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GE hopes new acquisition helps Brazil bid

disclaimer: image is for illustration purposes only
by Staff Writers
Rio De Janeiro (UPI) Mar 8, 2011
Energy giant GE has set sights on acquiring new business in Brazil's subsea drilling for oil and natural gas with its $1.3 billion acquisition of Wellstream, a producer of deep-water exploration and production equipment.

Brazil is in the early stages of launching a multibillion-dollar project to develop offshore hydrocarbon resources, most of which require drilling to great depths to reach potential wells under the seabed.

The government indicated it is looking for partners and investors but on its own terms, implying extensive technology transfer and sovereign control over the exploration and development of oil and gas resources.

GE said its acquisition of Wellstream Holdings PLC was a "significant milestone" that would help GE expand its portfolio of companies or units that are involved with various stages of manufacturing equipment for subsea operations or offering supportive services.

GE said its strategic acquisition of Wellstream Holdings PLC began after Wellstream announced the listing of its ordinary shares was canceled and Wellstream shares ceased to be admitted to trading on the London Stock Exchange.

By March 4, GE, through its wholly owned subsidiary, General Electric Austria GMBH, had received valid acceptances for 98.63 percent of Wellstream's shares. GE announced Feb. 16 that it had commenced the compulsory acquisition of Wellstream's shares from shareholders who have not yet accepted GE's offer, which it expects to complete by April 1.

The acquisition of Wellstream expands GE Oil & Gas' extensive subsea manufacturing and services portfolio and accelerates its presence in the fast growing deep-water production regions of Africa, Asia and Brazil.

Wellstream has more than 850 employees and operates two manufacturing facilities; one in Newcastle, England, and another in Niteroi, Brazil. The company specializes in the engineering and manufacture of high-quality flexible risers and flowline products for oil and gas transportation in the subsea production industry.

The acquisition enables GE to capitalize on growth in the floating production, storage and offloading offshore segment, which underpins deep-water oil and gas production.

Brazil has said it has extensive expertise in the field but can still use modern technologies from new partners. It isn't clear what role GE will play in Brazil's ambitious deep-water oil and gas exploration and development.

GE Oil and Gas Chief Executive Officer Claudi Santiago said Wellstream's people, technology and customer relationships, including those in Brazil, are an excellent addition to GE's oil and gas subsea portfolio, complementing its existing drilling and production product and service lines.

"Together, GE Oil and Gas and Wellstream now offer our customers an unrivaled, value-adding technology and services platform, underpinned by systems integration and reliable innovation," said Santiago.

The acquisition gives GE access to Wellstream's state-of-the-art manufacturing facility in Niteroi.

GE Oil and Gas employs more than 12,000 people worldwide and operates in more than 100 countries.

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