At 100 years of age, Halliburton Co. (HAL) remains a stalwart in the energy industry. The company employed roughly 60,000 workers and generated about $24 billion of revenue in 2018. Although Halliburton's proposed acquisition of Baker Hughes Inc. in 2016 did not come to fruition due to antitrust concerns, Halliburton has a long history of acquisitions and currently has roughly 30 subsidiaries. These subsidiaries span the globe and are domiciled in countries ranging from the United States, the Netherlands and Canada to Brazil and Cyprus. When Halliburton acquires another company, it often integrates that company within one of 14 product service lines. These run the gamut from drilling products and services to production solutions, project management, and much more.
Beginning January 1, 2019, Halliburton's Board Chairman has been Jeff Miller. Miller has served as President and CEO of the company since June 1, 2017. Other top executives at the company include Lance Loeffler (Executive Vice President and CFO), Lawrence J. Pope (Executive Vice President of Administration and Chief Human Resources Officer) and Robb L. Voyles (Executive Vice President, Secretary, and General Counsel).
Aside from preparing for a year-long 100th-anniversary celebration in 2019, the last few months of 2018 brought exciting new developments to Halliburton's business strategy and portfolio of subsidiaries and affiliates. In late July of 2018, for instance, Halliburton announced plans to acquire Athlon Solutions, a provider of specialty water and process treatment chemicals as well as other related products. Athlon will join Halliburton's Multi-Chem business line to provide chemicals for specialty oilfield services.
- Halliburton is an energy equipment and services company with a long history of acquisitions.
- The company currently has roughly 30 subsidiaries and 14 product service lines.
- Three important subsidiaries include Baroids (which models oil and gas fields and reservoirs), Landmark (which offers technology solutions for upstream oil and gas), and Sperry Drilling (which provides drilling operation systems and services).
- Haliburton recently acquired Athlon for an undisclosed sum to develop its reactive chemistry capabilities.
The number of countries in which Halliburton operates.
Halliburton's Revenue Growth
On February 13, 2019, Halliburton released its Form 10-K filing for 2018. The company reported an income from continuing operations (after income taxes) of $1.66 billion for the year. This compares with a loss of $448 million in the same category for 2017. For 2018, the company reported an operating income of $2.47 billion, up significantly from operating income of $1.37 billion in 2017.
The following are three of Halliburton's more important subsidiaries.
Founded in 1919, Halliburton is headquartered in both Houston and Dubai.
Baroid is housed within Halliburton's Drilling and Evaluation segment, which is responsible for the modeling of oil and natural gas fields and reservoirs. The segment also helps oil and gas companies to drill fields with precision and optimize the extraction of hydrocarbons. Baroid, specifically, is a supplier of drilling fluid additives, performance additives, completion fluids, and related products and services.
Baroid became a part of Halliburton in 1998 when Halliburton acquired Dresser Industries Inc., a major rival at the time, in an all-stock transaction. The transaction was a one-for-one stock deal and put a value on Dresser of nearly $8 billion at the time. Dresser had acquired Baroid four years prior for $1 billion.
Like Baroid, Landmark (formerly Landmark Graphics Corp.) is housed within Halliburton's Drilling and Evaluation segment. Landmark is a leading provider of Halliburton's technology solutions for the upstream oil and natural gas industries, including software for exploration and production (E&P) companies, as well as for data analysis solutions. One of Landmark's software solutions is OpenWorks, a data management system that organizes data and information generated from drilling wells. OpenWorks facilitates communication between parties on projects and encourages collaboration to optimize well locations.
Halliburton originally purchased the Landmark Graphics Corp. in 1996 in a stock-for-stock transaction similar to the Dresser deal.
Dick Cheney was a CEO of Halliburton and would later become vice president of the United States under U.S. President George W. Bush.
3. Sperry Drilling
Sperry Drilling can also be found within Halliburton's Drilling and Evaluation segment, as is the case with Baroid and Landmark. Sperry provides Halliburton's clients with systems and services for a host of drilling operations, such as horizontal and directional drilling, as well as systems for information gathering on rig sites. Additionally, Sperry offers engineering optimization that helps Halliburton's clients reduce the risk at drilling sites and increase productivity. Sperry also offers real-time consulting to E&P companies to ensure that wells are drilled in a safe manner and that oil and gas are extracted in the most efficient manner possible.
The successor of Sperry Drilling, the Sperry-Sun Well Drilling Company, was founded in 1929 as a joint venture between the Sun Oil Company and the Sperry-Gyroscope Company. Sun Oil Company's Joseph N. Pew, Jr. went into business with Elmer Sperry to develop well-drilling methods that were more optimal than those available at the time. Sun Oil bought out Sperry's stake in the Sperry-Gyroscope Company in 1947, and in 1974, merged Sperry-Gyroscope with another drilling company, Reamco Inc. The resulting company was renamed Sperry-Sun Inc.
Sun Oil later restructured and sold Sperry-Sun to NL Industries Inc. (NL) for $252 million in 1981. At the time, NL Industries contained Baroid before it was sold to Dresser Industries. NL packaged Sperry-Sun into Baroid in 1988 and spun off Baroid amid hard times in the oil industry before being acquired by Dresser and, eventually, Halliburton.
Recent Acquisitions and Acquisition Strategy
Halliburton's most recent acquisition was Athlon, as indicated above. The Athlon acquisition was finalized for an undisclosed amount. When Halliburton made the announcement in July of 2018, CEO Jeff Miller explained that the purchase was part of Halliburton's strategy to develop its reactive chemistry capabilities in the U.S. as well as internationally.
Investors may wish to look to Halliburton's stock performance in 2018 for a clue as to the company's future approach toward acquisitions. In 2018, Halliburton stock dipped by as much as 45% or so after producers used up their capital spending budgets on ultra-productive drilling projects before the year was over. External pressures in the oil industry have also made this area a less profitable one in recent years. With these things in mind, Halliburton may scale back its acquisitions program in order to monitor its spending in the months to come.