On Mar 29, Zacks Investment Research downgraded oilfield
) to a Zacks Rank #3 (Hold).
BP PLC (BP): Free Stock Analysis Report
EXTERRAN PTNRS (EXLP): Free Stock Analysis
COMPRESSCO PTNR (GSJK): Free Stock Analysis
HALLIBURTON CO (HAL): Free Stock Analysis
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Why the Downgrade?
Houston, Texas based Halliburton continues to be plagued by
sluggish North American operations, a spike in the costs for guar
gums, and potential liability exposure to the Deepwater Horizon
The North American land rig count may plateau in the near future
as growth in highly-productive horizontal drilling has led to a
natural gas supply overhang and relatively weak natural gas
prices in the U.S. market. This is likely to be only partially
offset by the continued growth of oil- and liquids-rich
reservoirs. A slowdown in U.S. land drilling will impair
A substantial relief in the cost for guar gum - a key constituent
of the company's market-leading hydraulic fracturing ('fracking')
procedure - is not expected until well into 2013.
We remain concerned over the ensuing uncertainty regarding
Halliburton's potential liability exposure to the Deepwater
Horizon rig disaster. A final assessment report issued by the
federal government in September 2011 blamed the company for the
'poor cement job' that allowed the oil/gas to burst through the
reservoir and reach the rig, causing the explosion. We believe
this has raised the probability for Halliburton to share in at
least a portion of the spill liabilities with British energy
Stocks That Warrant a Look
While we expect Halliburton to perform in line with its peers and
industry levels in the coming months and advice investors to wait
for a better entry point before accumulating shares, one can look
Compressco Partners L.P.
Exterran Partners L.P.
) as good buying opportunities. These energy equipment makers -
sporting a Zacks Rank #1 (Strong Buy) - have solid secular growth
stories with potential to rise significantly from current levels.