Oilfield services leader Schlumberger aims to gain market share in shale gas drilling with its purchase of rival Smith International, and expects few antitrust hurdles for the takeover. Investors' belief in the deal's potential gained traction on Monday, with Smith shares extending their early gains and closing 8.8% higher at $41.03. Schlumberger trimmed its early losses and closed 3.7% lower at $61.57.

On a conference call with analysts on Monday, Schlumberger Chief Executive Andrew Gould said he had been considering the acquisition "for some time," and the timing now was right, even though he acknowledged paying "a significant premium." The stock market had shaved about $700 million off the original $11.3 billion value as of Monday's close.

But analysts welcomed Gould's move to get his hands on Smith's drillbit technology, in which the company made its name when it was founded 108 years ago in California's oil boom.

"The bits is a really cool business, and Smith is the best at that," said Doug Sheridan of EnergyPoint Research.

Under the terms, Smith shareholders will receive 0.6966 shares of Schlumberger for each of theirs. That originally valued Smith at a 37.5% premium over Thursday's closing share price, according to a joint statement by the companies on Sunday. They expect the deal, subject to shareholder and regulatory approval, to close this year.

Schlumberger expects the acquisition to add to earnings per share in 2012, after realizing pretax savings after costs of about $160 million in 2011, and double that the next year. Schlumberger said later on Monday that in the event of a deal termination, Smith may have to pay a fee of $340 million.

Big oil services players, which also include Halliburton and Baker Hughes, say clients, and state-run oil companies in particular, increasingly demand more services from a single provider. So Schlumberger, operating in about 80 countries, wants Smith drillbits to give clients the option to drill deeper and cheaper for fossil fuels, and has its eyes on the fast-growing market for extracting natural gas from shale rock.

"No doubt, in the long-term, shale gas is going to be one of the big new energy sources in the U.S. and overseas," Gould said, "and the capacity to serve that market in North America is of great interest to me."

Gould does not believe antitrust issues will cause any "change in the landscape" of the acquisition. Analysts say the deal is likely to face close scrutiny by antitrust enforcers given the attention paid to other oilfield services mergers, such as Cameron International's Natco purchase and the $6 billion purchase of BJ Services by Baker Hughes, which is due to close this quarter.