FOR IMMEDIATE RELEASE                                          AT
WEDNESDAY, JUNE 5, 1996                            (202) 616-2771
                                               TDD (202) 514-1888

                                 
        DIVESTITURE RESOLVES JUSTICE DEPARTMENT OBJECTIONS
                      TO OIL INDUSTRY MERGER
                                 
                                 
     WASHINGTON, D.C. --  The Department of Justice announced
today that it has agreed to modifications of a 1994 consent
decree that would allow Smith International Inc. of Houston to
purchase Anchor Drilling Fluids of Norway, provided Smith sells
off Anchor's U.S. drilling fluids business. 
     Drilling fluids, a combination of chemical compounds, are
pumped through drill pipes to cool and lubricate the cutting
tools on the pipe, remove cuttings from the drill hole, and
control downhole pressure to prevent an explosion of the drill
site.
     Smith is the majority owner of M-I, a major drilling fluids
business.  M-I is the largest drilling fluids company in the
United States and the world and one of three companies that
dominate the business.  Anchor Drilling Fluids is the fourth
largest producer and distributor of drilling fluids in the United
States.  Total U.S. drilling fluids sales exceed $500 million
annually.
     The divestiture agreement, filed today in U.S. District
Court in Washington, D.C., is part of a joint motion with Smith
to modify a consent decree entered in April of 1994, that allowed
Dresser Industries Inc. of Dallas to acquire the Houston-based
Baroid Corporation.
     The 1994 decree settled a suit, filed by the Department in
late 1993 against Dresser Industries and the Baroid Corporation,
that alleged their proposed merger would likely lessen
competition in the manufacture and sale of two oil field service
products, including drilling fluids.  The decree ordered Dresser
to divest either its ownership interest in M-I Drilling Fluids or
Baroid Drilling Fluids.  To comply with the decree, Dresser sold
its interest in M-I to Smith.
     Today's proposed modification is necessary because the
decree barred Smith, as the purchaser of M-I, from acquiring
Anchor.  The settlement prohibited the purchaser of the divested
drilling fluids business from acquiring or combining the drilling
fluids business with the drilling fluid operations of any one of
four named companies, including Anchor.
     Anne K. Bingaman, Assistant Attorney General in charge of
the Antitrust Division said, "The 1994 decree preserved future
competition in the highly-concentrated drilling fluids business
by prohibiting certain consolidations among the major drilling
fluid producers for ten years.  Today's filing maintains that
competition by permitting Smith to acquire Anchor only because it
agreed to divest Anchor USA."
     In addition to divesting Anchor USA, Smith has also agreed
to supply barite, an essential ingredient in drilling fluids, to
the purchaser of Anchor USA  for five years, with an extension
for up to five more years at the purchaser's option.  This
guarantee of barite will permit Anchor to continue to be a
competitive force in the United States.
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