The world's largest oilfield-services provider,
Schlumberger Limited
(
SLB
) acquired stakes of a Hong Kong-listed Chinese oilfield services
company, Anton Oilfield Services Group (Antonoil).
Schlumberger procured 20.1% interest, or 423,361,944 shares of
Antonoil, which declined to comment on the transaction price.
However, based on Antonoil's total market capitalization of $408
million as of July 6, 2012, Reuters projected the value of the
shares at approximately $80 million.
Established in 1999, Antonoil is among the few privately
controlled oilfield service companies in China that joined hands
with Schlumberger back in 2010 related to a cooperation agreement
over drilling fluids and well-cementing services. The deal
constituted an integral part of the Chinese oilfield services
industry.
We believe Schlumberger's combination of technological
leadership and management depth will prove beneficial for Antonoil
over the long term, boosting the Chinese company's reputation as
one of the country's foremost oilfield service providers. This will
eventually improve Antonoil's long-term revenue and profit.
The latest deal will not allow Schlumberger to intervene in
Antonoil's management, leaving the latter's collaboration with
other business associates unchanged. Again, this move will aid
Antonoil as well as Schlumberger to explore the wide-ranging
opportunities in the Chinese market.
We believe Schlumberger is favorably positioned to operate
within the current oilfield services scenario, given the
acceleration in international drilling activity, pricing
improvements and an expected recovery in its seismic
operations.
Schlumberger should also benefit from its oil-driven
international growth prospects and near-term North American
performance, given its leading position in exploration drilling.
The company's top line should continue to improve going forward due
to promising indications from Africa, the Middle East and the Gulf
of Mexico. The Middle East and Asia constituted 23% of
Schlumberger's revenue last year.
Schlumberger, which ranks ahead of
Halliburton Company
(
HAL
) as the biggest member of the oilfield services contingent, holds
a Zacks #3 Rank, which is equivalent to a Hold rating for a period
of one to three months. Longer term, we maintain a Neutral
recommendation on the stock.
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