Oilfield services leader Schlumberger’s (SLB) planned purchase
of rival Smith International (SII), in a stock swap worth $11
billion, would allow the combined company to better compete in a
changing industry. The need to support natural gas wells being
drilled in shale rock is the biggest difference in the business
these days, compared to a few short years ago. Exxon Mobil’s
(XOM) pending acquisition of XTO Energy highlights the increased
customer interest in unconventional resources, including shale
formations. Bringing Smith’s drill bit technology in house would
allow Schlumberger to better serve its customers’ growing shale-
drilling requirements.  The combined company would benefit from
highly complementary product lines. Schlumberger competes in
about half of the 15 or so assorted oilfield services markets
that generate $1 billion or more in annual revenue, with its
strength mainly in the largest lines. In addition to drill bits,
Smith International brings to the table expertise in drilling
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