Baker Hughes to buy BJ Services

The $5.5 billion acquisition of BJ Services Co. by Baker Hughes Inc. announced Monday likely will have a positive impact on the Permian Basin, one industry figure said.
   While the two Houston-based companies may have redundancy in some upper-level positions, Kirk Edwards, former president of the Permian Basin Petroleum Association and president of MacLondon Royalty Co., said most Permian Basin jobs looked like they still will be needed.
   “All these companies have grown through acquisitions over the last two decades,” he said. “This one is fairly unique in that they don’t overlap as much in certain aspects.”
   BJ’s pressure pumping unit should supplement what Baker Hughes currently offers, Edwards said.
   “Their overlap in the Permian Basin should be minimal,” he said.
   According to a news release, pressure pumping accounted for less than 1 percent of Baker Hughes’ 2008 revenues but would generate 20 percent of income for the combined company.
   The merger puts Baker Hughes in better position to compete against Halliburton and Schlumberger in oilfield services in the area, Edwards said.
   “I think it’s a very important merger because of the breadth the combined entity will have,” he said. “With the slowdown we are experiencing in the energy sector the previous year, it will be good to have a very healthy service company continue to be located in West Texas.”
   An employee at BJ’s Odessa office said the company had 105 employees based there, not including its coil tech operations, but referred questions to Jeff Smith in BJ’s Houston office. Efforts to reach Smith were unsuccessful.
   Baker Hughes spokesman Gary Flaharty said it was premature to discuss the impact the merger would have on any of the company’s specific service areas. The merger still requires approval by both companies’ stockholders.
   “That’s probably more specific than I’m prepared to comment on now,” he said.
   Flaharty said he expects the merger to be finalized by the end of the year.
   The merger will bring Baker Hughes cost savings of approximately $75 million in 2010 and $150 million in 2011, the news release said. Baker Hughes’ board of directors will add two representatives from BJ’s board.
   Edwards said he wouldn’t be surprised to see more acquisitions in the oil and gas business.
   “You always see the mergers and acquisitions in this type of climate,” he said.