The downturn in oil prices is continuing to drive consolidation in the energy industry, with Schlumberger announcing Wednesday it has agreed to acquire rival Cameron International for about $12.74 billion in cash and stock.

Schlumberger, the world’s largest oilfield service company, focuses on underground operations, helping companies find new oil and gas reserves, while Cameron assembles blowout preventers and other rig equipment for surface operations. The companies previously formed a joint venture called Subsea in 2012.

“With oil prices now at lower levels, oilfield services companies that deliver innovative technology and greater integration while improving efficiency, which our customers increasingly demand, will outperform the market,” Schlumberger CEO Paal Kibsgaard said in a news release.

“We believe that the next industry technical breakthrough will be achieved through integration of Schlumberger’s reservoir and well technologies with Cameron’s leadership in surface, drilling, processing and flow control technologies,” he added.

The deal follows the planned merger of two oilfield services giants Halliburton and Baker Hughes.

“Massive consolidation is expected across the energy space as companies struggle to deal with low oil prices and a pullback in drilling activity,”  The Wall Street Journal said, noting that oilfield services companies have borne the brunt of the pain.

Companies including Schlumberger and Halliburton have been forced to lay off tens of thousands of workers around the world this year and idle hundreds of drilling rigs amid sharp spending cuts by their energy company customers.

“We believe that more M&A opportunities are likely to evolve between the larger oil service and equipment companies,” Wells Fargo analyst Judson Bailey told the WSJ. “The driving force, in our view, will be the ability to provide a suite of technology and product lines to help the world’s biggest operators lower costs and enhance returns in areas like deep water and U.S. shale.”

At $66.36 a share, Schlumberger is paying a premium of 56.3% to Cameron’s closing price on Tuesday. But the offer still represents a 10% discount to where the shares traded a year ago.

In trading Wednesday, Cameron stock was up more than 42% at $60.53, while Schlumberger was down about 3.3% at $70.10.

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