Oil field service major
Halliburton
(
HAL
) is making progress into Malaysia's oil and gas industry. Earlier
this month, the firm's subsidiary Halliburton Bayan Petroleum (HBP)
signed a deal with Petronas Carigali Sdn Bhd, the exploration and
production arm of state-controlled oil giant Petronas, to provide
services to boost production from mature wells in the Bayan Field
off the coast of Malaysia. The deal is estimated to be worth $1.2
billion and will span over 24 years. Dialog, a Malaysian oil and
gas engineering services firm, has picked up 50% equity stake in
HBP and will partner with Halliburton to provide services in these
fields.
Malaysia holds Asia's third largest oil reserves with most of
the fields located offshore. However, the country's production has
been on the decline due to maturing oil fields. As of last year,
the country's daily production stood at 630,000 barrels - around
25% below the peak of 860,000 barrels per day achieved
in 2004. The country's oil consumption on the other hand has
been steadily growing, prompting the government to invest in
enhancing recovery from existing oil fields and leveraging the
country's deepwater resources to meet energy needs. Given that much
of the technology required is not available in the country,
Petronas has forged partnerships with international oil firms and
contractors to carry out drilling and enhanced recovery operations
in the mature fields.
Mature Fields
The life cycle of an oil well can be categorized into different
stages. During the primary recovery stage, oil is extracted using
the wells' natural pressure and production rates are among the
highest at this stage. In the secondary stage, oil is extracted
using pumps or by injecting water to stimulate the flow.
After these two stages, the rate of recovery declines
significantly, resulting in a drop in production. Wells at this
stage of the life cycle are often called mature wells.
Mature wells need enhanced recovery operations that call for
pumping of gasses, steam and chemicals into the well to stimulate
the flow. According to Halliburton,
a 1% increase in the recovery rate from mature oil fields could
feed the world's oil needs for 2 years.
As easily accessible resources become increasingly scarce, oil
firms will need to focus on improving yields of their existing
fields. Enhanced recovery operations present a huge opportunity for
oilfield services firms since mature fields account for about 70%
of the world's oil production. Halliburton has a suite of services
for mature fields that include production enhancement, drilling,
completion, management and monitoring services. Mature field
contracts are attractive to Halliburton since service periods are
generally longer and service intensity is also quite high, which
would positively impact the revenue per rig.
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