UPDATE 3-Schlumberger, Cameron in subsea JV to tap deepsea boom

Thu Nov 15, 2012 4:24pm EST

* Combines subsea businesses, pose risk to some rivals
    * Schlumberger shares rise 2.2 pct, Cameron up 3.6 pct


    Nov 15 (Reuters) - Schlumberger Ltd, the world's
largest oilfield services company, and oilfield equipment maker
Cameron International Corp said they would combine their
subsea businesses as they look to tap into rising demand for
drilling in deeper waters.
    Oil companies, bolstered by high oil prices, have raised
exploration spending, venturing into areas like the Arctic or
heading to very deep sea levels in regions like West Africa,
requiring new techniques to access oil.
    About 200 such fields are expected to come online in the
next four years and by 2020 more than 11,000 subsea wells will
be operating worldwide, Schlumberger Chief Executive Paal
Kibsgaard said at a recent energy conference.
    Cameron, which will manage the joint venture and hold a 60
percent stake, will receive $600 million from Schlumberger. The
structure is similar to Schlumberger's MI-Swaco drilling fluid
JV with Smith International, which held 60 percent of MI-Swaco
before it was bought by Schlumberger for $11 billion in 2010.
    Shares of Cameron rose 3.6 percent to $52.63, and
Schlumberger rose 2 percent to $69.16 - both outperforming a 1.3
percent rise in the Philadelphia oil service index.
    "The JV's mission is to unlock greater reservoir potential
from customers' subsea developments," Cameron CEO Jack Moore
said on a conference call on Thursday.
    Subsea production equipment is based on the sea floor and is
built to withstand strong ocean currents and harsh temperatures.
    Schlumberger will contribute its Framo, Surveillance, Flow
Assurance and Power and Controls businesses to the venture, and
own the remaining 40 percent stake.
    "The partnership brings together Schlumberger's expertise in
subsea processing and platform integration with Cameron's vast
capabilities in subsea tree manufacturing," Barclays analyst
James West said, referring to the equipment that manages the
flow in and out of underwater wells.
    Doug Sheridan of EnergyPoint Research in Houston said the
financial implications seemed less significant to the two
companies than to competitors such as Dril-Quip and FMC
Technologies Inc, which both make subsea products.
    "We also believe the move, to some extent, represents
evidence of Schlumberger and Cameron taking steps to provide
greater focus in the respective core businesses," Sheridan said.
    Credit Suisse advised Cameron while Goldman, Sachs & Co
advised Schlumberger on the venture.
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