Month: April 2013

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Sizing Up GE + Lufkin Industries – Part 2

M&A

Part 1 of this article discussed background issues at play for the companies in GE Oil & Gas‘ purchase of Lufkin Industries, including the uncharacteristic decline in Lufkin’s customer satisfaction ratings in 2011 and early 2012. It also took a look at the strategic rationale behind the deal.

This second part focuses on what the GE-Lufkin combination prospectively means for customers, with particular attention paid to the perceived cultural fit between the two companies. Continue reading “Sizing Up GE + Lufkin Industries – Part 2”

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It’s A Mad, Mad, Mad, Mad Oilfield

Mad Mad Oilfield

North American shale continues to rewrite the books, and its potential seems destined to spread globally. Simultaneously, new horizons are being forged offshore — from the ultra-deepwater of the world’s great oceans, to the lower-tertiary depths of the Gulf of Mexico, to the vast unknown of the Arctic. And operators are always looking to squeeze more from existing assets everywhere. All the while, the industry’s ingenuity and resolve is being both tested and showcased.

Given the clamorous state of the industry, maybe it’s not surprising EnergyPoint’s customer satisfaction ratings of oilfield service suppliers are, as they say, “all over the board”. After all, no one contends the demands of this brave new world are easily met. They are not. Everything from the far-flung and nomadic nature of today’s operations to the “big-crew change” lurking in the background suggests plenty of challenges. Continue reading “It’s A Mad, Mad, Mad, Mad Oilfield”

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Sizing Up GE + Lufkin Industries – Part 1

M&A

Despite its relatively small size and narrow focus, Lufkin Industries‘ products are iconic within the petroleum industry. Glance at virtually any photo of a West Texas oilfield, and you’ll likely see at least one gracefully oscillating Lufkin pump jack. The oilfield’s a pretty practical place, but there’s always been something sublime about that particular image.

With its announcement earlier this week that it will purchase Lufkin Industries for $3.3 billion — a rich 38% premium over the previous trading-day’s closing price — GE Oil & Gas obviously sees something inspiring in the shot as well. The industrial giant clearly believes there are strong secular growth prospects in artificial lift applications. Continue reading “Sizing Up GE + Lufkin Industries – Part 1”

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The “Bad Apple” Scenario (Revisited)

Bad Oilfield Apple

The Wall Street Journal recently published an article pointing out that fewer environmental incidents are being recorded now that larger, more experienced operators have begun to supplant smaller ones in Pennsylvania’s Marcellus Shale. While this is certainly welcome news, the industry has reason to remain vigilant in greenfield regions that lack installed infrastructure and/or a pool of trained and experienced personnel.

With this in mind, we thought we’d share an updated version of the “Bad Apple” post we published back in the Fall of 2012. We hope it will serve as a reminder of the potential pitfalls that exist as the industry moves into new regions to develop an ever-expanding set of resources. Continue reading “The “Bad Apple” Scenario (Revisited)”