Schlumberger to pay $1.7bn for minority stake in Russian oil driller

20th January 2015, Comments 0 comments

Schlumberger announced Tuesday it would pay $1.7 billion to acquire a minority stake in Russia's biggest onshore oil driller, with an option to take total control in a few years.

The transaction to buy a 45.6 percent stake in Eurasia Drilling Company (EDC) is based on a price of $22 per share, the world's largest provider of oilfield services said in a statement.

EDC stock rose as much as 72 percent to $20.90 per share in London trading Tuesday after closing the day before at $12.15 per share.

The deal also calls for the principal shareholders of EDC to take the company private. It is expected to close in the first quarter.

Schlumberger, based in Paris and Houston, will have the option to buy all of EDC's shares three years from the closing of the transaction, the statement said.

Analysts said the deal shows Schlumberger has pushed aside concerns about plunging oil prices and the West's economic sanctions against Russia over the Ukraine conflict.

"Schlumberger believes that the sanctions will be lifted sooner or later, and the company will be well-equipped to reap benefits from growing Russian oil field services market by then," Alexander Kornilov, an oil and gas analyst at Alfa Bank told Bloomberg news agency.

Though US and EU sanctions have targeted Russia's oil industry, they don't affect the vast majority of EDC's business, Bloomberg reported.

The two companies have had a strategic alliance since 2011, "which had enabled deployment of a range of drilling and well engineering services to customers in the Russia land conventional drilling market," Schlumberger said.

EDC is the largest provider of onshore drilling services in Russia based on the number of metres drilled, according to Schlumberger.

It is also involved in offshore drilling in the Caspian Sea and land drilling in Iraq.

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© 2015 AFP

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