Halliburton Said to Plan Sale of Baker's Offshore Fluids Unit

  • Oilfield services company may also divest completion systems
  • Asset sales are taking place to appease antitrust regulators

Almost 16 months after announcing its takeover of oilfield services rival Baker Hughes Inc., Halliburton Co. is adding yet more assets to the list of businesses it plans to sell to appease antitrust regulators who’ve been stalling the deal.

Halliburton plans to divest Baker’s offshore drilling-and-completions fluids division and the bulk of Baker’s completion systems, according to people familiar with the matter. The units join two other batches of overlapping business lines that Halliburton has said it will sell to assuage the U.S. Department of Justice’s concerns that the deal will hurt competition.

It’s not clear at this stage how much the new assets Halliburton is looking to sell may fetch, the people said, asking not to be identified as the process isn’t public.

Dave Lesar, chief executive officer at Halliburton, told analysts and investors on a conference call last month that the companies presented a new plan to the Justice Department earlier in January to sell more assets. He declined on the call to name which ones.

Melanie Kania, a spokeswoman at Baker Hughes, and Emily Mir, a spokeswoman at Halliburton, declined to comment.

Halliburton agreed to buy Baker Hughes in November 2014 in a cash-and-stock deal that at the time was valued at about $35 billion. The transaction was scheduled to close last year, but has been delayed to no later than April 30 as the companies seek to resolve antitrust concerns in the U.S. and abroad.

Baker Hughes traded 1.4 percent lower at $42.24 at 12:55 p.m. in New York, valuing the company at about $18.4 billion. Halliburton fell 5 percent to $29.29.

Core Completions

Halliburton had already agreed to sell Baker’s so-called core completions business, which provides equipment for controlling the flow of oil as it is readied for production. It has decided to sell most of the rest of Baker’s related completions operations at the behest of regulators, one of the people said.

When the deal was announced, Halliburton said it planned to divest assets that generate as much as $7.5 billion in annual revenue to win antitrust approval. The units publicly announced for sale amount to about $5 billion in 2013 revenue, the benchmark year the companies are using for the threshold. The total package could climb to as much as $10 billion in revenues, James West, an analyst at Evercore ISI, wrote last month in a note to investors.

“There is no agreement to date with the DOJ or [European Commission] as to the adequacy of the proposed divestitures,” Lesar said on a January 25 conference call. “We remain committed to seeing this deal through, despite the extended time required to obtain regulatory approvals.”

Halliburton has shelved plans to divest one of the smaller assets earlier put up for sale. The company’s expandable liner hangers unit, which generated about $300 million in 2013 revenue according to Spears, did not meet all of the requirements to be classified as an asset held for sale, the company said Feb. 5 in a federal filing.

The fluids business, often called “drilling mud” in the oil patch, shoots various mixtures of liquids into the ground to help carve and finish the well for production.

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