(BHI) Baker Hughes-Statoil in Norwegian Continental Shelf Deal

Oilfield services provider Baker Hughes Inc. (BHI) announced that it has won Norway-based Statoil ASA’s (STO) new drilling service contract for 25 fields on the Norwegian Continental Shelf (NCS). The two-year contract – valued at $504 million – is for integrated drilling services. The deal is with an option for Statoil to make two extensions of two years each, though this is not included in the estimated value of the contract.

Per the agreement, Baker Hughes will deliver directional drilling, measurement-while-drilling, logging-while-drilling, mud logging as well as onshore support and drilling engineering services. The work is expected to begin in the third quarter of 2012.

Through Baker Hughes’ focus on quality of tools and services, the deal will also improve drilling efficiency which in turn ensures cost efficiency.

Management at Statoil is optimistic on the successful execution of the deal, given Baker Hughes’ expertise and experience in the NCS.

Houston, Texas-based Baker Hughes – the world’s third-largest oilfield services provider after Schlumberger Ltd. (SLB) and Halliburton Co. (HAL) – offers a range of services to the global oil and gas industry. The company is a major supplier of wellbore-related products and technology services and systems. It caters to drilling, pressure pumping, formation evaluation, completion and production, and reservoir technology. It also offers consulting services to the worldwide oil and natural gas industry.

Stavanger, Norway-based Statoil is a major international integrated oil and gas company. Though Statoil has operations in all major hydrocarbon-producing regions of the world, it has an upstream focus on the NCS.

Baker Hughes holds a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months. On the other hand, Statoil retains a Zacks #2 Rank, translating into a short-term Buy rating.

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