Rosneft acquires oilfield services from Weatherford International

Rosneft President Igor Sechin and Vice President of Weatherford International plc. for Russia, Lance Marklinger have signed an agreement confirming the Russian state-owned company’s acquisition of Weatherford’s land drilling and workover assets in Russia and Venezuela.

The agreement envisages the acquisition of 8 companies (part of the Weatherford group) involved in drilling operations in Russia and Venezuela. The document also envisages the development of long-term co-operation in oilfield services between the two companies. The closing of the transaction is subject to, among other things, to corporate and state regulatory approvals and is expected to close in the third quarter of 2014.

Strengthening Rosneft’s drilling and workover services

The realisation of the deal will allow Rosneft to strengthen its positions on the market of drilling and workover services and will expand the array of service contractors which will enable to boost efficiency of drilling and hydrocarbons production, enhance financial results.

Commenting on the signing Igor Sechin said: “The deal fully complies with the adopted Rosneft strategy of the development of in-house service business. The acquisition of Weatherford assets will allow to secure under the terms of maximum price transparency the most important regions of operation of the company with service and workover machinery. Moreover the agreement forms part of the company initiative for the development of competencies in the service sphere in co-operation with Weatherford. We are sure that our mutually beneficial co-operation will develop actively both in Russia and abroad”.

Divestment of non-core businesses

Bernard J. Duroc-Danner, Chairman, President and Chief Executive Officer of Weatherford stated: “After the recent divestment of our pipeline business, this sale is the second step in our efforts to divest our non-core businesses. There will be additional steps over the coming quarters. De-levering our balance sheet is a top priority. Although our Russian business will be half its present size, the operations will be much leaner, intensely focused on our core product lines, and therefore more profitable. We will dedicate ourselves to the long-term development of Russia’s reservoir base. Following this sale, our remaining 114 international land drilling rigs, the majority of which are in the Middle East, are being prepared as planned for issuance in the public market in 2015 as an independent international drilling contractor.”

Russia to increase drilling

Russia is currently the world's top oil producer but needs to increase its drilling to maintain its output of approximately 10.5 million bpd over the next decade. Commenting on the acquisition, private oilfield services firm Integra says that Weatherford accounted for about 3% of the Russian oilfield services market by revenue in 2012 and the largest players were Eurasia Drilling Company, Surgutneftegaz and Gazprom.

Edited from various sources by Cecilia Rehn

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