Schlumberger buys USD 1.7bn stake in EDC to strengthen Russia onshore drilling business


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Submitted by Paddy Harris on 20th January 2015

20th January 2015

Schlumberger Limited is to acquire a minority equity interest in Eurasia Drilling Company Limited (EDC), extends the successful long-term relationship enjoyed by the two companies within the strategic alliance signed in 2011, which has enabled deployment of a range of drilling and well engineering services to customers in the Russia land conventional drilling market.

EDC is the largest provider of onshore drilling services in Russia, as measured by the number of metres drilled, providing onshore integrated well construction services and workover services

In connection with the agreement, the principal shareholders of EDC will take the company private. Upon delisting of the company from the London Stock Exchange, Schlumberger, through one or more subsidiaries, will acquire a minority equity ownership interest of 45.65 per cnet in EDC, in exchange for consideration of USD 22.0 per share.

The total cost of acquiring this minority interest, including the cost of a call option and various non-competition agreements, is approximately USD 1.7bn. The call option will allow Schlumberger, at its election, to purchase the remaining shares in EDC during a two-year period commencing three years from the closing of the transaction. This transaction is expected to close during the first quarter of 2015, and is subject to customary closing conditions.

EDC is the largest provider of onshore drilling services in Russia, as measured by the number of metres drilled, providing onshore integrated well construction services and workover services. The company also provides offshore drilling services in the Caspian Sea and is the largest provider of such services in the sectors where it operates based on the number of jack-up drilling rigs. The company offers its onshore integrated well construction services and workover services to local and international oil and gas companies primarily in Russia and its offshore drilling services to Russian and international oil and gas companies in the Russian, Kazakh and Turkmen sectors of the Caspian Sea. In addition, the company provides onshore drilling services in Iraq.