By Lisa Beilfuss 

Schlumberger Ltd. on Wednesday said it agreed to buy Cameron International Corp. for about $12.74 billion in cash and stock, the latest move by the world's biggest oil-field services company as the industry struggles with lower prices and rising supply.

The price tag values Houston-based Cameron--which makes drilling equipment and supplies maintenance equipment to pipelines, refineries and wells--at $66.36 a share, a 56.3% premium to Tuesday's closing price. Amid the downturn in the energy sector, Cameron shares had fallen 42% over the past 12 months, but they surged 45% to $61.40 in premarket trading Wednesday.

Cameron shareholders will receive $14.44 in cash and 0.716 Schlumberger shares for each share of Cameron. After completion, Cameron holders will own about 10% of the combined company.

With oil prices now at lower levels, Schlumberger Chief Executive Paal Kibsgaard said, "this agreement with Cameron opens new and broader opportunities for Schlumberger."

In a note this week, analysts at Raymond James said the latest outlook for drilling activity in the U.S. translates into a much longer downturn than anticipated and a lack of recovery next year. An estimate for West Texas Intermediate crude at $55 through 2016 implies a 7% reduction in exploration and production, according to the analysts, resulting in "meaningfully lower earnings estimates" across the sector.

Weaker conditions have prompted some consolidation in the industry, with the Schlumberger-Cameron tie up the latest example. This summer, Energy Transfer Equity LP offered to buy Williams Cos., and a partnership controlled by refiner Marathon Petroleum Corp. announced plans to acquire MarkWest Energy Partners LP for $15.8 billion.

Those deals followed Royal Dutch Shell PLC's nearly $70 billion offer for Britain's BG Group PLC and Halliburton's $35 billion deal to acquire smaller oil-field services rival Baker Hughes Inc.

Last month, Halliburton and Baker Hughes agreed to extend until at least Nov. 25 the Justice Department's antitrust review period of their merger. The companies are the number two and three oil-field servicers, respectively.

Paris-based Schlumberger said it expects to complete the Cameron acquisition in the first quarter of 2016, subject to approval by Cameron shareholders as well as regulatory clearance. On a pro forma basis, the combined company had 2014 revenue of $59 billion.

Schlumberger said it anticipates pretax synergies of about $300 million in the first year and $600 million in the second year after the deal closes. The transaction will add to per-share profit by the end of the first year, Schlumberger said.

Cameron, perhaps best known as the maker of a piece of safety equipment that helped trigger the 2010 Deepwater Horizon disaster, settled with BP PLC for $250 million in 2011. The company later benefited from new regulations on oil wells as companies upgraded their equipment in the wake of the disaster.

Schlumberger shares, down 35% over the last 12 months, slipped 3.2% in premarket trading.

Write to Lisa Beilfuss at lisa.beilfuss@wsj.com

 

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(END) Dow Jones Newswires

August 26, 2015 08:53 ET (12:53 GMT)

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