In a move to boost its presence in the energy business, General Electric Co. will pay $3.3 billion to acquire oilfield services provider Lufkin Industries Inc.
GE, the world’s biggest maker of jet engines and electric turbines, has expanded in the energy industry with a series of acquisitions of companies that make equipment used in oil and gas production.
The company has spent about $11 billion in acquisitions since 2007 to boost its presence in the oil and gas business, which is the conglomerate’s fastest-growing. That sector contributes about 10 percent of GE’s total revenue.
Lufkin will broaden GE’s artificial lift capabilities beyond electric submersible pumps.
Artificial lift refers to the use of external means to help lift hydrocarbons to the surface in reservoirs with low pressure, as well as to improve the efficiency of naturally flowing wells.
“The artificial lift segment is at the heart of critical changes that are helping producers maximize well potential, which translates into increased output at lower operational cost,” Daniel C. Heintzelman, chief executive of GE Oil & Gas.
The global artificial lift sector should approach $13 billion in 2013, according to Spears & Associates, GE said.
Lufkin’s fourth-quarter profit beat analysts’ estimates on demand for its pumping equipment from companies operating in energy-rich shale fields such as Bakken and Eagle Ford, despite a slowdown in overall drilling activity.
However, the company estimated that a slow recovery in the stalled U.S. onshore drilling will dent profits this quarter.
The acquisition, which is for $2.98 billion actually comes to $3.3 billion including debt, should close in the second half of 2013.