As a result of the recent rapid expansion of oil and liquids-related
activity in North America, Halliburton (NYSE: HAL) has experienced
increased costs for guar gum, an agricultural commodity used as a
blending additive to its fluids utilized in hydraulic fracturing. The
price of guar gum has inflated more rapidly than previously expected due
to concerns over the potential for shortages for the commodity later in
2012. As such, the costs have impacted the company's second quarter
North America margins more than anticipated. As a result, the company
now believes that its North America margins will be impacted 300 basis
points more than its previous guidance of 200 to 250 basis points, for a
total impact of 500-550 basis points lower than first quarter levels.
Though the company believes these increased costs are transitory once
new supplies are available in early 2013, the company is seeking to
mitigate these costs in the second half of the year through seeking
relief from customers and increased usage of synthetic and other guar
alternatives.
The company is scheduled to release second quarter earnings on Monday,
July 23.
ABOUT HALLIBURTON
Founded in 1919, Halliburton is one of the world’s largest providers of
products and services to the energy industry. With nearly 70,000
employees in approximately 80 countries, the company serves the upstream
oil and gas industry throughout the life cycle of the reservoir – from
locating hydrocarbons and managing geological data, to drilling and
formation evaluation, well construction and completion, and optimizing
production through the life of the field. Visit the company’s website at www.halliburton.com.
NOTE: The statements in this press release that are not historical
statements, including statements regarding future financial performance,
are forward-looking statements within the meaning of the federal
securities laws. These statements are subject to numerous risks and
uncertainties, many of which are beyond the company’s control, which
could cause actual results to differ materially from the results
expressed or implied by the statements. These risks and uncertainties
include, but are not limited to: results of litigation, settlements, and
investigations; actions by third parties, including governmental
agencies; changes in the demand for or price of oil and/or natural gas
can be significantly impacted by weakness in the worldwide economy;
consequences of audits and investigations by domestic and foreign
government agencies and legislative bodies and related publicity and
potential adverse proceedings by such agencies; indemnification and
insurance matters; protection of intellectual property rights;
compliance with environmental laws; changes in government regulations
and regulatory requirements, particularly those related to offshore oil
and natural gas exploration, radioactive sources, explosives, chemicals,
hydraulic fracturing services and climate-related initiatives;
compliance with laws related to income taxes and assumptions regarding
the generation of future taxable income; risks of international
operations, including risks relating to unsettled political conditions,
war, the effects of terrorism, and foreign exchange rates and controls,
international trade and regulatory controls, and doing business with
national oil companies; weather-related issues, including the effects of
hurricanes and tropical storms; changes in capital spending by
customers; delays or failures by customers to make payments owed to us;
execution of long-term, fixed-price contracts; impairment of oil and
natural gas properties; structural changes in the oil and natural gas
industry; maintaining a highly skilled workforce; availability of raw
materials; and integration of acquired businesses and operations of
joint ventures. Halliburton’s Form 10-K for the year ended December 31,
2011, Form 10-Q for the quarter ended March 31, 2012, recent Current
Reports on Form 8-K, and other Securities and Exchange Commission
filings discuss some of the important risk factors identified that may
affect Halliburton’s business, results of operations, and financial
condition. Halliburton undertakes no obligation to revise or update
publicly any forward-looking statements for any reason.
