General Electric to buy well-support unit of UK’s John Wood for $2.8 billion

General Electric Co (GE), the US-based multinational conglomerate, yesterday said that its oil and gas unit will acquire the well-support division of British energy services firm John Wood Group Plc, for $2.8 billion in cash.

Aberdeen-based Wood Group is an international energy services company with revenues of $5 billion, employing more than 29,000 people and operating in 50 countries.

The Group has three divisions - Engineering & Production Facilities, Well Support, and Gas Turbine Services - providing a range of engineering, production support, maintenance management and industrial gas turbine overhaul and repair services to the oil & gas, and power generation industries worldwide.

With 3,800 employees, more than 20 manufacturing and multiple service centres worldwide, Wood Group's Well Support division is comprised of three business platforms, Electric Submersible Pumps, Pressure Control and Logging Services.

In 2010, the Well Support division recorded revenues of $947 million and EBITDA of $166 million. The division, which generated 13 per cent average annual revenue growth over the past decade, is expected by GE to generate $1.1 billion in revenue and approximately $200 million of EBITDA in 2011.

The proposed deal propels GE as a key player in enhanced oil recovery by adding electrical submersible pumps (ESPs) to its growing portfolio of drilling and production solutions.

The proposed acquisition also provides GE with entry into the fast growing demand for enhanced oil recovery segment from mature oil fields using downhole pump 'artificial lift' in brownfield developments.