M-I SWACO Announces Acquisition of Specialised Petroleum Services Group Limited

Thursday, August 3rd 2006

M-I SWACO today announced that it has acquired Specialised Petroleum Services Group Limited (“SPS”) of Aberdeen, Scotland in exchange for cash consideration of approximately $165 million. SPS is a leading provider of well-bore clean-up products and services for the technically-challenging offshore market. The acquired operations had revenues of $38 million for the six months ended June 30, 2006, with 75 percent of the business focused in the Eastern Hemisphere markets and 85 percent of their revenues generated from offshore drilling operations.

SPS patented cleanup tool technology is designed to clean the casing and well-bore, reducing down-time and cost which allows completion technologies to access the producing formation with maximum efficiency. The operations will be joined under the newly-formed well-bore assurance and productivity business unit which had combined revenues of approximately $400 million at June 30, 2006 on a trailing twelve months basis.

Don McKenzie, M-I SWACO President and CEO, commented, “SPS is the world leader in well-bore clean-up tool technology and M-I SWACO is the largest provider of completion and reservoir drill-in fluids around the globe. The combination of these two businesses enables us to provide customers with a unique, integrated solution.”

Mike Hill, Director of 3i Oil, Gas & Power team and Non Executive Director of SPS, commented, “3i has been pleased to have been involved together with the original founders of the business in the development of SPS, over the last 6 years, supporting acquisitions and repositioning the business to access the global oil and gas market place. We believe M-I SWACO is the ideal candidate to support SPS’s growth.”

M-I SWACO, a leading supplier of drilling and completion fluids, production chemicals, solids control and waste management services to the worldwide oil and gas industry, is owned 60 percent by Smith International, Inc. (NYSE:SII – News) and 40 percent by Schlumberger Limited (NYSE:SLB – News).

Contact:

Smith International, Inc., Houston
Margaret K. Dorman, 281-443-3370

Source: Smith International, Inc.