National Oilwell Varco and Schlumberger Enter Into Agreement to Form Intelligent Drill Pipe Joint Venture

National Oilwell Varco and Schlumberger announced that they have signed a definitive agreement to create a joint venture that combines their respective and complementary expertise in the manufacturing and technology development of wired drill string telemetry systems. The agreement will enable the companies to accelerate delivery of intelligent drilling solutions to customers through the expanded use of the IntelliServ® Network, while opening a range of new technological opportunities for customers. Closing, which is subject to regulatory approval, is anticipated to occur in late fourth quarter 2008 or early 2009.

“National Oilwell Varco is a pioneer in drill string telemetry through its IntelliServ® Network wired drillpipe platform that enables instantaneous communications between the drill floor and the drill bit,” said Pete Miller, Chairman, President and Chief Executive Officer of National Oilwell Varco. He added: “This joint venture with Schlumberger opens the way to new and innovative technologies that turn IntelliServ’s entire drilling assembly into a measurement system capable of providing vital data and information about downhole drilling conditions.”

Under the terms of the agreement, National Oilwell Varco will assume operational control of the joint venture through a 55% stake, while Schlumberger will purchase a 45% stake and add technology expertise and measurement know-how necessary to help promote the technology. Schlumberger will also pursue the development of drilling related systems that are enabled by the IntelliServ® Network. The joint venture will make no changes to the open access architecture of the IntelliServ® Network platform, in order to promote this as an industry standard for all providers of bottom-hole assemblies who wish to deploy high data-rate downhole tools at the bottom of the drill string.

Commenting on the agreement, Andrew Gould, Chairman and Chief Executive Officer, Schlumberger Limited remarked: “The combination of our respective strengths provides the industry with an advanced approach to drilling and well placement through more accurate knowledge of the drilling environment and formation parameters. We anticipate that this will lead to a step-change in drilling technology that can provide the customer with continuous information both about the well and about its placement within the reservoir.”