By Selina Williams
LONDON--Russia's largest onshore oil drilling firm Eurasia
Drilling Co. Ltd. said Monday it would extend a final deadline on a
proposal to sell a stake to oil-field services giant Schlumberger
Ltd. for about $1.7 billion.
Russian officials haven't approved the deal over concerns that
EDC's activities could be affected if western sanctions against
Russia over the crisis in Ukraine are extended further. Russia's
federal antimonopoly service and the commission on foreign
investment are reviewing the deal.
In January, Schlumberger said it had agreed to buy a 45.65%
stake in EDC, with an option to buy the rest of the Russian company
at a later date. The transaction was originally expected to close
by the end of March but now has until the end of April, EDC
said.
The deal will be terminated if conditions aren't met by then.
Schlumberger declined to comment.
The deal would represent an unusually large investment by a
U.S.-listed company in Russia's oil industry at a time of
heightened tensions between Moscow and the West.
While much of the Russian oil industry isn't subject to overall
sanctions, Western governments have targeted parts of the industry,
and if tensions with Moscow don't cool, restrictions could
expand.
EDC operates the largest fleet of onshore drill rigs in Russia
and is vital to operations at the country's conventional oil
fields. Russia's economy is highly dependent on hydrocarbons.
Oil-and-gas revenues account for around half its federal budget
revenues.
The head of Russia's antimonopoly service Igor Artemyev said
last week one of the conditions being discussed for approval of the
deal includes the sale of Schlumberger's stake to a Russian
investor if further western sanctions prevented the company from
operating in Russia, RIA Novosti reported.
Schlumberger's move to acquire a stake in EDC extends a
strategic alliance between the two companies that dates back to
2011.
The deal had enabled the two firms to work together to deploy a
range of drilling and well-engineering services to customers in the
Russian conventional drilling market, Schlumberger said in
January.
Russia has long been a lucrative market for Schlumberger. While
sanctions have sharply reduced western investment in Russia in the
past year, many major multinationals say they plan to remain in the
country in the hope of a recovery once geopolitical tensions
ease.
EDC, which acquired Lukoil's drilling subsidiary in 2004, is
listed on the London Stock Exchange through global depository
receipts. Upon completion of the deal, the company will be delisted
and Schlumberger will acquire a 45.65% stake for $22 a share. That
represents an 81% premium to EDC's closing price before the
proposed deal was announced.
Write to Selina Williams at Selina.williams@wsj.com
Write to Selina Williams at selina.williams@wsj.com
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