Halliburton Company (HAL): The Best Pick in the Oilfield Services Industry

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Apart from that, Halliburton is currently the leader in the fracking industry, which gives it a competitive advantage over Schlumberger and Baker Hughes. The company recently unveiled its latest fracking technology–H2Oforward–in Colorado, which reduces the waste water output by 25%.

Since offshore rigs are required to treat the toxic water before releasing into the sea, a 25% cut will significantly reduce the processing capacity for treating waste water. This will save both time and money, which is why H20Forward is being considered as the most cost effective fracking technique on the market.

Investors’ Delight

For the recent quarter, the U.S rig count was down by 3% YoY. As a result, Halliburton’s revenues from North America slid by 1% during Q1FY13 YoY. But thanks to a sequential margin improvement of 400 bps, its quarterly operating income from the region surged by 30%, while its revenues of $7 billion stood at record levels. As guar prices continue to decline, its margins are estimated to further expand by 100 bps in the next quarter.

Apart from robust financial performance, Halliburton Company (NYSE:HAL) has also been returning value to its shareholders. The company recently hiked its quarterly dividend payouts by 38%, which equates to an annual yield of 1.2%. That may still be paltry, but something is better than nothing.

The company also repurchased 1.2 million of its common shares for around $50 million during the previous quarter. Management stated that the ongoing repurchases will be accelerated during the second quarter, which will further boost its quarterly EPS growth. On April 22, Halliburton’s remaining buyback authorization stood at $1.7 billion, which allows a repurchase of 39.59 million shares, or 4.2% of its shares outstanding (at the current price).

Final words

In my opinion, all the mentioned companies have solid growth prospects to fire up their stocks. But due to the rebounding rig count in North America, Halliburton Company (NYSE:HAL) seems to have more upside potential than its peers. The company currently leads the fracking industry, offers a wide range of subsea services, and is entering new territories abroad. This should add stability to its top line over the longer run. Apart from that, Halliburton is also returning significant value to its shareholders, which altogether presents a compelling bullish case.

The article The Best Pick in the Oilfield Services Industry originally appeared on Fool.com and is written by Piyush Arora.

Piyush Arora has no position in any stocks mentioned. The Motley Fool recommends Halliburton. Piyush is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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