Haliburton Hosts Analyst Meeting Focused On Success

Haliburton's HAL analyst meeting, held in Houston the last couple of days, highlighted the company's recent successes but also that they are not standing still. Despite having a clear market leading franchise in North America, HAL is essentially “tearing up” the model in unconventional plays. Meanwhile, they are committing to growth internationally while closing the margin gap with Schlumberger SLB. Deutsche Bank believe HAL's leading market position in the US, increasing complexity and international growth leave it well positioned and rate it BUY. HAL hopes to grow internationally by leveraging their leadership in unconventional plays in NA into the international markets where they are tracking/ pursuing over $15B in opportunities, a number that could grow to $35B in the next 10 years. Meanwhile in deepwater, HAL is committing to grow 25% faster than the market. HAL is also investing in under-served markets and pushing its technology, manufacturing and supply chain efforts into local markets. Overall, HAL is targeting international margins in the mid 20% range. DB's $48 target price is based on 8.7x our 2011 EBITDA estimate which is the average forward EBITDA multiple for HAL since 1995. The primary risk to the thesis is uncertainty regarding the Deepwater Horizon GOM accident. Deterioration in natural gas fundamentals is another risk. HAL closed Wednesday at $34.88