Halliburton Investor Day 2013

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings.

“we are sticking with our strategy, our consistent focus on deepwater mature fields and unconventionals has served us very, very well”

Eric Carre – Senior Vice President, Drilling and Evaluation

“When we started defining our strategy years back, the message from our customers was centered around three key elements. They wanted a choice of suppliers in deepwater, but their concerns with Halliburton, was the lack of footprint in some key deepwater market as well as some technology gaps.”

“The key building blocks of our success have been an unwavering investment in infrastructure in our global footprints as well as the commitment to improving our technology portfolio. Let’s first have a look at people and infrastructure. Over the last three years, we invested over $1 billion to improve our infrastructure in operations, manufacturing and technology. In operations alone, we have added over 50 new facilities globally totaling over 2 million square feet, which is equivalent to adding about 10 technology centers such as the one you saw yesterday. We have also increased our deepwater related headcount significantly, for example, in the Golden Triangle alone, headcount levels increased by over 35%. Now, if you consider the challenge associated with staffing deepwater operations in general or staffing challenges in countries such as Angola or Brazil, you will understand that this is quite an achievement. ”

“As you know, deepwater is a very technology driven segment and we could not have achieved this level of success without a competitive offering. What you see on the screen is the sample of about 30 new products and services we have commercialized in the last three years.”

“the key drivers behind the deepwater market growth have not changed significantly over the last three years. First is access to reserves. Deepwater remains a critical component for many of our customers to access world class reserves and deliver on the production growth targets. According to Wood Mackenzie in the last five years, about 60% of all discoveries in terms of volume were made in deepwater.”

“Second is advances in technology and that is primarily happening on two fronts. First, these technologies that make it possible to identify new resources, as you saw in the landmark demo of GeoShell yesterday, for example. Second, drilling and completion technologies, which makes it possible to access resources unreachable before.”

“Finally, licensing activity is in our view also very indicative of future growth. In 2012, leading top 20 exploration companies license 40% more acreage than in 2011 and 28% of all licensing activity that ever took place in deepwater took place last year.”

“About 60% of all wells drilled in the next five years will be drilled in the Golden Triangle. ”

Jon Lewis – Senior Vice President, Europe and Sub-Saharan Africa

“As operators continue to be challenged with the ever increasing capital requirements and Greenfield developments, mature fields will remain their primary source of free cash flow and they will be the primary source of their highest returns. Now, for the majority of our customers, meeting the expectations of the capital markets is therefore keenly dependent upon squeezing more hydrocarbon from this class of assets.”

“growing percentage of these mature fields are going into decline and they’re going into decline at ever increasing decline rates. So the maintenance of these free cash flow generated becomes increasingly service intensive”

“60% of IOC’s portfolio fields are in decline with the average decline rates being more than 8% per annum.”

“mature field drilling CapEx budget this year primarily associated with field redevelopment and infill drilling is nearly $60 billion.”

“as the market matures, no pun intended we have seen the development of three distinct commercial models; discrete services, integrated solutions, and integrated asset management.”

“With integrated asset management, operators are contracting us to manage all aspects of their mature fields, subsurface analysis, drilling and completions, infrastructure and facilities, and production operations with payment for services and often of a barrel fee coming out of cost recovery on actual production.”

Paul Koeller – Vice President, Consulting and Project Management

“From our customer’s perspective, the solutions they seek following the three types. First, immediate impact for increasing production and cash flow, second, optimize reservoir management, maximizing the recovery factor, and third, new page to further expand and leverage the existing infrastructure.”

“consulting, which is where the opportunity generation occurs and has experienced very significant growth in mature fields area with revenue doubling over the last three years. Without this capability, the service company will be very limited in their ability to participate across the full value chain of our E&P customers”

“as an example of the consultative lead approach, Halliburton put a team of experts in the IOCs West Africa office and work jointly with them to model the reservoir and then identified multiple approaches to drilling, completing, stimulating and producing it. And innovative technology approach was delivered and successfully tested and resulted in sufficient production to merit launching initial full field development planning effort based on this design. When this new pay zone is sanctioned for development Halliburton retains the right of first refusal on all services, strong margins. Needless to say only a very limited number of service providers can compete in this market segment and deliver this type of holistic solution.”

“Now it may appear as though we are trying to become an oil company, we are not. We are not seeking equity positions. We do not strive to put barrels on our balance sheet. We are supplying knowhow, capacity and alignment of interest with upside through risk sharing on reservoir performance”

“Today, we are putting the stake in the ground and we are committing to a further tripling of our mature fields revenues over the next three years to $9 billion”

Jim Brown – President, Western Hemisphere

” I said this before my 35 years in the industry in North America, I’ve always worried about the natural gas market and the weather that drove it.

Now those traditional pronounced boom and bust cycles are a different story altogether. Gas will still come and go, but it won’t necessarily be the market driver. In fact when it does come back, it just gives us the opportunity to add to our number one position. It will be gravy, but the reality is this today is all about liquids and that’s why we are focused. A more stable price, steady rig count, mega pads, more service intensity, tailored chemistry, drilling and completion efficiencies.”

“in 2011 horizontal wells in the Niobrara took about 18 days to drill. Horizontal wells now average around eight days with one customer ”

“many of these tasks used to often result in huge amounts of paper being shuffled across my desk or from department to department days after the job. But now with a smartphone like the one I have in my hand as a district manager I had access to key pieces of information. For example, I can see when a crew arrived on location and even see what roads they took to get there. I can see which crew is on site and how many hours that they have logged and manage overtime. I could monitor jobs, I can see what frac stage that they are on, even see if the crew is performing maintenance on a certain piece of equipment. And I could review individual customer details and invoices. In total, I could see the daily utilization, revenue and costs to make better decisions about my business everyday.”

Mark McCollum – Executive Vice President and Chief Financial Office

“the winner at the end of the day will be the company that can offer the highest production for the lowest cost per BOE”

“another important point to note is that this year we will be very close to having an equal balance between our North America and our international businesses.”