HAL Recycles Water to Cut Costs - Analyst Blog

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According to the head of water management of major oilfield services provider Halliburton Company ( HAL ), the company managed to increase its savings to a great extent in 2012 by using recycled water for fracking additional wells.

For extracting oil and gas, Halliburton employs hydraulic fracturing (or fracking) - a process of opening fissures forcibly in subterranean rocks by injecting liquid at a very high pressure.  

While recycling, Halliburton altered the chemistry of the water by separating rock debris and chemicals from the liquid. The recycled water was reused for fracking additional wells instead of using fresh water, thereby reducing its operating cost significantly.

Halliburton management revealed that the use of recycled water in place of fresh water for fracking wells in the Bakken field in North Dakota has increased its savings significantly from $6,000 a well in 2011 to $400,000 per well in 2012. Management is also planning to curtail the use of fresh water by 25% for fracking by the end of 2014.

Houston, Texas-based Halliburton is one of the largest oilfield service providers in the world, offering a variety of equipment, maintenance, and engineering and construction services to the energy, industrial, and government sectors. The company operates under two main segments: Completion and Production, and Drilling and Evaluation.

Halliburton is among the top three players in each of its product/service categories, and is present in all major hydrocarbon-producing regions of the world. The company enjoys very strong relationships with both publicly-traded and national oil companies worldwide.

However, the new environmental regulations for hydraulic fracturing in the shale plays could adversely impact the company, as it will force Halliburton to reveal the structure of its fluids, and potentially wipe out its competitive advantage in the high-end pressure-pumping market.

Halliburton currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.   

In the energy sector, firms that are expected to outperform the U.S. equity market over the next one to three months are Compressco Partners LP ( GSJK ), Range Resources Corporation ( RRC ) and Calumet Specialty Products Partners LP ( CLMT ). All the firms currently carry a Zacks Rank #1 (Strong Buy).  



CALUMET SPECLTY (CLMT): Free Stock Analysis Report

COMPRESSCO PTNR (GSJK): Free Stock Analysis Report

HALLIBURTON CO (HAL): Free Stock Analysis Report

RANGE RESOURCES (RRC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: CLMT , GSJK , HAL , RRC

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