The galloping prices of oil may offer some explanation towards the galloping prices offered by competing bidders towards a maker of drilling equipment, with rival bids increasing by the day. The latest $3.4 billion offer by Candover Partners Ltd for for UK oilfield-services provider Expro International Group Plc represents an eight per cent premium over the last $3.36 billion offered by Halliburton Co., which in turn was made to surpass Candover's $3.2 billion bid.

Both buyout firm Candover and oil services company Halliburton are quite insistent on acquiring Expro. The bidding war has started and more battles could follow, given the relatively small spread between the bids and the competitors' desire to extend their international reach and product portfolios. The Candover offer, made in association with Goldman Sachs, represents a cash bid of £15.50 per share,, trumping Halliburton's offer of £15.25 a share.

In light of this latest development, Expro's shares jumped 5.5 per cent to £16.26 in London trading on Friday. At the same time, Halliburton's shares fell 51 cents to close at $47.77 on the New York Stock Exchange. This 1.1 per cent fall is quite in contrast to the 27 per cent gain it has so far experienced, quite in contrast to the broader market.

Halliburton, the world's No. 2 oil field services company behind Schlumberger, first expressed interest in Expro in April, a day after Candover made its $3.2 billion bid. Unlike Candover, Halliburton has yet to make a binding offer, but instead submitted a less formal indication of what it would pay pending review of Expro's financials, according to spokesmen for the two companies.

In a statement, Halliburton said it is continuing discussions with the board of Expro and "strongly urges Expro shareholders to take no action at this time." The Candover bid is scheduled for a vote by Expro shareholders on 2nd June. Halliburton would have until 20th June to revise its offer. Expro's independent directors, who unanimously agreed to back the new offer, are released from their pledge should there be a rival bid at least 12.5 percent higher, according to the statement by Candover and Goldman.

Oil-services acquisitions are accelerating as record crude prices drive a $98.7 billion binge in exploration spending this year by Exxon Mobil and its five largest Western rivals. Services stocks are outpacing gains by oil producers as the cost of finding and developing new petroleum deposits climbs and contractors secure long-term projects ensuring revenue growth. The 15-member Philadelphia Oil Service Sector Index, a benchmark for US oilfield contractors, has climbed 11 per cent this year, five times the gain by major US oil producers.

Even as demand for oil, and consequently, its price, increases, it is becoming increasingly difficult to find. Exploration costs have more than quadrupled since 2000 as producers target more challenging reservoirs. At the same time, oil-rich nations are reducing access to reserves and hiring contractors to help develop fields that previously would have been tapped by international producers.

In this light, the importance of Expro's expertise is extremely valuable. It has equipment that can test oil wells in water deeper than 1,000 metres (3,281 feet), a service that's in increasing demand as producers develop more deep-water fields.

In similar deals, buyout firms including First Reserve Corp. are acquiring oil-services companies, betting on increasing competition for commodities. First Reserve and Schlumberger agreed to buy Canada's Saxon Energy Services Inc. on 5th May for Canadian $592.1 million ($601.7 million). First Reserve agreed in December to buy Scottish oil driller Abbot Group Plc for £906 million. Many more such acquisitions are expected to follow.

Halliburton Energy Services is a United States-based multinational corporation with operations in more than 120 countries. It employs over 50,000 people and reported revenue of $15.3 billion in 2007, the second highest in the industry after Schlumberger's $23.8 billion.

Candover, established in 1980 and based in the UK, specialises in arranging and leading large buyouts and buy-ins. Candover is structured as an investment trust. Investments in buyouts are provided in two forms, from Candover Investments Plc and more significantly from third party funds raised and managed by Candover Partners Limited, a wholly owned subsidiary of Candover Investments Plc, which is listed on the London Stock Exchange. Candover's current fund closed at €3.5 billion in November 2005.

Candover has offices in London, Düsseldorf, Paris, Madrid and Milan. Since 1980, Candover has raised nine funds with total capital commitments of more than €8.7 billion. Candover have completed 133 deals worth over €40 billion.