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FMC, Technip merger latest in a trend

Tie up between to oil and gas services companies follows precedent set by players from Shell to Baker Hughes.

By Daniel J. Graeber

HOUSTON, Dec. 6 (UPI) -- FMC Technologies and Technip, two companies working to assist with oil and gas exploitation, became the latest in the industry to agree to a merger.

The respective shareholders approved a merger between FMC, which specializes in subsea oil and gas operations, and Technip, a leader in submarine pipeline installation and broad-based oil and gas infrastructure development.

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No financial terms of the agreement were unveiled. Merger plans were first unveiled in May.

The merger announcement comes as crude oil prices start to hold steady above the $50 per barrel mark. A recent rally in crude oil was sparked by an agreement from the Organization of Petroleum Exporting Countries to hold production levels steady, though prices were holding steadily in the mid-$40s for much of the latter half of the year as global economies started to recovery slowly.

At the start of the year, when oil prices collapsed below $30 per barrel, analysis from consultant group Wood Mackenzie found restrictions in financing in the low-price environment would potentially encourage mergers and acquisitions.

"Few companies are safe; while the top tier of IOCs can largely ride out a further year of low prices, the next tier down may have fewer alternatives," the analysis read at the time. "Corporate actions will follow, including asset sales."

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British energy company BG Group became a unit within the corporate structure of Royal Dutch Shell in early February. The $7 billion tie-up was the largest of its kind since Exxon and Mobil joined forces in the 1990s.

Last month, oilfield services company Baker Hughes formed a business venture with Goldman Sachs and others that would focus on North American hydraulic fracturing. That come one month after GE Oil & Gas took a 62.5 percent stake in Baker Hughes for an entity with combined revenue of $32 billion.

Early this year, Wood Mackenzie said merger and acquisition activity would likely pick up once oil prices recover.

FMC and Technip expect the merger to close in early 2017.

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