Halliburton


The largest energy services companies are set to benefit from a focus on oil drilling in the US as the shale oil boom in North America continues, analysts at Barclays claim, even as drilling for natural gas in shale – largely an “efficiency game” – becomes commoditized.

Much has been made of the boom in development of both oil and natural gas fields in the US, stemming from advances in the efficiency and deployment of hydraulic fracturing. That technological advance has created a price dynamic that weighs on the very industry that has taken advantage of it, while comparatively high global oil prices have made drilling for crude – a more complicated business – more attractive. Keep reading →

Rex Tillerson, CEO of ExxonMobil recently met separately with Iraqi Prime Minister Nuri al-Maliki and Kurdistan Regional Government Prime Minister Masoud Barzani to discuss the company’s provocative stance within Iraq’s critical oil and gas sector. Exxon is simultaneously famous for its “my way or the highway” approach and for shying away from the internal politics of sovereign nations where it operates, so these high-profile meetings create many questions about the future of Iraq’s oil and gas development framework.

The disagreement and distrust between Baghdad and the KRG has gone on since the former regime fell in 2003, with the two sides unable to reach an agreement on oil revenue sharing, contractual terms with foreign oil companies, export routes and other issues.

Most of Iraq’s developed fields and export infrastructure is located in the south, but the Kurdish regional area in the north contains considerable undeveloped reserves and its border with Turkey offers additional export routes to European and western markets.

Baghdad has barred companies that sign contracts with the KRG from operating in the south, but ExxonMobil – having already established itself in one of the most prolific southern fields, West Qurna-1 – also signed production sharing contacts with the KRG in 2011. This infuriated the central government and Oil Ministry who barred Exxon from future licensing rounds and demanded the company sell its West Qurna-1 stake. Exxon has reportedly spoken to potential buyers.

In 2009 and 2010, Exxon – along with partner Shell – agreed to increase West Qurna-1 output from about 250,000 b/d to 2.825 million b/d within 7 years. “Initial field production of 244,000 barrels per day has now increased to 285,000 barrels per day, which exceeds the 10 percent improved production target established under the technical services contract,” Exxon said in a 2011 statement. The service contract terms provide the companies a $1.90/bbl remuneration fee for incremental output from developed formations and a $2.00/bbl fee from nearby discovered, undeveloped formations.


It’s hard to see why Exxon would risk its West Qurna-1 stake with hundreds of thousands of barrels of incremental daily production virtually guaranteed, but the prospect of bookable reserves could be a factor.

This was a major issue 10 years ago when Baghdad was trying to figure the best way to re-open the country’s oil sector to western companies. Ceding control of Iraq’s national resources by allowing foreign companies to book reserves would be politically toxic domestically and internationally. The nascent democratic government could not risk the fragile trust of its ethnically and religiously diverse population and western governments involved in Saddam Hussein’s ouster were sensitive to perpetuating the view that the war was about accessing Iraq’s enormous oil and gas reserves.

As such, the technical service contract became the preferred legal construct under which international oil companies would operate. As contractors they would receive a fee for services rendered, but could not book reserves, similar to the terms governing service companies like Schlumberger and Halliburton in their dealings with oil companies.

The majors were not thrilled with the generally tough terms dictated by Iraq’s Ministry of Oil, but the hope was that by getting their foot in the door to some of the world’s largest oil reserves and doing a good job things might open up down the road. At least this arrangement was better than the situation under Saddam Hussein when there was no access at all.

However, the KRG offers more attractive terms to foreign operators than Baghdad. Traditional production sharing contracts typically allow companies to book a portion of the reserves being developed. Regional operators have discussed the possibility of booking reserves. For example, Calgary-based E&P firm Western Zagros stated in its most recent Annual Information Form it “believes that there is excellent potential for the establishment of significant reserves and production on its PSC Lands.”

The exact details of Tillerson’s meeting with Barzani are unclear, but the potential to report Kurdish reserves on Exxon’s books could represent the added value required to walk away from West Qurna-1.

It is also possible that Exxon is attempting to hasten a grand bargain between the KRG and Iraq’s Central Government that would arguably be in everyone’s best interests, but the regional and central leaders appear to remain far apart on the issues.

Meanwhile, Kurdish leaders have reportedly been meeting with Turkish government representatives to discuss oil and gas transport possibilities, which if solidified, would reduce KRG reliance on Baghdad and put them in a stronger bargaining position, as some have recently suggested. Potentially lucrative petroleum pipeline deals in the north coupled with service contracts in the south could also be a desirable outcome for the oil majors operating in Iraq.

Iraq’s importance in global oil markets cannot be understated as the country’s export volumes play an increasingly crucial role in fundamentals and price discovery. Exxon’s foray into Iraqi politics highlights the valuable stakes,and whatever happens could alter the course of regional oil and gas development.

Keep reading →


Mining sand, clay and other industrial minerals for use by industrial concerns was a solid business for over 100 years, but the explosion of unconventional drilling that has helped boost US petroleum output to levels not seen in decades opened a new and lucrative market.

US Silica is a 112-year old company that got its start supplying sand to Pennsylvania’s glass industry, but around 2008 the firm began to supply proppants to companies that were hydraulic fracturing wells in order to tap liquid and gas hydrocarbons trapped in low-porosity geologic structures like shale. Keep reading →


For renewable energy, the 2012 presidential race reveals the downside of being championed.

President Barack Obama channeled a historic amount of money into green energy in his first term and made it a centerpiece of his jobs platform. As a result, renewable energy is big target for those taking aim at Obama. Keep reading →


The oil and gas industry can bring new resources to bear in its battle against critics and efforts to achieve a “social license to operate.” A small cleantech firm has developed patented technology that allows producers to recycle up to 100% of their well flowback and produced water during hydraulic fracturing operations.

“We use and have invented an advanced oxidation process to treat water on the front end of the [fracking process] and at the flow rate of the [fracking process], eliminating liquid biocides and chemicals for bacteria growth and scale inhibition, and allowing 100% recycling of the flowback and produced waters,” said EcoSphere Technologies Chairman and CEO Charles Vinick said during a recent radio appearance. Keep reading →


Halliburton revealed a 23% rise in first-quarter earnings and topped Wall Street expectations, as demand for oil-rich shale formations kicked higher in the US, lifting its rig count in the region. The Houston-based oilfield services company reported net income of $627 million, or 68 cents a share, compared with a year earlier $511 million, or 56 cents. Excluding one-time items, the company earned 89 cents, ahead of average analyst estimates of 85 cents in a Thomson Reuters poll. Revenue for the three months ended March 31 was up 30% to $6.8 billion, up from $5.3 billion a year ago, matching the Street’s view. However, the company’s operating margin fell to 14.9% from 15.4%.


Developers of new advanced biofuels technologies are evaluating the entire energy production, service and delivery chains for commercial opportunities.

OriginOil’s ambitions are much larger than its small IPO from last year’s registration suggests, and the company claims it has pioneered technology that will revolutionize the service industry for advanced biofuels as Halliburton and Schlumberger had done in the petroleum and petrochemical industries. Keep reading →


Last summer a Halliburton executive did the unthinkable: He took a big ol’ swig of hydraulic fracturing fluid. No, he didn’t have a death wish. And yes, he appears to be doing just fine. He did it to prove a point: fracking fluid need not be toxic. What the exec drank was a new formulation of fracking fluid made with ingredients sourced from the food industry rather than the chemical industry. As public concern over the controversial practice of fracking mounts, Halliburton and a host of other companies are racing to fill a major void: finding a way of cracking rock to unlock oil and natural gas that is also environmentally benign. This article is a linkout only.


Halliburton reported on Monday a stronger-than-expected 26% increase in third-quarter profit lifted by very strong demand in North America and a recovery in Canada and its other international markets. The company’s chief Dave Lesar said in a statement the recent drop in oil prices and declines in equity markets have been “unsettling to investors,” however he predicted the company will remain on its long-term course as its international businesses recover and activity improves. The world’s second-largest oilfield services company posted net income of $685 million, or 74 cents a share, compared with $545 million, or 60 cents a share, in the same quarter last year. This article is a linkout, for the full article go to: http://www.foxbusiness.com/markets/2011/10/17/shale-gas-helps-halliburton-profit-beat-street/#ixzz1b99R0DLy

Page 2 of 212