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August. 2022
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Halliburton Defies Rough Market, Eyes Global Oil & Gas Opportunities

Looming recession? What looming recession? Executives at Halliburton Company (NYSE:HAL) (Houston, Texas), one of the top global providers of hydraulic fracturing ("fracking") services, are upbeat about the Oil & Gas Industry's prospects for the coming years, with expectations for a "multi-year upcycle" beyond North America. While acknowledging supply conditions will remain tight, opportunities abound--especially in the Middle East and Latin America, which are expected to see the most growth on a full-year basis. Industrial Info is tracking more than $1.5 billion worth of active projects involving Halliburton's services worldwide, with the Terminals Industry accounting for more than half of the spending.

Halliburton expects to see steady growth continue across North America's Oil & Gas Production Industry, but executives say the company will shift its focus from market share to cash flow on returns. The reason? North America is "all but sold out" of Halliburton's product, said Jeff Miller, the chief executive officer of Halliburton, in a quarterly earnings-related conference call.

Industrial Info's Global Market Intelligence (GMI) Oil & Gas Project Database shows a much higher total investment value (TIV) for projects involving Halliburton's services across Asia, when compared with any other continent. Most of this is attributed to the Gazli Natural Gas Storage Cavern project in central Uzbekistan, a two-phase expansion that is expected in increase capacity from 3 million to 10 million cubic meters by the end of 2024.

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The first phase of the Uzbekistan project is expected to wrap up toward the end of this year, after which the second phase is expected to begin construction and finish toward the end of 2024. Subscribers to Industrial Info's GMI Terminals Project Database can read detailed project reports on Phase I and Phase II.

Along with the Middle East, Halliburton expects its business in Latin America to grow the most on a full-year basis. Increased drilling services bolstered revenues in Latin America by 16% during the second quarter, including Brazil, where the company is involved in a swath of active drilling projects.

PetroRio S.A. (Rio De Janeiro, Brazil) is contracting Halliburton for cementing and completion services on two of its drilling projects in the Frade Deepwater Oil Field Development, offshore Brazil: a development in the Wahoo Field, which involves adding four production wells, and a revitalization of the Frade Field, which involves adding two water-injection wells and a production well. Subscribers can read more details in Industrial Info's reports on the Wahoo Field and Frade Field projects.

"As for the overall [North American] market, I believe it will be all but sold out for the second half of the year due to service company discipline, long lead times for the new fleet, and supply-chain bottlenecks for consumables," Miller said in the earnings call. "We expect public companies will steadily execute their drilling and completion programs. Private [exploration and production companies] capitalized on available rigs and equipment in the first half of the year, and will likely maintain a measured level of activity growth for the rest of the year. We continue to believe that North American operators' spending growth will eclipse 35% this year. Our customer conversations have already pivoted to 2023 plans, well in advance of the typical timeframe."

But circumstances in the energy markets have forced even Halliburton, a longstanding figure in fossil-fuel development, to pursue the development of cleaner, affordable energy. Last year, Halliburton joined forces with several other companies--including Momentum Technologies (Dallas, Texas), which recovers critical materials from lithium-battery products for reuse--to form Halliburton Labs, which aims to develop emerging clean-energy technology commercially.

Halliburton is consulting with Momentum on its proposed lithium-ion battery-recycling plant in Dallas, which would use Momentum's Membrane Solvent Extraction technology to strip and extract aluminum, cobalt, nickel, copper and other metals from electronic waste. Subscribers can learn more from Industrial Info's project report.

But Halliburton, like many of its peers, does not always face such investor-driven pressures abroad. As noted in an analysis by Bloomberg, many of the world's most significant oil provinces--including those in the Middle East and Latin America--are in nations where the government owns and manages its major E&P companies, making them far less vulnerable to shareholder pressure and profit thresholds. Not surprisingly, this could be where global players like Halliburton turn their attention in the years to come.

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