General Electric Co.'s oil and gas business is booming, and the industrial conglomerate is eyeing more growth with its plans to purchase Lufkin Industries Inc.
GE on Monday said it will acquire the Lufkin, Texas-based manufacturer of artificial-lift technologies for $3.3 billion.
Used in 94 percent of the world's oil-producing wells, artificial-lift systems help lift hydrocarbons to the surface in reservoirs with low pressure and improve the efficiency of naturally flowing wells, according to GE.
The deal – expected to close in the second half of 2013 – "will broaden GE Oil & Gas's artificial-lift capabilities beyond electric submersible pumps to include rod-lift, gas-lift, plunger-lift, hydraulic-lift, progressive-cavity pumps and a sophisticated array of well-automation and production-optimization controls and software," GE said in a news release.
Lufkin has approximately 4,500 employees in more than 40 countries. The company has nine manufacturing facilities.
"Advanced technologies, combined with new drilling practices, are revolutionizing the oil and gas industry," said Daniel Heintzelman, president and CEO of GE Oil & Gas.
"The artificial-lift segment is at the heart of critical changes that are helping producers maximize well potential – which translates into increased output at lower operational cost. Lufkin's world-class people, equipment and services fit perfectly in our portfolio and will enable us to offer a wide range of artificial-lift solutions to our customers in this fast-growing artificial-lift sector."
Heintzelman noted that Lufkin already supplies GE with turbo gearings and specialty bearings for GE's compressors and gas turbines. GE's turbomachinery equipment is used in applications such as liquefying natural gas and moving hydrocarbons through pipelines.
In 2012, Lufkin posted record revenues of $1.3 billion, a 37 percent increase. The company's artificial-lift business grew by 47 percent.
"Oil & Gas is GE's fastest-growing business, and with the addition of Lufkin's artificial lift products and automation and optimization solutions, GE can provide global exploration and production customers with a complete portfolio of offerings that address a wider variety of well types at all stages of the production lifecycle," GE said in a news release.
GE cited data from Spears & Associates that the global artificial-lift market is expected to reach $13 billion this year, fueled by "unconventional shale plays and liquids-rich resource plays."
GE Oil & Gas has made $11 billion in acquisitions since 2007, according to the company.