GE's Lufkin Buy Boosts Lift Portfolio - Analyst Blog

In a concerted effort to augment presence in the oil and gas industry, GE Oil & Gas, an operating unit of General Electric Company ( GE ), recently completed the acquisition of artificial lift technology provider Lufkin Industries Inc. (LUFK) for about $3.3 billion. In addition to strengthening the artificial lift capabilities of General Electric, the strategic acquisition also fortifies its turbomachinery product portfolio by leveraging industrial gears and engineered bearings designed by Lufkin.

With 9 manufacturing facilities and a global network of over 110 service centers, Lufkin manufactures a broad portfolio of artificial lift equipments that are vital for increasing the output of oil-producing wells. Industry report suggests that artificial lifts are utilized in 94% of around 1 million oil-producing wells across the globe to lift resources to the surface in reservoirs with low pressure and improve the efficiency of naturally-flowing wells. Market research-based consulting firm Spears & Associates further expects the global artificial lift sector to reach $13 billion in 2013, making the acquisition appear to be a masterstroke by General Electric.

On its own, General Electric already has an active presence in this sector with products like electric submersible pumps (ESP). The Lufkin acquisition has further expanded its capabilities by adding rod lift, gas lift, plunger lift, hydraulic lift, progressive cavity pumps, and a wide array of well controls and software to its kitty. In addition, General Electric is also likely to benefit from Lufkin's production automation approach for optimal use of resources.

Serving over 100 million customers worldwide, General Electric is one of the largest and the most diversified technology and financial services corporations in the world, with products and services ranging from aircraft engines, power generation, water processing, and security technology to medical imaging, business and consumer financing, media content and industrial products. Its segments include Power & Water, Oil & Gas, Energy Management, Aviation, Healthcare, Transportation, Home & Business Solutions, and GE Capital.

General Electric currently has a Zacks Rank #3 (Hold). Other companies in the industry worth mentioning include ITT Corporation ( ITT ), Compass Diversified Holdings ( CODI ) and Honeywell International Inc. ( HON ), each carrying a Zacks Rank #2 (Buy).

COMPASS DIVERSF (CODI): Free Stock Analysis Report

GENL ELECTRIC (GE): Free Stock Analysis Report

HONEYWELL INTL (HON): Free Stock Analysis Report

ITT CORP (ITT): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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