Halliburton HAL, one of the largest oilfield services companies in the world, is reportedly set to sign a new energy deal in Libya, worth $1 billion, with the state-owned National Oil Corporation (“NOC”). The agreement will focus on the rebuilding of the al-Dhara oil field in central Libya, which was destroyed by Islamic State militants in 2015.
U.S. multinational conglomerate, headquartered in Charlotte, NC, Honeywell International Inc.’s HON contract with NOC is worth $400 million, and involves designing and building a refinery in southern Libya. These deals are seen as a sign that Libya now offers a more favorable working environment for American firms, with better predictable investment opportunities.
Although the al-Dhara field is currently being operated by ConocoPhillips and TotalEnergies, the deal with NOC would enable Halliburton to take possession of the field's operations and help boost the country’s oil production. This indicates a significant investment in Libya's oil and gas sector, which has seen a resurgence in recent years, following years of political instability and conflict.
Security in Libya has improved significantly since the establishment of a UN-backed government in 2016, allowing the country to boost its oil production once again. In 2021, the country’s oil production reached its highest in six years, averaging around 1.2 million barrels per day.
These developments have made Libya an attractive destination for foreign oil and gas companies, particularly as Europe turns to other sources for its energy needs following Russia's decision to cut off gas supplies last year.
Libya has significant oil reserves, which are its primary sources of revenues. However, the country's oil production has been severely disrupted by the civil war, with output falling from 1.6 million barrels per day in 2011 to just 100,000 barrels per day in 2020.
The new deals with Halliburton and Honeywell are expected to help rebuild the country's oil infrastructure and increase production. This would provide a much-needed boost to the Libyan economy, which has been struggling due to the ongoing conflict.
The current conflict in Libya has had a significant impact on the country's population. Millions of people have been displaced, and there are other humanitarian concerns.
The rebuilding of the al-Dhara oil field and the construction of the new refinery could provide job opportunities for Libyans and help stimulate the local economy. This could also improve the living conditions of many Libyans, who have been affected by the conflict.
Halliburton and Honeywell are technology companies that specialize in energy-related solutions. Their expertise in this field will be key to rebuilding Libya's oil infrastructure and constructing the new refinery.
The use of technology could help improve efficiency and reduce costs in these projects. It could also ensure that the infrastructure is built to the highest standards, which will be important for maximizing the safety of workers and the environment.
The oil industry can have significant environmental impacts, and the rebuilding of the al-Dhara oil field and the construction of the new refinery could aggravate these consequences. However, both Halliburton and Honeywell are committed to sustainability and environmental protection. They are likely to take steps to minimize the environmental impact of their operations in Libya, which will be important for ensuring the long-term viability of the country's oil industry.
The new energy deals between Halliburton, Honeywell and NOC are a positive development for Libya's economy and the energy sector at large. They are a sign that the country is offering a more viable environment for foreign companies to operate in.
However, there are certain risks associated with investing in Libya, including the ongoing conflict and political instability. These risks need to be managed carefully in order to ensure the projects’ success and sustainability.
Halliburton is a leading oilfield service provider, headquartered in Houston, TX, offering a wide range of services to the energy, industrial and government sectors across 80+ countries.
Honeywell has a strong presence in the aerospace industry, with commercial aviation and defense being its major sources of business. It also sees opportunities within unmanned aerial systems and urban air mobility.
Zacks Rank and Key Picks
Currently, both Halliburton and Honeywell carry a Zacks Rank #3 (Hold). Investors interested in the energy sector might look at some better-ranked stocks like NGL Energy Partners NGL, sporting a Zacks Rank #1 (Strong Buy), and Energy Transfer ET, holding a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
NGL Energy Partners: The company is worth approximately $328.30 million. Its shares have increased 10.1% in the past year.
NGL is a limited partnership company that operates a vertically-integrated propane business with three segments — retail propane, wholesale supply and marketing, and midstream.
Energy Transfer LP: The company is valued at around $36.21 billion. It delivered an average earnings surprise of 11.43% for the last four quarters and its current dividend yield is 10.43%.
ET currently has a forward P/E ratio of 8.20. In comparison, its industry has an average forward P/E of 9, which means the company is trading at a discount to the group.
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Halliburton Company (HAL) : Free Stock Analysis Report
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