both production and engineering. He has an undergraduate degree in industrial and systems engineering from Ohio State University. Schuman previously was sales and service manager for Multi's Rocky Mountain region. Prior to joining Multi, he served in various production-optimization roles for Encana Corp., Delta Petroleum Corp., and Superior Energy Services Inc. Multi's product lines include plunger lift systems for artificial lift, pump jack automation products, vapor recover units, and contract machining services.
North Star Shipping Ltd.,
Aberdeen, a division of the family-owned global shipping and energy services firm The Craig Group, was awarded a £63 million multi-service contract from BP PLC for tanker assist, platform supply, and emergency and response rescue vessels supporting BP's operations in the North Sea. The contract is for 5 years with a possible extension of 5 years for four vessels, the Grampian Talisker, Grampian Frontier, Grampian Conquest, and Grampian Dee. A fifth vessel may be added, officials said. The Craig Group fleet, operated by North Star, now stands at 35 vessels in service.
Det Norske Veritas (DNV),
Oslo, along with the Dutch firm WillTeco BV, is inviting participation in a joint industry project (JIP) to define and recommend best practices for the maintenance and inspection of jacking gears on self-elevating units and rigs to reduce the risk of gear failure and lower the life-cycle cost. Jacking gears often are neglected offshore due to "the high turnover of people with specific knowledge on board, the evolving nature of the systems, and the natural focus on merely the production process and systems on board," said Michiel van der Geest, DNV's Offshore Class product manager. The JIP is intended to collect and analyze information on incidents; mutually review current inspection and maintenance work supported by risk-based modeling; and define and select best practices.
WesternGeco,
Gatwick, part of Schlumberger Ltd., has begun its Ice Bear 2 multiclient 3D survey in the western Barents Sea using its new IsoMetrix marine isometric seismic technology to provide high-resolution broadband imaging in this geologically complex area. Ice Bear 2 lies to the north of the WesternGeco Bjørnøya Ice Bear and West Loppa 3D seismic survey areas where the Havis and Skrugard discoveries were made. Exploration and production activities in the region have increased as a result of these and other discoveries.
CenterPoint Energy Bakken Crude Services LLC (CEBCS),
Houston, a wholly-owned natural gas gathering, processing, and treating subsidiary of CenterPoint Energy Inc., entered into a long-term agreement with XTO Energy Inc., a subsidiary of ExxonMobil Corp., to gather XTO's crude oil production through a new gathering and transportation pipeline system in North Dakota's Bakken shale. The agreement with XTO is the first pursuant to the open season announced by CEBCS on Feb. 19.
