Schlumberger’s Bid for Eurasia Drilling Reportedly More Political Than It Seems

The last hours showed how market consolidation has to face both financial and political hurdles, as Moscow reportedly said it could set additional conditions before giving its green light to Schlumberger's bid for a stake in Russia's Eurasia Drilling, while another offer did not go through because of divergences over the terms of Nostrum’s Proposed Offer for the entire capital of Tethys Petroleum. 

Recent reports indicated that a low oil price environment could remain for other two years, suggesting that M&A operations could be the order of the day. On the other hand, oil and gas assets remain of geopolitical importance, and countries are likely to interfere with companies' decisions. 

According to Reuters and news agency RIA, for instance, Schlumberger's bid for a stake in Russia's Eurasia Drilling could face the opposition of several bodies involved in the decisions. A government commission should soon make its decision on the deal.

The two companies are continuing negotiations, as Nostrum Oil & Gas is doing with Tethys. 

‘Nostrum has reiterated to the Board of Tethys that Nostrum currently remains willing to maintain the price of the Proposed Offer at C$0.147 per Tethys share. Nostrum believes that if the Board of Tethys is able to reach agreement shortly as to the terms of a recommended offer, the parties will be able to work to a timetable that will provide for completion of an offer before the end of December 2015’ reads the note released on Tuesday.

The deadline for a deal is on September 25. According to Nostrum, the delays are taking a toll on Tethys. 

‘Nostrum believes that the underlying financial position of Tethys has continued to deteriorate and that there has continued to be an erosion of Tethys’ value’ the Anglo-Dutch company wrote on its website.