GE has entered an agreement with international energy services company Wood Group to acquire its Well Support Division for $2.8 billion.
Wood Group's Well Support division comprises three business platforms: ESP (electric submersible pumps), Pressure Control (surface wellhead and flow control systems) and Logging Services (wireline logging).
“With world-class products and people, Wood Group’s Well Support division is an excellent strategic fit with our business model of high technology engineering, manufacturing and services,” said Claudi Santiago, president and CEO, GE Oil & Gas.
“The acquisition is another major step forward for GE Oil & Gas in executing our strategy to equip and serve our global oil and gas customers with the mission-critical equipment and solutions required to address their toughest technical challenges and growth objectives.”
The proposed transaction immediately positions GE as a key player in enhanced oil recovery by adding electrical submersible pumps (ESPs) to GE's growing portfolio of drilling and production solutions.
Wood Group’s Pressure Control platform will complement GE’s wellhead and flow control offerings, as well as increase capabilities in the rapidly growing unconventional oil and gas segment.
Shale gas exploration is also driving demand for better well monitoring and control to optimize the use of materials and target the "sweet spots" in the rock. Better well control helps producers lower costs and become more efficient.
The Wood Group board intends to unanimously recommend the deal to its shareholders. “The disposal will accelerate the delivery of value to shareholders and reflects Wood Group’s success in building the Well Support Division’s differentiation and market position as a leading provider of products and services for drilling and production operations,” the company said in a statement.
“Our shareholders will benefit from a significant return of cash and we plan to continue to pursue our successful growth strategy of targeted geographic expansion and broadening of the service offering in our core engineering and operations & maintenance activities in oil & gas and power markets,” said Allister Langlands, Wood Group chief executive.