Both companies are hired by oil and natural gas explorers to drill wells and provide services such as hydraulic fracturing, or fracking, which cracks rock to let petroleum flow more freely. Together, the companies will dominate the $25 billion U.S. market for onshore fracking.

The merger also gives Halliburton access to Bakers Hughes technology to boost production in aging wells and its prized oil tools business.

The two companies restarted talks yesterday after initial discussions fell apart late last week, a person familiar with the matter said yesterday. Baker Hughes confirmed the takeover talks on Nov. 13 after media reports of a potential deal.

Talks collapsed a day later, and Baker Hughes released letters in which Craighead took Halliburton’s Lesar to task for refusing to raise his offer and pressuring for a hasty decision by threatening a proxy fight. 

Eoin Treacy's view

If major oil producers cut back on drilling and exploration because they no longer believe oil prices will continue to trend higher, oil service companies necessarily run into trouble. Deep corrections have been evident on almost all oil service companies over the last couple of months as oil prices pulled back. This is creating interesting situations for expansion oriented boards that now see bargain prices among some of their competitors. 

The reaction of the market to Halliburton’s acquisition of Baker Hughes has so far been muted not least because uncertainty still reigns over where oil prices will bottom. Brent crude has not rallied by more than $4 in four months and a move greater that that will be required to question the consistency of the downtrend despite the increasingly oversold condition evident on the daily chart. 

Additional signs of bargain hunting among some of the better-placed market participants will likely be required before investors are convinced that a meaningful low has been reached by the sector.