Schlumberger Ltd.’s (NYSE: SLB) decline in North America appears inconsequential in the face of a chance to grab yet another piece of oilfield service technology.

The services giant, which has offices in Houston, Paris, London and The Hague, said April 27 it will buy coiled tubing drilling and coiled tubing units from Xtreme Drilling and Coil Services Corp.

Calgary’s Xtreme said the deal was worth the equivalent of US$162.5 million (C$205 million). Xtreme owns a fleet of 11 coiled tubing units deployed in Saudi Arabia and the U.S., where its core markets are in the Eagle Ford and Permian Basin.

“With the addition of Xtreme’s coiled tubing assets, we continue our pursuit of advancing overall drilling and well intervention efficiency through technology integration to help our customers improve production at a lower cost per barrel,” said Sherif Foda, president of Schlumberger’s production group. “The combination of our existing technology portfolio with Xtreme’s proprietary technology will result in a step change in operational performance.”

Schlumberger is coming off a first quarter that saw continued weakness in North American and international markets.

The company’s North America first-quarter revenue of $1.5 billion decreased 25% compared to the fourth quarter of 2015. The U.S. land rig count declined 31% as customer E&P budgets fell further, the company said April 21. Land revenue fell 29% from lower activity, continuing pricing pressure, and the early onset of the Canadian spring break-up.

International revenue also dropped by 13% to $5 billion as customers slashed budgets, activity was disrupted and price and currency were under pressure.

Schlumberger reported that compared to the fourth quarter, first-quarter revenue declined by:

  • $2 billion in the Middle East and Asia, primarily because of a winter slowdown in China and lower activity in Australia and the Asia-Pacific region;
  • $1.7 billion in Europe, Russia and Africa, mainly because of weather and weakness in the ruble; and
  • $1.3 billion in Latin America on significantly lower activity in Mexico and Central America and customer budget cuts elsewhere.

Schlumberger said April 21 it plans to reduce 2016 global spending by nearly 25%, including up to 50% in North America.

Despite its falling fortunes, Schlumberger acquired two U.K.-based companies in March: engineering and service firm Meta Downhole Ltd. and Asset Development & Improvement Ltd., a consultancy to the oil and gas industry.

The deals come after the company closed its $14.8 billion merger with Cameron International on April 1. Cameron’s first-quarter revenue was $1.6 billion.

Xtreme’s deal is subject to an inventory closing adjustment and an escrow fund of US$7.9 million (C$10 million) to cover any potential claims arising within six months of the date of closing. The transaction also requires approval by 66.7% of Xtreme’s shareholders.

Tom Wood, Xtreme CEO, said its industry leading, advanced AC-electric coiled tubing technology complements Schlumberger’s focus on operational efficiency and market expansion through automation and integration.

Schlumberger’s technology integration approach has moved from engineering simple combinations of discrete services to optimized systems customized through extensive design and modeling capabilities for specific customer needs.

In the fourth quarter, Xtreme’s XSR coiled tubing daily revenue decreased by 2% to $56,314. The coil services segment saw operating profit decrease to $31.2 million in 2015 compared to $34.8 million in 2014.

Xtreme said it will retain its XDR drilling segment, including a fleet of 21 XDR rigs operating in North Dakota, Colorado and Oklahoma.

Darren Barbee can be reached at dbarbee@hartenergy.com.