Sm-Ru intermetallic surface alloy films were prepared by vacuum deposition and annealing of rare earth Sm on single crystal Ru(0001) surface. The Ru 3d and Sm 3d core level spectra clearly show the formation of surface alloy layers. XPS measurements on surface alloy film revealed an induced peak in the Ru 3d region at lower binding energy by 1 eV compared to the bulk Ru (elemental) suggesting an electronic effect of alloying and Sm-Ru bond formation. The Sm 3d5/2 photoemission peak of Sm film consists of strong features characteristic of Sm(II) with electron configuration 4f6 (5d 6s)2 and Sm(III) with electron configuration 4f6 (5d 6s)3. It is observed that the Sm(II) feature decreases in intensity upon alloy formation with surface Ru atoms. Oxidation of these films with carbon monoxide indicates alloy breakdown due to the oxidation of Sm atoms selectively. Alloy oxidation also shows a clear shift of Sm 3d5/2 feature.