Schlumberger said it will initially acquire 26% of the company, with a further 25% to be acquired in the second quarter of 2005, and the remaining interest one year later. Closing on the first 26% is expected in the first quarter of 2004.

Completion of each of the three stages is subject to performance levels and other customary conditions. The total acquisition price will be determined by a performance-based formula, and paid one-third in cash and two-thirds in Schlumberger stock.

"We are very pleased to have reached this agreement with PetroAlliance, the leading independent Russian service provider," commented Andrew Gould, chairman and chief executive officer of Schlumberger.

"Advances in oilfield service practices and technologies have already played significant roles in Russia, and making new technology available through broader service options responds to a growing need and expresses our confidence in the continuing development of the Russian oil and gas industry."

PetroAlliance was established in 1995 and has steadily expanded its activities to include seismic, wireline logging and perforating, directional drilling, pumping, integrated project management, and information management and IT-related services. PetroAlliance provides services to a number of both Russian and international oil and gas operators.