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Understanding Halliburton’s Capital Expenditure Focus

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Oct. 11 2020, Updated 12:32 p.m. ET

HAL’s capital budget

Halliburton (HAL) plans to spend $2.0 billion on capital projects in 2018. In the first half of the year, the company has already spent $1.1 billion on growth projects. The issues facing the company’s operations in North America, as we discussed in the previous part, haven’t resulted in a change in the company’s capital spending plans.

There are two reasons for maintaining this status quo. Firstly, Halliburton is expected to be positioned well for 2019 as a result of the planned projects. The company expects the temporary headwinds to be resolved by that time.

Secondly, a part of HAL’s capex targets on international markets, which don’t face these headwinds. The chart above shows Halliburton’s capital expenditures over the last ten quarters.

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Sperry Drilling

Halliburton (HAL) is increasing its spending on Sperry Drilling—its service focused on optimizing customers’ asset value. The service includes providing drilling systems and services that offer directional control for accurate wellbore placement. In collaboration with the customer, Halliburton designs suitable directional drilling, measurement while drilling, logging while drilling, or other solutions for the customer’s specific well applications.

According to Halliburton, this offering is expected to have great demand as well as the potential to generate attractive returns. “The market for these technologies and additional equipment in our development pipeline is growing,” noted Jeff Miller, Halliburton’s president and CEO, in the company’s first-quarter earnings call.

“This is a strategic priority for the organization,” noted Chris Weber, Halliburton’s chief financial officer, during the call.

You can see what institutional investors did with their oilfield services stocks—Halliburton, Schlumberger (SLB), Baker Hughes (BHGE), and National Oilwell Varco (NOV)—in Are Institutional Investors Bearish on Oilfield Services Stocks?

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