Halliburton Buys Gearhart for $277 Million
Halliburton Co. agreed today to buy Gearhart Industries Inc. for about $277 million in cash and stock in a deal that will give Halliburton a bigger foothold in “wire-line” oil field services.
Wall Street and industry analysts applauded the definitive agreement, with Halliburton officials and analysts saying it gives the Dallas company a bigger, potentially lucrative role in the growing wire-line sector of the generally depressed oil field-services business.
Wire-line technology uses electronic devices to search below ground for oil. Schlumberger Ltd. is the leader in wire-line technology.
“I think it will be a good fit. It adds a good quality name to Halliburton,” said Tom Escott, oil-service industry analyst with Dallas-based brokerage Rauscher Pierce Refnes Inc.
“It’s very positive for Halliburton,” said analyst Jim Crandell of Salomon Bros. in New York.
“It gives Halliburton a large market presence in the wire line business, makes Halliburton the leader in the seismic business; creates substantial cross savings in such areas as research and development and gives Halliburton a presence in the measurement-while-drilling business,” Crandall said.
He added that the acquisition was being made on attractive terms and that it was being made in Halliburton’s core business, positioning the company well in an industry which was in the early stages of a long-term recovery.
Halliburton signed a letter of intent in February, to acquire Gearhart, a Ft. Worth-based company that evaluates oil wells and provides geophysical services to oil companies around the world.
The definitive deal announced today calls for a stock swap of 1.47 million Halliburton shares and some $230 million in cash payments to Gearhart lenders.
“By combining wire-line and geophysical services of Gearhart, we should be able to increase efficiency and expand our market exposure outside the United States,” Halliburton vice president Guy Marcus said.
“Wire-line is a technology-driven area that is likely to grow well through at least the next decade,” he said.
Halliburton had faced competition from Houston-based Energy Service Co., an oil rig contractor controlled by investor Richard Rainwater.
Marcus declined to speculate on possible future acquisitions. Halliburton has been said by analysts as a company on the prowl for bargains in the depressed oil patch.
In February, Halliburton acquired 60% of Texas Instrument Inc.’s Geophysical Services Inc. for an initial downpayment of $50 million with an additional payment, possibly totaling another $50 million, to be made based on Geophysical’s performance.
“Halliburton has been a long-time player and remains committed to the oil-field services business,” Marcus said.
