Hanover Buys Schlumberger's Gas Compression Assets

Hanover Compressor Co., which rents, repairs and services natural gas compressors worldwide, broadened its customer base last Thursday, agreeing to acquire several compression and gas handling joint venture projects of Schlumberger for $761 million. Hanover will pay Schlumberger $270 million in cash, $150 million in a long-term loan and issue shares worth $283 million, effectively giving Schlumberger a 10% stake in the company.

In the deal, Hanover also agreed to pay Schlumberger another $58 million, depending on the circumstances of one of the joint ventures it is buying. The deal gives the Houston-based company 100% of Schlumberger's natural gas compression business, including Production Operators Corp. and ownership interests in some South American compression and gas handling ventures.

"The demand for gas compression, including outsourced gas compression, and related gas handling services continues to experience exceptional growth," said Hanover CEO Michael McGhan. He noted that the best opportunities currently are in the international markets, and said the deal would generate "strong revenue growth for Hanover over the next five years."

Schlumberger will hold its 10% stake for at least three years and will not raise its stake to more than 25% in the same time period, Hanover said. The 10% stake will equal between 6.82 million and 8.71 million shares, depending on the closing price of Hanover shares in the 30 days before the deal closes. As long as it holds at least a 5% stake, Schlumberger also will hold a place on Hanover's board of directors.

©Copyright 2001 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.