Less than a week after Schlumberger (NYSE: SLB) said it would look to gain market share as its top rivals combine, the company announced Jan. 20 it would acquire a minority interest in Eurasia Drilling Co. (EDC) for $1.7 billion.

Schlumberger will acquire a 45.65% interest for $22 per share with a call option allowing the company, at its election, to purchase the remaining shares in Eurasia Drilling (LONDON: EDCL.L) during a two-year period commencing three years from the closing of the transaction. In a related transaction, Eurasia will be taken private and delisted.

“Despite political and economic uncertainties, SLB is clearly committed to Russia,” said Ken Sill, analyst, Global Hunter Securities.

Moscow-based Eurasia operates about 261 land rigs, and 438 workover rigs in Russia and provides a broad geographic footprint that will improve Schlumberger’s market access for its other services, “assuming it ultimately exercises its call option,” he said.

However, John Freeman, analyst, Raymond James, said the increased exposure to Russia is not favorable given the relatively low valuation.

“We view this deal as a net neutral as it stands today, with the potential for long-term value creation after weakness in Russia subsides,” he said.

Schlumberger is preparing itself for new combination with Halliburton (NYSE: HAL) and Baker Hughes Inc. (NYSE: BHI), which agreed to merge in November. Halliburton is buying Baker Hughes for $34.6 billion, subject to regulatory approvals.

In a Jan. 16 conference call, Paal Kibsgaard, Schlumberger CEO, said the pending merger validates the philosophy that scale is essential to drive performance in the oilfield services business.

However, taking on such a large transaction to build a larger scale company comes with challenges.

“In general, everything takes much longer than you initially think and in addition to this all of the extra work that is involved with making such a transaction easily distracts you from running the base business,” Kibsgaard said. “We look at this transaction as an opportunity … for us, and we do intend to capitalize on it.”

Kibsgaard also noted that in some countries the company’s market share has been limited, possibly to ensure work is made available to multiple companies.

"The current environment has changed the strategic directions that we were looking to pursue,” he said. “It is more about when these opportunities arise. We have a clear view of where the company is heading and what we want to do from an M&A standpoint. We have been executing a number of these things in previous years and as we go forward now we will look at whether the other opportunities that we have on our list become accelerated opportunities in which case we will pursue them."

Schlumberger and Eurasia currently operate under a strategic alliance that was formed in 2011. However, Eurasia has been in a dispute with OAO Rosneft, the leading E&P company in Russia, that may have prompted the company to seek a strong outside partner, Sill said.

The deal should not violate recent sanctions taken against Russian energy companies after the country was hit with disciplinary actions after its acts in the Ukraine.

Because Eurasia’s business is all conventional land rigs, not shale or deepwater, said Kurt Hallead, managing director, RBC Capital Markets.

Eurasia Drilling was founded in 2002. It 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 jackup drilling.

Eurasia also offers 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.

Schlumberger expects to finance the transaction through a $991 million convertible bond. The transaction is expected to close during the first quarter of 2015, and is subject to customary closing conditions, Schlumberger said.

Associate Editor Velda Addison, Hart Energy, contributed to this report.