Oil services firm Schlumberger buys Russian competitor

Source: Press photo

U.S. firm Schlumberger, the largest oil services company in the world, announced on Jan. 20 that it will purchase a 45.6 percent stake in Russia’s largest domestic oil services company, Eurasia Drilling for $1.7 billion. Schlumberger reserves the right to increase its share in the company to 100 percent three years after the deal closes.

Analysts believe that Eurasia Drilling’s Russian shareholders initiated the deal, which is expected to close in the first quarter of 2015, even though the company is worth two-thirds what it was six months ago. The main beneficiary will be Eurasia Drilling CEO Alexander Djaparidze, who owns 30.2 percent of the company. This is not the first time that Djaparidze has done business with Schlumberger.

According to Alexei Kokin, an analyst with Uralsib, who spoke to Russian daily Kommersant, the foreign investor “is counting on changing of the situation and the long-term prospects, when oil prices rise and sanctions are lifted.

Konstantin Cherepanov, a senior analyst with UBS investment company, told RBK daily that the deal also provides Schulmberger with a stable demand for drilling as Russia is the world’s largest oil and gas producer.

The deal is not affected by sanctions imposed on Russia by the U.S. and the EU because Eurasia Drilling specializes in traditional technology and rarely buys equipment in the United States and Europe. However, analysts say that sanctions may complicate the company’s plans to implement drilling projects in shale fields in Western Siberia.

This news was combined from reporting from Kommersant and RBK daily.

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