Two big tie-ups between oilfield service operators announced last week, which together are worth close to $1.8 billion, appeared to demonstrate the continuing appeal of being able to offer onshore hydraulic fracturing (hydrofracing) services to producers.

Last Monday Nabors Industries Ltd. offered to buy Superior Well Services Inc., a hydrofracing pumping services specialist, in a transaction worth an estimated $900 million, including debt. Late Thursday Seadrill’s majority-owned subsidiary Seawell Ltd. announced a combination with onshore provider Allis-Chalmers Energy Inc. in a transaction valued at $890 million, including debt.

Superior, based in Indiana, PA, specializes in hydrofracing.

“For some time now, we have evaluated integrating more service offerings into our business, particularly internationally,” said Nabors CEO Gene Isenberg. “Although we expect this acquisition by itself to be significantly accretive to 2011 results, our major motivator was the opportunity to leverage this well respected franchise into a global force utilizing our extensive international footprint and resources.

“In addition to the upside associated with expanding internationally, we expect to derive significant synergies in North America by integrating pumping services with our drilling and workover offerings. The most readily identifiable economies will be derived from our own oil and gas entities, with further benefits dependent upon how quickly we can increase activity across more of our fleet.”

Superior’s “broad U.S. presence complements that of both our U.S. land drilling and well-servicing operations and augments our expansion into areas such as the Marcellus Shale region,” said Isenberg. Superior also has one of the newest fleets in the industry with more than 430,000 hp.

“This complementary combination of the largest land drilling contractor in the world with a leader in technical pumping will make both organizations stronger and better able to meet our customers’ needs not only in the U.S., but around the world,” said Superior CEO David Wallace.

Owners of about one-third of Superior’s outstanding shares of common stock already have agreed to tender their shares to Nabors. Once the tender offer is completed, which is expected by the end of September, Nabors said it would acquire any remaining shares of Superior through a second-step merger at the same price paid in the tender offer. The merger agreement requires Superior to pay Nabors a termination fee of about $22.5 million and reimbursable expenses of up to $5 million if the agreement is terminated for certain reasons.

In the second big combination among oilfield service providers, Seadrill and Allis-Chalmers agreed to merge. Seadrill is primarily a worldwide offshore operator, and it gains onshore expertise in its merger with Houston-based Allis-Chalmers. In the United States Allis-Chalmers operates primarily in Texas, Louisiana, New Mexico, Oklahoma, Arkansas and offshore in the Gulf of Mexico. Internationally it operates primarily in Argentina, Brazil and Mexico.

Among its services Allis-Chalmers provides directional drilling services, casing and tubing services, underbalanced drilling, production and workover services with coiled tubing units, rental of drill pipe and blow-out prevention equipment, and international drilling and workover services.

“This is a major step in our quest to create a global first-class drilling and well services company focused on assisting our customers in producing more hydrocarbons from their existing fields,” said Seawell Executive Chairman Jorgen Peter Rasmussen. “We complement each other with a much improved geographical footprint, similar focus on customers and a wider range of technology and services, which we are now able to offer to our combined customer base. We intend to build a unique and leading company in the oilfield service sector.”

The combined company would have about 6,500 employees and estimated annual revenues of $1.3 billion. The merger, said Rasmussen, would “allow the combined company to grow the business and profitability faster than each of the companies on their own.”

Only last month Allis-Chalmers paid $17.2 million in cash to acquire American Well Control Inc., which manufactures high pressure valves used in hydrofracing in unconventional shale gas plays.

At the time of the announced purchase of American Well Control, Allis-Chalmers CEO Micki Hidayatallah said the company “has the best frac valve product in the market…With an existing strong position for the frac valve product in the Haynesville Shale, American Well Control intends to increase its presence in the Marcellus, Eagle Ford and Bakken Shale markets by establishing service and repair facilities side by side with Allis-Chalmers’ existing locations. The acquisition of American Well Control increases Allis-Chalmers’ presence in the active, onshore, nonconventional gas markets.”

The latest merger follows a flurry of other combinations by oilfield services companies with U.S. ties. Many of the biggest deals give the combined companies additional expertise to operate in onshore unconventional gas plays.

Last year Baker Hughes Inc. struck a cash-and-stock deal valued at $5.5 billion to acquire shale fracturing expert BJ Services Co., which was the largest oilfield services acquisition in more than a decade (see NGI, May 3; Sept. 7, 2009). And in April Halliburton Co. agreed to buy pressure control services provider Boots & Coots in a deal worth an estimated $240.4 million (see NGI, April 19).

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