Ri­vals form JV to chal­lenge Hal­libur­ton

New Straits Times - - Business -

HOUS­TON: Sch­lum­berger Ltd and Weather­ford In­ter­na­tional Plc are form­ing a joint ven­ture aimed at tak­ing on the king of frack­ing, Hal­libur­ton Co.

Sch­lum­berger, the world’s biggest oil-field ser­vice provider, would own 70 per cent and be the op­er­a­tor of the hy­draulic frac­tur­ing part­ner­ship, to be known as OneS­tim, said the two com­pa­nies in a joint state­ment on Fri­day.

Weather­ford, the No. 4 oil-field ser­vicer, will own the bal­ance and re­ceive a one-time cash pay­ment of US$535 mil­lion (RM2.4 bil­lion).

Frack­ing, in which com­pa­nies blast wa­ter, sand and chem­i­cals un­der­ground to re­lease trapped hy­dro­car­bons, has been one of the most bat­tered busi­nesses in the oil patch dur­ing the two-year mar­ket down­turn.

Weather­ford said last month it had shut down its frack­ing unit and would sell the busi­ness after prof­its evap­o­rated.

The new joint ven­ture, ex­pected to close in the sec­ond half of the year, would bring Sch­lum­berger closer to its chief ri­val Hal­libur­ton, which had a to­tal fleet of frack­ing pumps that add up to three mil­lion horse­power, ac­cord­ing to Spears & As­so­ciates, a Tulsa-based oil-field con­sul­tant.

Sch­lum­berger cur­rently has about two mil­lion horse­power, while Weather­ford has an es­ti­mated 800,000 to one mil­lion.

“They would be on a par with Hal­libur­ton in terms of horse­power,” said Richard Spears, vice-pres­i­dent at Spears & As­so­ciates, on Fri­day.

“I wouldn’t put them on par with Hal­libur­ton in terms of rev­enue, be­cause Weather­ford isn’t bring­ing any busi­ness to them. It’s just trucks.”

Last year, some of the biggest oil-field ser­vice providers told in­vestors that pric­ing for their frack­ing work had dropped to un­sus­tain­able lev­els, forc­ing Baker Hughes and Weather­ford to pull back their busi­nesses.

After a pro­posed merger with Hal­libur­ton failed to gain reg­u­la­tory ap­proval, Baker Hughes agreed to com­bine its oil and gas busi­ness with Gen­eral Elec­tric, form­ing an­other ser­vice com­pany gi­ant to chal­lenge Hal­libur­ton and Sch­lum­berger.

The deal re­mains un­der reg­u­la­tory re­view. Bloomberg

BLOOMBERG PIC

Sch­lum­berger Ltd, the world’s biggest oil-field ser­vice provider, will own 70 per cent of the joint ven­ture with Weather­ford In­ter­na­tional Plc.

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