Schlumberger allowed to buy EDC to meet a number of conditions – CIA

March 27, 2015

  The Russian government is ready to allow the US to acquire Schlumberger Eurasia Drilling (EDC) to meet a number of conditions. If you tighten sanctions Schlumberger will receive a ban on work in the country, it must sell its stake in EDC Russian investors. In addition, the business must lead the Russian executives. One candidate sources “b” is called the head of Alexander Shokhin.

 Yesterday a meeting of the government commission on foreign investment, which considered the request Schlumberger to acquire 45.65% stake in EDC with the possibility of increasing the share of up to 100%. On the eve of the sources of “b” is called the outcome of the review unpredictable: a number of market participants and the ministries opposed the deal. As a result, the commission gave the opportunity to buy Schlumberger EDC, but with some restrictions. “The Commission proceeded on the assumption that, in principle, possible, the transaction will have a positive solution, but formulate the boundary conditions, since it is a very sensitive area for the Russian economy,” – said the executive secretary of the commission, FAS head Igor Artemyev. He said that in the negotiation of the parties have ten days.

 It FAS initially have any questions to the deal, which the parties announced in January. It was assumed that the first phase of EDC redeem their shares from minority shareholders at the expense of $ 991 million loan from Schlumberger and spending delisted from the LSE. Free float is 30.67%, 14.98% stake in another EDC Schlumberger would like to purchase from the principal owners (Alexander and Alexander Putilov Japaridze) and top management, consolidating 45.65% and has an option to acquire the remaining securities within five years. But after the intervention of FAS hand froze the deal. Office requested information on it, but the responsibility for coordination shifted to a government commission.

  According to sources, “b”, supported by the Ministry of Energy and the Ministry of Economy transaction, acted against the Ministry of Natural Resources and “Rosneft”. One of the interlocutors “b” says that the state company feared transition under the control of foreigners’ strategic drilling industry. ”

 “Of course, we are concerned first and foremost a very simple situation where, say, a Government of a particular foreign country impose sanctions regime in respect of such activities and companies. As in this case have to do foreign investors who operate in the territory of the Russian Federation? ” – Explained yesterday, Igor Artemyev.

 According to him, only put forward ten conditions, not all of which are made public official. The main thing – the obligation to sell a stake to a Russian investor if Schlumberger business in the country will be restricted.

 Source: “b” close to the deal, saying that conditions “generally satisfied” Schlumberger. Investors also were encouraged: GDR EDC in London rose by 8.7%, to $ 18.65 per share (after the announcement of the transaction price soars to $ 19.7, after the occurrence of complications – stabilized around $ 17). According to Arthur Rokhlin of “Infraleksa” government “has the right to impose its own conditions to the transaction,” although “each case is different.” Exploration – is a strategic industry, said the lawyer, and it is clear that the authorities want to have “at least some control over a major player.” The Head of the EDC, he adds, “should be fairly well known, as it will bear a special responsibility”.

 Kirill Melnikov