The sale of Eurasia Drilling: the deal against the "force"

As Forbes found out, the largest transaction in the domestic drilling business interferes with the interests of Igor Sechin.
30.07.2015
Forbes
Origin source
In the transaction for the sale of 45,65% Eurasia Drilling Company (EDC) oilfield services company Schlumberger has powerful opponents, told Forbes three people familiar with the negotiations. According to one of them, it's "siloviki". Two others speak of "structures act in the interests of" Rosneft "." With these may be, including, connected delaying the approval of the transaction by a government commission, said one of the interlocutors.

A source in the "Rosneft" has denied involvement in the company to the delay which has arisen in the process of negotiating the deal. "We do not have any interest," - says Forbes said. According to him, "Rosneft" is very important to develop your own direction - "RN-Drilling" and the company is investing in this great power. CEO and owner of 30.2% stake in Eurasia Drilling Alexander Japaridze said only that the transaction is classified as strategic for the country, it is considering the government and the other declined to comment. Schlumberger and "Rosneft" representatives also declined to comment.

"Rosneft" has been negotiating the purchase of EDC, RASSCAzali Forbes two people close to "Rosneft". But the negotiations came to nothing.

At a press conference, February 4, 2015 President of "Rosneft" Igor Sechin said that "Rosneft" will develop its own drilling business. "We will develop this business to not be affected by the collusion on the market, - he said. - I speak without criticism, but we break this agreement and will negotiate separately with each "(his words conveyed TASS). At the same time it was reported that the "RN-Drilling" is going to announce in the near future to purchase a large service company "in order to strengthen its position in the market of services in Russia." Shortly thereafter, a subsidiary of "Rosneft" - "RN-Drilling" - bought the Orenburg Drilling Company.

On the sale of 45,65% EDC oilfield services company Schlumberger for $ 1.7 billion, the parties announced on January 20. The transaction is scheduled to close in the first quarter of 2015, and three years later Schlumberger was going to increase its stake in EDC to 100%. Consideration of the transaction on a government commission had been scheduled for the first half of 2015, but then postponed to the autumn. "Documents in the Government Commission made to monitor the implementation of foreign investments. At a recent meeting of the committee, this matter has not been. He was not on the agenda. We hope that at the next meeting, this issue will be addressed and finally resolved, "- said Deputy Head of the Federal Antimonopoly Service Andrey Tsyganov. But at the moment the agenda for the fall has not yet been formed.

"This kind of activity is strategic, and, if a foreign company acquires" control "over a Russian company, the transaction is subject to approval. EDC has a major market share. There are fears that it received, the company (Schlumberger -. Forbes) will be able to dictate the price "- says Roma. Nevertheless, he said, the complaints from the oil companies about the problems with the conclusion of FAS drilling contracts did not receive.

Another official pointed out that "it is not clear how the work will be divided between the two companies in the case of strengthening of sanctions." However, in February, when the FAS has put forward a number of conditions totransaction (in particular, the mandatory sale of shares in EDC Russian investor in the case of new sanctions), Japaridze claimed that all the conditions are met the FAS.

Group Eurasia Drilling Company Limited companies - the largest player in the Russian market of oilfield and drilling services. Second after Japaridze largest owner of the company - Alexander Putilov, he 22,4% Eurasia Drilling, about 30% of the shares are in free float. In 2014, as calculated by Deloitte & Tuche CIS, oilfield services market in Russia reached $ 25.9 billion, of which $ 15.4 billion accounted for drilling services. Share Eurasia Drilling Drilling on the market amounted to 28% and could rise to 29% in 2015. Among EDC customers - "Lukoil", "Rosneft", "Gazprom Neft", "Rusvietpetro". The company conducts operations in Western and Eastern Siberia, the Volga-Urals and Timan-Pechora regions. In addition, EDC operates in the Caspian region and in northern Iraq. Schlumberger is registered in the Netherlands Antilles. This is one of the largest oilfield service companies in the world with headquarters in Houston and Paris.

Schlumberger specializes in well logging(GIS) in the Russian market reached $ 2.4 billion, and the share of Schlumberger it is 12.7%.

The likelihood that the transaction will close in the near future remains relatively low, says the analyst "VTB Capital" Ekaterina Rodina. In the long term, the main risk to the value of the share is in constant fluctuations in world oil prices. The risk that Schlumberger will be able to dictate prices in the market after the completion of the transaction, there is a recognized home. "But at the EDC's market share was high, however their weight situation of the company is not abused," - she said.