Joint venture wins federal approval

The planned joint venture between oil field services companies Schlumberger and Weatherford International should soon come to fruition following approval last week by the U.S. Justice Department.

The go-ahead from antitrust officials paves the way for the deal to close by the end of the year. The joint venture, known as OneStim, will specialize in providing technologies and services, such as hydraulic fracturing, that stimulate shale oil and gas wells.

The joint venture is expected to help Schlumberger, the world’s biggest energy services company, compete in the North American fracking market, now dominated by its longtime rival, Halliburton of Houston. Hydraulic fracturing is the process of blasting water, chemicals and sand into the earth to break open shale rock and release oil and gas.

The plan is to combine Schlumberger’s large hydraulic fracturing fleet of high-horsepower pumps and Weatherford technologies used to stimulate multiple separate horizontal zones within shale wells. Schlumberger, which is paying Weatherford $535 million, would own 70 percent of the joint venture.

The deal is expected to relieve the debt burden of financially struggling Weatherford. That company, which is a distant fourth in the energy services industry behind Schlumberger, Halliburton and Baker Hughes of Houston and London, recently reported that it lost $256 million in the third quarter. Schlumberger earned $545 million in the third quarter, its biggest quarterly profit in two years.

The joint venture is part of the changes in the energy services industry as it recovers from the recent oil bust. The sector, which lost billions of dollars and slashed tens of thousands of jobs, has seen some major consolidation over the past year or so.