HOUSTON—Schlumberger Ltd. will spend about US$1.7 billion for a minority stake in a big Russian energy company at a time when that country’s relations with the West are under strain and as energy prices hit multi-year lows.
Schlumberger said last week that it would cut 9,000 jobs in response to falling oil prices, which have forced other energy companies to lower their forecasts for 2015 and pare back spending plans.
The world’s largest oilfield services company will pay about US$22 per share to acquire a 45.6 per cent stake in Eurasia Drilling Co. Ltd., which will go private and delist from the London Stock Exchange (LSE).
Eurasia is the largest provider of onshore drilling services in Russia.
It also provides offshore services in the Caspian Sea and works in Iraq.
The Russian economy is feeling the impact of both the plunging energy prices and European Union (EU) sanctions over the crisis in the Ukraine, where Russian-backed rebels are fighting for control of parts of that neighbouring country.
The deal gives Schlumberger a window to purchase the rest of the company at a later date.
The companies expect to close the deal on the initial stake in the first quarter.
Schlumberger has principal offices in Paris, Houston, London and The Hague, Netherlands, and employs about 120,000 people.