[WESTERN HEMISPHERE] Schlumberger to buy Saxon Energy Services for $582 million

Schlumberger, the world's biggest oilfield contractor, and First Reserve, an energy industry buyout fund, agreed to acquire Canada's Saxon Energy Services for about $582.1 million to expand in South America.

Saxon Energy Services shareholders will get seven Canadian dollars a share, Calgary-based Saxon said in a Canada Newswire statement today. That's a 1.9 percent premium to Saxon's closing price May 2. Saxon, had 84.59 million shares outstanding as of April 30, according to Bloomberg data.

Schlumberger, based in Houston and Paris, is seeking a bigger stake in the growing market for oilfield-services companies as oil prices surge to records.

"The C$7 a share price is a bit skinny," said Irwin Michael, who helps manage $1.25 billion at ABC Funds in Toronto including about 6.25 million shares in Saxon. "We think it's worth C$7.50 or more."

Saxon Energy Services gained 13 cents, or 1.9 percent, to C$7 as of 10:24 a.m. in trading on the Toronto Stock Exchange. Schlumberger rose $1.86, or 1.9 percent, to $101.49 in composite trading on the New York Stock Exchange. Saxon Energy Services is worth more because of record oil prices, according to Michael.

"We have a lot of faith in (Chief Executive Officer) Dale (Tremblay)," he said in an interview. "The earnings have yet to come through but the potential is there."

Saxon said on May 1 its first-quarter profit fell 36 percent to $5.1 million, or 6 cents a share, from $8 million, or 10 cents a share, a year earlier. Revenue climbed 31.5 percent to $72.2 million.

Crude oil futures traded in New York have risen 91 percent in the past year. They touched a record $119.93 a barrel on April 28.

Saxon Energy Services has 21 rigs in South America, 11 in Mexico and 19 in the U.S., according to Sanford C. Bernstein & Co. analyst Ben Dell in New York.

"We are seeing a trend of the services building out their rig fleet so they can offer truly integrated project management from drilling to completion," Dell said in an e-mailed statement.

Stephen Harris, a Schlumberger spokesman, didn't return a telephone call for comment. A spokesman for First Reserve couldn't be reached. Saxon was advised by Thomas Weisel Partners Canada Inc.

Source: Bloomberg

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