Energy equipment maker National Oilwell Varco Inc. NOV has decided to buy the completion tools operations of Trican Well Service.
For the acquisition, National Oilwell Varco will pay almost C$53.5 million that will include both cash and stock. The transaction is anticipated to be completed on or around Jun 30, 2016 but is awaiting approval from regulators.
It is to be noted that the to-be-acquired completion tools business is engaged in designing a variety of innovative and patented downhole tools that are used for multi-stage fracturing and multi-zone completions. The equipment are sold in North American markets and also outside the continent. Most importantly, with this purchase, the company will significantly broaden the scope of its completion and production business and could offer better services to customers.
Oilfield service provider Trican Well Service added that the divestment proceeds will likely be utilized to strengthen its financials and improve its hydraulic fracturing operations in Canada.
Houston, TX based National Oilwell is a world leader in the design, manufacture, and sale of comprehensive systems, components, products, and equipment used in oil and gas drilling and production worldwide.
Investors should note that the extended weakness in oil price – although the commodity is walking on the bullish path but is nowhere near its price before mid-2014 – has dealt a heavy blow to oilfield services companies such as National Oilwell, as they grapple with fewer orders from explorers that are looking to cut capital expenditure.
As a result, the company currently carries a Zacks Rank #4 (Sell), which implies that the stock will underperform the broader U.S. equity market over the next one to three months.
Some better-ranked players in the energy sector include PetroChina Co. Ltd. PTR, TC PipeLines, LP TCP and World Point Terminals LP WPT. Each of the stocks sports a Zacks Rank #1 (Strong Buy).
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