Grant Prideco Acquires Reed-Hycalog

Grant Prideco, Inc. has signed a definitive agreement to acquire Reed-Hycalog from Schlumberger. Under the terms of the agreement, consideration will include $255 million cash, 9,731,834 shares of Grant Prideco common stock, and the assumption of approximately $5 million of liabilities. The total value of the transaction is approximately $350 million. The transaction is expected to be accretive to earnings per share of Grant Prideco. In the twelve months ended June 30, 2002, Reed-Hycalog had revenues of $228 million and earnings before interest, taxes and depreciation of $53 million.

Michael McShane, Grant Prideco's President and Chief Executive Officer commented, "Reed-Hycalog provides an excellent strategic and industrial fit with Grant Prideco's worldwide leadership position in drill stem technology and manufacturing. They are an established market leader with strong brands and demonstrated profitability throughout the drilling cycle. Reed-Hycalog brings to Grant Prideco a portfolio of high-quality, technologically advanced products, and a highly-experienced manufacturing and sales workforce with worldwide presence. Long term, we expect to grow Reed-Hycalog's business and to realize synergies in technology, manufacturing and sales." In addition to the approximately $90 million in Grant Prideco stock included in the purchase price, financing for this transaction (and for Grant Prideco's general corporate purposes) is expected to be provided through a new credit facility of approximately $265 million (replacing the Company's existing credit facility) and other public or private placements of debt securities of up to $150 million.

The transaction is expected to be completed prior to year-end and is subject to regulatory approvals, including under the Hart-Scott-Rodino Improvements Act, and other customary closing conditions.