NEW YORK – General Electric Co. on Wednesday signed a deal to buy the private energy equipment maker Dresser Inc. for about $3 billion in an effort to capitalize on expanding uses of natural gas following discoveries of huge new resources in the U.S. and abroad.
"One thing that happens with low natural gas prices is that people will use more," said John Krenicki, vice chairman of GE and chief executive of GE's energy unit. "And that's not necessarily a bad thing."
Dresser's products include small gas engines, control and relief valves, measurement, regulation and control systems used in gas pipelines, liquid natural gas facilities and power plants.
GE builds natural gas-fired turbines for power generation and provides services like water treatment and recycling for oil and gas drilling operations. Last week GE announced a mobile version of its water treatment technology designed to reach remote gas drilling locations.
Recent discoveries of huge, cheaply accessible reservoirs of natural gas found deep underground in shale formations in the U.S. and abroad are leading analysts to predict relatively low and stable natural gas prices for years to come. That is inspiring utilities, chemicals producers and other industrial companies to expand their reliance on natural gas.
GE follows some of its giant corporate peers that are also looking to capitalize on the natural gas boom. ExxonMobil agreed to buy natural gas company XTO Energy for $31 billion last December. Royal Dutch Shell said in May that it will acquire East Resources, which has natural gas assets in two U.S. shale formations, for $4.7 billion.
GE had signaled it was ready to begin buying companies again, long a growth strategy for the company, but this is its first major purchase since the beginning of the financial crisis, according to a report by Nigel Coe, an analyst at Deutsche Bank.
GE didn't say whether the deal's value includes the assumption of Dresser's debt, or provide further details
Dresser is based in Addison, Texas. It had earnings of $318 million on revenue of $2 billion last year, according to the company.
The deal requires regulatory approval.
GE shares rose 46 cents, or 2.8 percent, to $16.97 in midday trading.