SCHLUMBERGER

Second Time Lucky For EDC Acquisition SCHLUMBERGER

PRODUCTION: Timothy Reeder

// In what is a major landmark for the oil and gas industry, Schlumberger, the world’s largest oilfield services company, has announced that it will acquire a majority share in Eurasia Drilling Company. It is an agreement that extends an already successful long-term relationship in the conventional land drilling market, established by the two companies in 2011.

Eurasia Drilling Company (EDC) is a leading onshore and offshore drilling and well services contractor, owning and operating one of the largest fleets of land drilling and workover units in the world, and is also the premier supplier of drilling services in the expanding Caspian Sea jack-up market. This transaction pairs it with the world’s leading provider of technology for reservoir characterisation, drilling, production and processing to the oil and gas industry.

With a presence in more than 85 countries and employing approximately 100,000 people who represent over 140 nationalities, Schlumberger supplies the industry’s most comprehensive range of products and services, from exploration through production, reporting revenues of $27.81 billion in 2016. It comes as

28 / www.emea-energy.net Schlumberger’s second attempt to buy Russia’s biggest drilling company, less than two years after a similar plan was scuppered amid opposition from the nation’s regulators, and provides the first U.S. stake in Russia’s oil and gas sector since sanctions were imposed on Moscow after its 2014 annexation of Crimea.

Schlumberger, based in Houston and Paris, had sought to buy 45.65% of EDC for $1.7 billion in 2015, with an option to acquire the rest at a later stage, a deal which fell through after Russian authorities delayed approval for almost eight months.

“I warmly welcome Schlumberger as our majority shareholder,” commented EDC Chief Executive Alexander Djaparidze. “It builds on our strategic alliance with Schlumberger since 2011 and our mutually beneficial business relationship since 2007.” The deal, announced before the release of Schlumberger’s second-quarter results, came as lawmakers in Washington debated fresh sanctions on Russia’s energy industry. Conversely, EDC’s core business is drilling wells for conventional fields in Russia, operations which do not fall under western sanctions targeting Arctic, deepwater and shale-oil projects.

“Despite what’s happening in Washington, corporate America still sees the opportunity in Russia and very much wants to be engaged in Russia,” said Chris Weafer, partner at Macro Advisory in Moscow. “With a very powerful company like Schlumberger taking such a strong position in the Russian oil sector, Russia effectively now has another lobbyist in the U.S. against sanctions.”

Kremlin spokesman Dmitry Peskov, said of the deal that, “Russia was, is and will be interested in cooperation with foreign investors in all possible areas, except for the most sensitive ones.

“And even in these areas there are possibilities to cooperate.” For Schlumberger, the investment will mean access to the Russian market, a key area where producers have sustained their capital spending despite low oil prices.

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