Halliburton explains new vision for US shale

By Luke Geiver | July 23, 2019

Halliburton is deploying a new North American unconventional oil and gas operational playbook to maximize its fiscal results. As the energy service giant’s clients change their focus from acreage and production growth at all costs to operating within cashflow, Halliburton has had to adapt. The company is now more willing to right-size operations through cost reductions and frack fleet laydowns than ever before. CEO Jeff Miller reminded investors of Halliburton’s new stance towards unconventionals during the company’s second quarter update.

Many clients are staying disciplined with capital spend for 2019 after investors have tasked E&P executives with focusing on revenue totals, Miller said, and because of that, the yearly activity trends have changed. While the first part of the year was active for Halliburton and the producers, the second half of the year may be more difficult to predict as some operators lay down rigs, continue on their normal pace or switch efforts to completed drilled but uncompleted wells.

The unpredictability of its clients has meant Halliburton will act in accordance. For the next two years, the company actually believes operators will focus more on production optimization, surface efficiency and getting more out of wells already producing or set for completion. Miller pointed to the company’s success in the early part of the year with electronic submersible pumps and other technology aimed at increasing the production potential of shale wells. As unconventionals move into a new phase, Miller said, technology that can improve well productivity will the key to their (operators) success. Halliburton believes the U.S. market still offers them a growth opportunity and Miller said “we are excited about those businesses.”

Multiple analysts asked Miller about Halliburton’s stance on e-fracks, or electronically powered frack fleets. Miller said that his team is less concerned about the type of unit used for pressure pumping, but rather on the demand and balance of available and quality horsepower in the market.

Apart from the U.S. market, Miller explained that the international oil industry is showing signs of growth for the first time since 2012. Oil plays are more attractive, and investment is going back into the long-cycle operations found outside the U.S. However, Miller noted, U.S. shale still provides the quickest opportunity for the world to grow production.

Despite a decline in North American rig count, Miller pointed out that his team still showed growth.

“I’m pleased with how Halliburton performed in North American in the second quarter. Both of our divisions made meaningful contributions to growing North America revenue and margins in the second quarter. We are successfully executing our strategy of controlling what we can control and managing our business to perform well in any market conditions,” Miller said.