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Schlumberger Limited (SLB - Analyst Report) recently joined forces with the Hong Kong-listed Chinese oilfield services company, Anton Oilfield Services Group, or Antonoil for the development of China’s onshore oil and gas projects.

Per the agreement, both the companies will offer integrated project management (IPM) services for onshore oil and gas exploration and development in Chinese ventures. Following Schlumberger’s acquisition of 20.1% interest, or 423,361,944 shares of Antonoil in July, this joint venture (JV) marks a significant step in improving efficiency and ramping up exploration and development efforts in China.

Of late, China has been focused mainly on developing emerging energy resources. The IPM services offered by the JV will keep the cost perspective in mind while delivering output. This is in contrast to conservative stand-alone services. IPM synchronizes the many services, starting from project design, resource procurement to project administration.

Schlumberger spent years on the development of IPM and achieved success worldwide. Hence, technological leadership and management depth of the world’s largest oilfield-services provider − Schlumberger − along with Antonoil’s local know-how, expert industry understanding, access to local resources along with an impressive group of experienced engineers will likely aid China in augmenting production.

The latest Schlumberger and Antonoil pact will eventually prove beneficial for the end customers. They will thereby experience a unique combination of the respective strengths of both parties in the IPM. This offers a distinctive platform providing the latest solutions of an international standard combined with local expertise.

Established in 1999, Antonoil is among the few privately controlled oilfield service companies in China to collaborate with Schlumberger. Their alliance, related to a cooperation agreement over drilling fluids and well-cementing services, dates back to 2010. The deal constituted an integral part of the Chinese oilfield services industry.

We believe Schlumberger is favorably positioned to operate within the current oilfield services scenario, given the acceleration in international drilling activity and pricing improvements.

Schlumberger, which ranks ahead of Halliburton Company (HAL - Analyst Report) as the biggest member of the oilfield services contingent, holds a Zacks #2 Rank, which is equivalent to a Buy rating for a period of one to three months. Longer term, we maintain a Neutral recommendation on the stock.

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