Front Page || Main Index || Corpus Christi News || Business || Texas || Sports || Entertainment || Selena
Wednesday, Sep. 30, 1998
Merger OK'd after drilling divestiture
Halliburton-Dresser must sell LWD services
By MICHAEL SNIFFEN
Associated PressWASHINGTON -- The Justice Department approved the merger of Halliburton Co. and Dresser Industries Inc. after Halliburton agreed to sell part of its worldwide oilfield service business to resolve concerns the deal would reduce competition.
The department announced Tuesday that Halliburton would sell its logging-while-drilling business and had earlier agreed to sell its 36 percent interest in M-I Drilling, a drilling fluids business.
Logging-while-drilling (LWD) services provide oil and gas companies with information about the formation through which those companies are drilling -- whether there is oil in the formation and how easily it can be extracted. They are particularly useful in offshore drilling.
Drilling fluids, a combination of chemical compounds and minerals, are critical for cooling and lubricating drill bits and controlling pressure in drill holes. They are the second largest cost in drilling for oil and natural gas, after the rental of drill rig.
Worldwide revenues for LWD services in 1997 exceeded $500 million.
Halliburton's total revenues for 1997 were over $8 billion. Dresser has $7.5 billion in total 1997 revenue. Both companies are headquartered in Dallas. (Halliburton has offices in the Coastal Bend.)
The government contended that without the divestiture the merger likely would have increased prices and decreased quality for LWD services and reduced the competition to develop improved LWD tools.
``Customers rely on competition among oilfield service companies to ensure high quality LWD services at the lowest prices, as well as to ensure that innovation for new and improved LWD tools continues,'' said Assistant Attorney General Joel Klein, head of the antitrust division.
``The divestiture will maintain that competition, increasing the ability of oil and natural gas companies to recover these depleting resources so that Americans have ready sources of these critical products,'' he added.
The agreement was contained in a settlement filed simultaneously in U.S. District Court to block the original deal. The lawsuit said the original merger would have combined two of four companies that provide LWD tools and services and innovation in such tools.
The settlement, if approved as expected by the court, would require Halliburton to sell all of its LWD business, including manufacturing, research, sales and service, to a buyer acceptable to the Justice Department. In return, Halliburton and Dresser would be allowed to combine the remainder of their businesses.
The department said that, in response to its concerns, Halliburton sold its interest in M-I Drilling to Smith International Inc. on Aug. 31.
Without that divestiture, Halliburton would have acquired one of its main competitors, Dresser's Baroid Division. M-I and Baroid are the two largest drilling fluid competitors in the $3 billion industry.
Caller-Times staff contributed to this report.Post your comments about local news eventsFront Page || Main Index || News || Business || Texas || South Texas Outdoors || Birdwatching || Sports || Entertainment || Selena || Education || South Texas Attractions || World Wide Web