Schlumberger (NYSE: SLB) bought the remaining 50.1% stake in SES Holdings Ltd. (Saxon Energy Services) in March for an estimated $670 million, a move in line with company strategy of consolidating joint investments, analysts said.

Schlumberger announced March 13 it was purchasing the Calgary-based provider of international land drilling services from First Reserve and certain members of Saxon management.

Saxon operates a fleet of 87 rigs (70 drilling and 17 workover) in 10 countries, and provides support services to an additional 35 rigs worldwide. The transaction is subject to customary closing conditions, including the receipt of regulatory approvals.

Schlumberger initially invested in Saxon’s land drilling rigs in 2008 to further its drilling operations in major projects globally, said Paal Kibsgaard, Schlumberger CEO.

“The conversion of our minority share in Saxon into full ownership is in line with our integrated well construction and production management business growth plans,” he said.

Saxon employs 3,700 people in 14 countries with particular focus on Australia, Canada, Colombia, Ecuador, Mexico, Oman, Pakistan, Peru, the United States and Venezuela.

“Schlumberger sees a growing market for integrated services outside of North America and rigs provide a platform for further integration of its offerings,” said James Crandell, managing director at Cowen and Co.

Tudor, Pickering, Holt & Co. said the transaction does make enough noise to move the needle for Schlumberger since the purchase will cost a “few hundred million dollars cash outlay as SLB already owns half and there’s some debt on the Saxon balance sheet.”

The transaction is no surprise, as both Schlumberger and Halliburton (NYSE: HAL) view owning rigs as part of their integrated strategy.

Saxon Major Rig Deployments

Region/Country

Rigs

Mexico

16

Columbia

12

North America

15-16

Australia

15-16

Source: TPH

James West, analyst for Barclays Capital Ltd., said many of the assets are on long-term contracts and Saxon has developed methods to enhance the drilling process through the use of technology and rapid deployment techniques.

“We believe this acquisition is consistent with Schlumberger's strategy of integration,” West said.

Schlumberger’s technology integration approach has evolved with the engineering of the drilling system from a simple combination of discrete services to optimal systems customized through extensive design and modeling capabilities.

Saxon provides drilling engineering and services expertise, which are key enablers for further advances in drilling efficiency, leading to superior performance in challenging land-based operating environments, Schlumberger said.

Six years ago, Schlumberger acquired 49.9% of Saxon for $582 million. In 2011, Saxon merged its rig business with Schlumberger Rig Management Group. Under the terms of the transaction, 14 Schlumberger land drilling rigs and crews in Oman, Pakistan and Venezuela will become part of Saxon's expanded international operations. Saxon will also provide technical drilling contracting support to existing Schlumberger joint ventures and operations in Saudi Arabia, Algeria, Iraq and Venezuela.

The company has also started to move into new areas. In October, Schlumberger purchased an artificial lift business, Shores Lift Solutions, from White Deer, a private equity fund. Shores Lift, based in Edmond, Okla., focuses on pump jacks and sucker rods in North America. Industry reports estimated the purchase price was below $500 million, according to Baird Energy. A Schlumberger spokeswoman said the company does not comment on M&A activity.