Halliburton Wins North Sea Deal - Analyst Blog

Halliburton (HAL) has won a contract from ConocoPhillips (COP) to provide drilling services to the Jasmine discovery in the North Sea region. With a 36.5% interest, ConocoPhillips will act as the operator of the Jasmine field while Eni SpA (E) and BG Group hold 33% and 30.5% stakes, respectively.

The scope of the deal includes directional drilling, logging-while-drilling (“LWD”) and surface data logging (“SDL”) activities intended to develop the high temperature discovery. Located in J-Block near the existing ConocoPhillips' producing fields and infrastructure, the Jasmine discovery records a temperature of 175 degree C range.

Halliburton is upbeat about this contract as it has expertise in technologies developed for ultra high temperature and high pressure (“HP/HT”) environments.

Based in Houston, Texas, Halliburton is one of the largest oilfield services providers in the world, offering a variety of equipment, maintenance, and engineering and construction services to oil and gas customers worldwide. The company operates under two main segments: Completion and Production, and Drilling and Evaluation.

We believe Halliburton enjoys a strong competitive position in the global oilfield services markets, given its array of lucrative development projects and a robust financial profile. The company has significant exposure to most of the fertile oil plays in the U.S, such as the Haynesville, Eagle Ford Shale and Bakken. In the near term, we expect Halliburton to benefit from uptrends in U.S. land drilling activities.

However, Halliburton's performance is particularly sensitive to the North American natural gas and pressure-pumping markets. We also remain cautious about the new environmental regulations for hydraulic fracturing in the shale plays and the intensely competitive nature of the market.

Considering the above factors, we are maintaining our long-term Neutral recommendation on the stock. Halliburton currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.

 
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