Black Is the New Gold: Halliburton Strikes Oil

Source: Thinkstock

Source: Thinkstock

Halliburton (NYSE:HAL) is an oil service stock that I have traded many times over the years. I have long preferred its rival Schlumberger (NYSE:SLB), although both are very similar in many respects. Schlumberger just reported its earnings and in an article published July 18, I tipped investors that Halliburton could do well as Schlumberger crushed estimates, proving to us that in this market, black is the new gold.

While very similar to Schlumberger, Halliburton has unique differences. It provides a range of services and products for the exploration, development, and production of oil and natural gas to oil and gas companies all over the globe. The company operates in two segments: Completion and Production, and Drilling and Evaluation.

The Completion and Production segment offers production enhancement services, including stimulation services, sand control services and cementing services comprising bonding well casings, and casing equipment. It also offers completion tools that provide downhole solutions and services, including well completion products and services, intelligent well completions, liner hanger systems, sand control systems, and service tools. This segment also provides well intervention services, pressure control, equipment rental tools and services, and pipeline and process services; and oilfield production and completion chemicals and services that address production, processing, and transportation operations.

The Drilling and Evaluation segment offers drill bits and services, including roller cone rock bits, fixed cutter bits, hole enlargement, and related downhole tools and services, as well as coring equipment and services; wireline and perforating services, such as open-hole logging, cased-hole and slickline, borehole seismic, and formation and reservoir solutions; and testing and subsea services comprising acquisition and analysis of reservoir information and optimization solutions. This segment also provides drilling fluid systems, performance additives, completion fluids, solids control, specialized testing equipment, and waste management services.

Now that you have a solid understanding of where Halliburton’s profits are generated, let’s talk about the company’s recent performance. With oil prices so high of late, it has helped the company, as has a higher than average natural gas price. The company saw income from continuing operations in its second quarter of $776 million, or $0.91 per diluted share. This compares to income from continuing operations for the first-quarter of 2014 of $623 million, or $0.73 per diluted share. In other words, a 25 percent year-over-year improvement.