Dec. 19 (UPI) -- A $6 billion merger between drilling services company McDermott and engineering firm CB&I creates a one-stop shop for both on and offshore work, they announced.
McDermott takes a 53 percent edge over the merger with Chicago Bridge & Iron. In a joint statement, the companies said the all-stock tie up creates one vertically integrated company with a broad range of know-how.
"This transaction combines two highly complementary businesses to create a leading onshore-offshore engineering, procurement, construction and installation company driven by technology and innovation, with the scale and diversification to better capitalize on global growth opportunities," McDermott President and CEO David Dickson said in a statement.
McDermott in the third quarter reported net income of $94.7, an improvement over the same period of 78 percent. The company is coming off the near-completion of the largest submarine project in the work, the Ichthys project off the coast of Australia.
CB&I, however, has been working to gain traction. In the second quarter, the company announced plans to sell off its technology unit and its third quarter income of $10 million was 90 percent less than the same period last year.
Both, however, signed contracts for work in Saudi Arabia recently. The announcements followed the $4.5 billion in agreements signed between the Saudi Arabian Oil Co., known informally as Saudi Aramco, and a handful of service contractors for "megaprojects" envisioned in the energy-rich kingdom.
Companies catering to the exploration and production, or upstream, side of the industry are still adjusting to the relative low price for oil, which has forced major energy companies to cut costs and improve efficiencies to survive.
Rig company Transocean in August built up its position in the offshore industry by reaching an agreement to acquire its North Atlantic rival, Songa Offshore. In July, U.S. oilfield services company Schlumberger announced a deal that establishes it as the majority owner in Russia's largest drilling and services provider Eurasia Drilling Co. Ltd.