General Electric (NYSE:GE) may be one of the largest oil service companies that most investors have never heard of. The storied American company recently announced an acquisition in this area, increasing its multibillion dollar oil and gas services business.

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GE's Latest Acquisition
General Electric is acquiring the Well Support Division of John Wood Group PLC (LSE:WG), an English company that is involved in a variety of engineering, power generation and oil and gas services businesses.

General Electric is paying $2.8 billion for this division, which reported 2010 revenues and EBITDA of $947 million and $166 million, respectively. The company expects this new division to grow rapidly and produce $1.1 billion in revenues and $200 million in EBITDA in 2011.

Well support refers to products and services that increase and enhance production from oil and gas wells, including artificial lift. Other businesses that General Electric is getting include wireline and logging services and pressure control equipment used to control and monitor the flow of hydrocarbons.

One justification that General Electric gave for the deal was that it would provide an entry into the enhanced oil recovery (EOR) services business. This is a fast-growing sub-segment of the oil services business as many older wells require some type of assistance to produce enough oil to make them economical.

GE's Oil and Gas Business
General Electric has its oil and gas business within the Energy Infrastructure segment for reporting purposes. The Energy Infrastructure segment reported total revenues of $10.96 billion in the fourth quarter of 2010, with the oil and gas business making up $2.4 billion or 22% of this total.

This level of revenues put General Electric close to Weatherford International (NYSE:WFT), which reported $2.9 billion in revenues in the final quarter of 2010. General Electric's oil and gas business also saw $2.9 billion in new orders from customers in the fourth quarter of 2010, with a 23% increase in equipment orders.

Recent Orders for GE's New Services
One recent order came from Petrobras (NYSE:PBR), which is developing new fields in the offshore area. General Electric will supply $50 million worth of subsea wellhead and installation tooling systems to the company. General Electric has a multiyear deal with the Brazilian oil company to supply sub-sea and other related equipment.

General Electric is also a major supplier to the Gorgon project located in Australia. This is a massive natural gas project operated and 47% owned by Chevron (NYSE:CVX). General Electric has been awarded more than $1 billion in contracts for this project. Exxon Mobil (NYSE:XOM) and Royal Dutch Shell (NYSE:RDS.A) each also have a 25% ownership in the Gorgon project.

The Bottom Line
General Electric is a major player in the oil and gas services business, but this is generally unknown to many investors due to the size of the overall company. The company got even larger here with a recent acquisition of a Well Support business from an English company, but this new acquisition is well worth investors' attention. (For related reading, check out How Does Crude Oil Affect Gas Prices?)

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