A wholly owned subsidiary of leading oilfield service
), has formed a joint venture (JV) with Calgary-headquartered
Trinidad Drilling Ltd. The venture - called Trinidad Drilling
International - will provide and operate drilling rigs for
Halliburton's international integrated projects.
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While the initial focus is on South Arabia and Mexico, the JV
looks to exploit other markets in the future. The JV is entitled
to the first look right for supplying drilling rigs to
Halliburton's managed onshore projects as well as Trinidad
Drilling's onshore drilling opportunities outside Canada and the
Trinidad Drilling is expected to supply four rigs (three upgrades
from the company's U.S. fleet and one newbuild), stipulated to
work in the Kingdom of Saudi Arabia for a period of three years,
with a provision for one-year extension.
The capital expenditure for the project is estimated at $120
million. Upgrading and construction of the rigs would be done at
Trinidad's in-house facilities and are expected to be operational
by mid 2014. Halliburton and Trinidad Drilling hold a 40% and 60%
stake respectively in the joint venture, with future
contributions from both the parties in the same proportion.
Trinidad Drilling's high-performance drilling services will help
Halliburton to position itself better for further integrated
project acquisitions. On the other hand, Trinidad Drilling will
get exposure to overseas markets through Halliburton's
international operating capabilities and its infrastructure.
The project expects to open doors to a new level of drilling
integration with manufacturing efficiency of Trinidad Drilling
and advanced technology of Halliburton. With integrated projects
in more than 20 countries, the Houston, Texas-based oilfield
services company expects numbers to grow further on the back of
more operators implementing this model in their drilling
The JV does not have any fixed term, however, both parties have
the flexibility to walk out after five years, or earlier under
Halliburton currently holds 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.
Meanwhile, one can look at other stocks in the energy sector that
are expected to outperform in the near term. These include Zacks
Ranked #1 (Strong Buy) stocks of
Magellan Midstream Partners LP
Seacor Holdings Inc.