It was a takeover waiting to happen, but who would have guessed that Halliburton Company would end up buying Landmark Graphics Corporation in a stock transition valued at $557 million. The announcement made on 1 July also outlined plans for Halliburton, Landmark and EDS, the massive information services company founded by US presidential pretender Ross Perrot, to join forces in an alliance to develop 'a worldwide distributed data management capability that integrates all information associated with the oilfield lifecycle.' The financial terms of this arrangement were not disclosed.
The obvious irony of the deal is that Halliburton is actually buying back some of the business it sold two years ago. At that time the struggling giant in the geophysical industry, Halliburton Geophysical Services, was sold for a song to Western Atlas. In a recent rationalization, Western agreed the sale of its software products division to Landmark including some products originating from the HGS stable. Which is why some observers are intrigued by the logic of the Halliburton move, particularly as the company seemed to have backed off involvement in the exploration side of the business. One PDM contact suggested that in order to stay in the competition with its chief rival Schlumberger, Halliburton needed the Landmark capability in the geo-sciences. An upbeat statement from Dick Cheney, Halliburton's chairman, president and chief executive officer, said 'The global petroleum industry is increasingly seeking service partners who not only deliver solutions for today but also have the insight and vision to anticipate future needs.
'The acquisition of Landmark is strategic for Halliburton and will enable our combined businesses to deliver an increasing array of solutions to address the needs of customers while providing added value to our shareholders.'
Cheney said that Halliburton will operate Landmark as a separate subsidiary 'to ensure that it continues to provide innovative software and services to all segments of the industry as well as forming alliances with other companies. He saw the EDS alliance providing the potential for 'an unprecedented linkage of information between oil field locations and the offices or our customers.' The official line on the alliance i's that it will 'create an information environment that will automate and integrate petroleum exploration and production from energy company offices throughout their oilfields.
This scalable environment will have the potential to encompass applications, workflows, processes and data from Halliburton, Landmark and EDS. lt will be based on industry standards and open to any software supplier, service company or energy company for widespread adoption.'
The acquisition of Landmark comes at a time when the company had been pursuing a strategy of transition from software products seller to provider of 'integrated solutions' to include services such as customer support, training, maintenance and consulting.
This concept had been made possible partly through the rapid expansion of its product range, thanks to key acquisitions such as Western Atlas Software, GeoGraphix, Stratamodel, Munro Garrett, Advance Geophysical and Zycor. However Landmark had some way to go with its integrated solutions aimed especially at the new asset team approach being adopted by oil companies. In an analysis of Landmark in June, equity research company Morgan Keegan predicted a possibly bumpy road ahead in the short term, emphasizing management as the critical factor in a successful transition.
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