* Latest move by GE to boost presence in oil services
* Expects deal to be slightly accretive in 2011
* Follows Wellstream deal in December
* John Wood intends to return cash up to $1.7 billion
(Adds more quotes, background on other GE deals)
By Megan Davies
NEW YORK, Feb 13 (Reuters) - General Electric Co , is to buy the well support division of British energy services firm John Wood Group for about $2.8 billion, the companies said on Sunday, the latest move by the largest U.S. conglomerate to boost its presence in oil services.
GE, which is buying the unit through its oil and gas business, in December struck a deal to buy oil drilling pipemaker Wellstream Holdings Plc for $1.3 billion.
That followed a 2008 deal to buy pressure control equipment company Hydril for $1.1 billion and a 2007 deal to buy privately held oil and gas field equipment maker Vetco Gray.
The U.S. company has said it could spend up to $30 billion on takeovers in the coming years as CEO Jeff Immelt renews GE's focus on heavy manufacturing after reaching a deal to sell its media unit and scaling back the GE Capital finance arm.
GE said the John Wood unit acquisition would allow it to tap fast growing demand for enhanced oil recovery from mature oil fields.
"Five years ago, drilling and production in GE did not exist," John Krenicki, CEO of GE Energy said in a telephone interview. "Over the last five years we've built it up to be an industry leader."
He said that GE expects the deal to be 'slightly accretive' in 2011 assuming it closes by the end of the second quarter.
Krenicki doesn't anticipate more deals in the medium-term in the specific area of drilling and production, but said there could be deals elsewhere.
"Specific to this space -- drilling and production -- we think we have got what we needed for the medium-term," Krenicki said. "But the rest of the energy portfolio has capability to do more and we'll look for things that make sense."
John Wood said that following the deal, it intends to return cash of no less than $1.7 billion to shareholders. It expects the deal to be significantly earnings per share enhancing immediately following completion.
UNLOCKING PUZZLE
Wood Group's Well Support division is comprised of three business platforms -- electric submersible pumps (ESPs), pressure control and logging services.
GE said that deployment of electric submersible pumps are one of the most effective methods of enhancing production.
"If you look at world oil production today, about two-thirds comes from 300 giant wells that are depleting about six percent a year," said Krenicki. "Of those giant wells, only about one third of the oil has been extracted -- for lots of reasons - cost, technology, difficulty. And world oil demand is to grow about 20 million barrels per day over the next decade."
"We know that these (electric submersible pumps) are the key to unlock this puzzle," Krenicki said.
He added that the auction for the unit had been very competitive.
"ESP technology is a coveted asset," he said. Asked about the price of the deal, Krenicki said that other deals GE has done in this space have been in a similar ballpark.
John Wood said earlier in February it was looking into the possible sale of the well support unit. Sources previously told Reuters the company had put the division on the block and had hired Credit Suisse to advise on the sale.
GE said on Sunday that Wood Group's board intends to unanimously recommend the deal to its shareholders. It is expected to close later in 2011, GE said.
GE shares closed up 0.3 percent at $21.33 on Friday, while shares in John Wood ended 3.2 percent higher in London. (Editing by Dhara Ranasinghe)