With a deal like Schlumberger's announced acquisition of liquids partner and drillbit maker Smith International for some $11 billion (adding in debt), speculation abounds as to "Who's next?" Tudor, Pickering, Holt & Co. analysts think a wave of oilfield service consolidation is premature thinking. "It doesn't really change the landscape that materially---the biggest player is getting bigger---and it doesn't force anyone to combine defensively." But Pritchard Capital Partners analyst Brian Uhlmer sees the landscape differently and painted a picture of the possibilities. "There is always potential to ride the acquisition speculation in several names. The ones at the top of the list in our opinion that are most likely are in the pressure pumping/well-servicing space. For management teams that are seeing pricing leverage in certain plays beyond what the stock market is pricing in, there may be opportunities for accretive transactions." The first on the list, he says, is Superior Well Services Inc. With its newer fleet of equipment and footprint in the Marcellus, it is a potential target for both Patterson-UTI Energy Inc. and Nabors Industries Inc. as well as certain Canadian listed players. The next potential is for Complete Production Services Inc. to merge with Basic Energy Services Inc., benefiting by expanding the Texas market, although Uhlmer sees this combo as a long shot. The offshore drillers have a need to consolidate, he says, and the likely suspects are Ensco International Inc. with Noble Corp. and Pride International Inc. with Seadrill. Pride already has the take-out premium in place and "would be bought out (in the) $35 neighborhood, while Ensco lost its premium with the move to the U.K. and would be around a $55 acquisition price and thus be a more attractive speculative buy." Both transactions would be primarily stock if they were to happen, he surmises. For manufacturers, T-3 Energy Services is an excellent candidate either for National Oilwell Varco to grow its BOP capacity or the LeTourneau/Stewart & Stevenson three-way merger talk could begin again later this year. Tesco Corp. is another name that circulates, "but there is not a considerably large market for acquirers who need to add top drives to their existing suite of products." Then there is Dril-Quip, always discussed either to be acquired by National Oilwell Varco, General Electric Co. or FMC Technologies, all of who could use the complimentary products and manufacturing capacity.
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