Halliburton Co. (HAL) has been awarded a fluid services contract by Total S.A. (TOT). Under the terms of the contract, Halliburton will deliver fluid services in support of Total’s deepwater drilling and completion activities offshore Angola.
 
The contract calls for the provision of fluid services on an average of three deepwater rigs for up to three years. Total contract amount is $140 million.
 
Halliburton provides fluid services under its Drilling and Evaluation segment, which accounted for approximately 46% of the company’s total revenue in 2008.
 
Fluid services are becoming a significant contributor to Halliburton’s Drilling and Evaluation segment revenue. This has been proven by the recent contracts award. In the last month, the company had received two prominent contracts for fluid services.
 
First one is a $190 million contract from Petrobras to provide drilling fluid and completion fluid services in the offshore markets of Brazil. The second one is a $450 million contract extension from StatoilHydro (STO) to provide fluids systems for multiple fields on the Norwegian Continental Shelf.
 
We view this contract award as a positive for Halliburton in a depressing economic environment. While these contracts are in the international arena, the company is nevertheless much more exposed to the North American pressure pumping market than any of its large-cap diversified oilfield service peers.
 
The outlook for the North American natural gas market remains on the weaker side. Within this market, Halliburton has a leading position and a strong leverage in the pressure pumping business. We prefer to stay sideline until the natural gas market gets some oxygen. We recommend a Neutral rating for Halliburton shares.
Read the full analyst report on “HAL”
Read the full analyst report on “TOT”
Read the full analyst report on “STO”
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