Weatherford International, the world's largest provider of artificial-lift services that boost oil flow in wells, said Friday that it agreed to buy TNK-BP's oil field-services unit for $489 million, gaining 75 drilling rigs.

TNK-BP Ltd. will get 24.3 million shares of Weatherford common stock, Weatherford said in a statement. The deal is valued based on Weatherford's closing price of $20.13 per share Thursday. Revenue for the oil field-services unit was more than $650 million last year, Weatherford said.

In a separate statement, TNK-BP said it would have a "priority option to retain Weatherford as a provider of drilling rigs and advanced technology" and that the sale was part of its intent to focus more on "the core business of producing, refining and marketing oil."

Chief operating officer Tim Summers, who was replaced as interim CEO by shareholder Mikhail Fridman last week, said in the statement that the deal would help TNK-BP increase efficiency, "secure jobs and boost investment in Russia's services sector generally."

The deal still requires Federal-Anti Monopoly Service approval, TNK-BP said.

Weatherford has sought to shift more of its business to the Eastern Hemisphere and away from North America.

"It kind of makes sense for Weatherford because that's one of the areas that they like to focus on," said Philip Weiss, an analyst at Argus Research in New York, who rates Weatherford shares a "hold" and owns none. "They're trying to push their business more and more internationally. This kind of jibes with that approach."

Russia, one of the worst-hit international markets, has seen its activity hit the bottom, or "troughed," chief executive Bernard Duroc-Danner told analysts April 20 on an earnings conference call.

"In a way, the decline in activity and the pullback on budgetary authorizations was more sudden, more vertical, more extreme than what you're seeing in North America," Duroc-Danner said on the call. "I think at this point, there's a realization the extreme decisions may not be necessary," he said.

In addition to the 75 rigs, TNK-BP's oil field-services arm owns 180 workover units and 150 cementation and pumping units.

TNK-BP, a 50/50 venture between BP and the Alfa-Access-Renova consortium, is Russia's third-largest oil company and accounts for about 16 percent of the country's production.

On May 21, TNK-BP said first-quarter earnings dropped 58 percent, reflecting the decline in crude prices. Net income sank to $747 million from $1.77 billion a year earlier.

Sales fell 50 percent to $6.33 billion, even as production rose 3.9 percent to 1.668 million barrels of oil equivalent a day.

TNK-BP executives had said they would like to spin off the oil field-services unit.

(Bloomberg, MT)