GE and Lufkin Industries Inc. have announced a joint agreement whereby GE, for approximately $3.3 billion in cash, will acquire Lufkin Industries Inc., a leading provider of artificial lift technologies for the oil and gas industry and a manufacturer of industrial gears, bearings and couplings.

The industry calls these technologies artificial lift. They represent a booming $13 billion patch of the oil and gas industry, fueled by shale and other unconventional sources of energy, and also by the need to make mature oil fields productive again.

Lufkin, which is based in Lufkin, Texas, also manufactures heavy-duty, ultra-precision industrial equipment and components such as high-performance gear boxes that transmit in excess of 80,000 horsepower from GE aeroderivative gas turbines to electric generators. Lufkin also manufactures industrial couplings and bearings that are designed to produce higher power levels and speeds and better efficiencies in turbine applications, predominately for energy-related industrial applications..

Lufkin speed increasers and reducers transmit power from engines, electric motors, turbines and compressors. The company's engineered gearing includes single helical, double helical, spiral bevel, and herringbone designs. Lufkin's RMT is a manufacturer of precision journal bearings; such as tilting pad, fixed pad, pressure dam, multi-lobed, and plain journal bearings. Lufkin manufactures a wide range of high-quality standard and flexible couplings used in applications in the iron & steel, metal processing, oil and chemical, plastics & rubber, hydroelectric & nuclear power, cement, paper, mining and passenger transport industries. These include couplings used in or with overhead cranes, test benches, pumps and compressors.

Nearly all of the world’s 1 million oil-producing wells are using artificial lift. Lufkin’s portfolio of rod lifts, gas lifts, progressive cavity pumps and other sophisticated technology and software that goose oil and gas to the surface will complement GE’s existing offerings in the space like electric submersible pumps. “Advanced technologies, combined with new drilling practices, are revolutionizing the oil and gas industry,” said Daniel Heintzelman, President and CEO, GE Oil & Gas. “The artificial lift segment is at the heart of critical changes that are helping producers maximize well potential – which translates into increased output at lower operational cost.”

The transaction, which is unanimously recommended by Lufkin's board of directors, is expected to close in the second half of 2013 subject to Lufkin shareholders' approval, regulatory approvals and customary closing conditions, and is the latest in a string of GE oil and gas acquisitions valued at $11 billion since 2007.

In 2012, Lufkin posted record revenues of $1.3 billion, which reflected growth of 37 percent. Lufkin employs 4,500 workers in 40 countries.

GE's portfolio of turbomachinery equipment is used in mechanical-drive, compression and power-generation applications such as liquefying natural gas, moving hydrocarbons through pipelines or generating power via gas turbines at a production or industrial site. Lufkin's suite of gears and bearings will complement GE's existing product line and are currently in use on GE's compressor and gas turbines. Lufkin will continue to sell these to the open market as it does today.