Seadrill’s majority-owned subsidiary Seawell Ltd. and Allis-Chalmers Energy Inc. have become the latest oilfield service providers to merge, announcing late Thursday that they would combine in a transaction valued at $890 million, including debt.

While Seadrill is primarily a worldwide offshore operator, Houston-based Allis-Chalmers mostly provides services and equipment to exploration and production companies operating onshore. 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 hydraulic fracturing (fracing) 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 Daily GPI, April 29; Sept. 1, 2009). In April Halliburton Co. agreed to buy pressure control services provider Boots & Coots in a deal worth an estimated $240.4 million (see Daily GPI, April 13). Earlier this month Nabors Industries Ltd. offered to buy Superior Well Services Inc., a frac pumping specialist, in a transaction worth an estimated $900 million, including debt (see Daily GPI, Aug. 10).

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