Halliburton's Endeavour in Poland - Analyst Blog

One of the largest oilfield service providers Halliburton Company (HAL) executed the first ever shale hydraulic fracturing operation in Poland. The company performed this operation for PGNiG, the state-owned Polish oil and gas company.

Halliburton was contracted by PGNiG to fracture the Markowola-1 exploratory well, located near Kozienice, Lublin province. This was done to verify whether the site holds commercial gas deposits reserves or not.

European countries have been struggling to cope with the supply-demand imbalance of natural gas. This is mainly due to the decline in production and the supplementary demand growth for natural gas. Poland is no exception to this trend; hence the Polish companies are looking for domestic sources of unconventional gas deposits.

Halliburton's management is highly enthusiastic about this first fracture stimulation project in Poland and aims to use the advanced technology and the expertise gained for the development of the unconventional gas plays in the United States.

We believe that Halliburton is perfectly positioned to take advantage of the upcoming energy expansion through its distinct competitive edge within the global oilfield services markets. The company's strong balance sheet and secure cash flow from huge international projects and North American contracts will further enhance the long-term value proposition of the company.

Recently, Halliburton reported impressive second quarter 2010 results. Earnings per share from continuing operations came in at 52 cents, compared with the year-ago quarter's adjusted profit of 30 cents. Revenues of $4.4 billion were 25.6% higher year over year, attributed to increased sales across the company’s business units.

Halliburton is a Zacks #2 Rank ('buy'), implying that the stock will perform better than its peers and the broad U.S. equity markets over the next one to three months.

However, our optimism for the stock is somewhat dampened by the intensely competitive nature of the market and suspension of operations in the Gulf of Mexico, following the drilling moratorium imposed by the government. Thus, we maintain our long-term Neutral recommendation on the company.

 
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