In Lufkin purchase, GE bets big on oil

General Electric\'s $3.3 billion acquisition of Lufkin Industries marks the industrial conglomerate\'s latest effort to strengthen its holdings in petroleum amid a booming oil and natural gas market. The purchase gives GE a major stake in the technology for drawing hydrocarbons to the surface from reservoirs with low pressure. Founded in 1902, Lufkin manufactures a variety of tools used in the \"artificial lift\" of oil and gas, technology used in roughly 94 percent of oil-producing wells around the world, GE said. The global artificial lift sector is expected to approach $13 billion in 2013, strengthened by the boom of unconventional oil and gas, especially in the US. \"Advanced technologies, combined with new drilling practices, are revolutionizing the oil and gas industry,\" Daniel Heintzelman, president and chief executive of GE Oil & Gas, said in a statement. GE has made some $11 billion in acquisitions in the oil and gas industry since 2007, including the additions of Wellstream Holdings, Dresser Inc. and Well Support, also in the artificial lift business. \"The acquisition is another step in bolstering GE\'s energy-related businesses, which the company has emphasized over the past several years,\" Standard & Poor\'s said in a research note of the Lufkin purchase. \"We see the deal as entirely consistent with GE\'s goal to target $1-$3 billion bolt-on deals in its core industrial businesses,\" Citigroup said in a research note. Lufkin, which is based in Texas, employs about 4,500 staff in 40 countries. Last year, the company reported revenues of $1.3 billion, an increase of 37 percent from the prior year. GE proposed to pay Lufkin shareholders $88.50 per share in cash, 38.4 percent higher than Friday\'s closing price. Lufkin shares traded just below the offer price Monday, while General Electric rose 0.6 percent to $23.08. S&P noted that the purchase of Lufkin will likely be financed by GE\'s \"sizable\" cash balances and should close in the second half of the year.