Halliburton (HAL) announced that it has received contracts for the supply of equipment and services to two offshore blocks in the South China Sea. The financial terms and name of the contracting company were not disclosed.
This happens to be Halliburton’s first ultra-high-pressure/high-temperature (HP/HT) drilling venture in Asia. The scope of the deal includes exploration of two firm wells and one potential well. The company intends to start drilling activities in the third quarter of 2011.
Per the terms of the contract, Houston, Texas-based Halliburton will extend directional drilling, measurement-while-drilling and logging-while-drilling support along with well completion equipment and services. Additionally, surface well testing and downhole drillstem testing quipment and services, and cementing equipment, fluids and pumping services will also be provided by the company.
At Halliburton, management believes its expertise in operating under severe conditions coupled with a strong legacy of performing HP/HT drilling assures its reliability and position in the industry.
The company offers a variety of equipment, maintenance, and engineering and construction services to energy, industrial and government sectors. Halliburton operates under two main segments, namely Completion and Production, and Drilling and Evaluation.
We believe Halliburton commands a strong competitiveposition in the global oilfield services market, courtesy its broad and technologically-complex product and service offerings as well as robust financial profile.
However, the company continues to feel pressure from depressed natural gas prices, new environmental regulations for hydraulic fracturing in the shale plays and intense competition from peer such as Baker Hughes Incorporated (BHI) and Schlumberger Limited (SLB). Hence, 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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