Oil field services giant Schlumberger has agreed to buy a nearly 46% stake in Russia’s Eurasia Drilling for $1.7 billion. Paul Whitfield, correspondent for The Deal, explains what the deal entails, including a $176 million call option to buy the rest of the company during a two-year period that begins three years after the deal closes. Whitfield explains that Eurasia Drilling is involved in onshore drilling, which at this point is not subject to U.S. sanctions against Russia. However, he cautions that an escalation of sanctions would be a risk to Schlumberger in this deal. Whitfield says another risk to both companies in this deal, amid falling oil prices, is falling revenues as oil companies cut back on their drilling. However, he believes Schlumberger took advantage of a good time to buy Eurasia, getting the company for a bargain.
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