Two of Houston’s biggest oil giants are about to tie the knot. Schlumberger has announced a deal to buy Cameron International, allowing both companies to offer more services, and more products, in more locations all over the world.
Schlumberger is the world’s biggest supplier of technology, integrated project management, and information solutions to customers working in the oil and gas industry. Cameron engineers, designs, and manufactures value-driven solutions for oil and gas companies. Both companies serve clients across the globe.
During the first year of the merger, Schlumberger says they expect “syngeries” of $300 million, doubling that by the second year. Initially, the savings will be related to “reducing operating costs, streamlining supply chains, and improving manufacturing processes.”
No doubt, many Cameron and Schlumberger employees are feeling nervous. However, on a conference call, Paal Kibsgaard, CEO of Schlumberger, said there’s virtually no overlap between the two company’s products. He expects to close the deal in the first quarter of 2016, and he said he doesn’t expect to divest any part of Cameron’s business. In addition, both companies still have a plethora of job openings posted on their websites.
All of this is great news for investors. In a market that’s been dropping to nerve-wracking lows, this merger is a good sign that Schlumberger experts are confident of an impending rise in oil prices.
“This is a sign that Schlumberger sees a market bottom,” Matt Marietta, a Houston-based analyst for Stephens Inc. who rates the stock a buy and owns none, told Bloomberg News. “Schlumberger didn’t have to agree to it this week. They could have waited for things to worsen. It can probably bring some confidence back to energy investors that we are approaching a bottom.”
“With oil prices now at lower levels, oilfield services companies that deliver innovative technology and greater integration while improving efficiency, which our customers increasingly demand, will outperform the market,” Paal Kibsgaard, said in a statement. “This agreement with Cameron opens new and broader opportunities for Schlumberger.”