There are hundreds of companies operating in the oil and gas industry around the world-the oil and gas industry is one of the largest and most important industries in the global economy. It is estimated that in 2020 alone, the industry’s revenue is expected to reach approximately US$3.3 billion. Companies in this industry operate in a variety of different areas, including exploration, drilling and production, marketing, refining, and transportation. They are collectively referred to as upstream, midstream, and downstream operations.
Strategic acquisitions constitute an important part of the industry. The multinational company Halliburton (HAL) is a major player in the field of oilfield services in this industry, which has expanded its influence in the global market through acquisitions. Read on to learn more about the top three companies owned by Haliburton.
- Halliburton is an energy equipment and service company with a long history of acquisitions.
- The company currently has approximately 30 subsidiaries and 14 product service lines.
- Three important subsidiaries include Baroids, Landmark and Sperry Drilling.
- Haliburton acquired Athlon for an undisclosed amount in 2018 to develop its reactive chemistry capabilities.
Halliburton: A Brief History
Halliburton remains the backbone of the energy industry. The company was founded in 1919 as New Method Oil Well Cementing Company, and was renamed Halliburton in 1961. It has approximately 30 subsidiaries in more than 80 countries and more than 50,000 employees. The company’s main business in the United States is located in Houston, while Halliburton’s international business is located in Dubai.
The company has 14 different product service lines that operate in two different departments-the drilling and evaluation department and the completion and production department. Both are supported by company consulting and project management, which, according to the website, is “the pioneer of our integrated service strategy.”
Jeff Miller serves as the chairman of the company. Miller has served as President and Chief Executive Officer (CEO) since June 1, 2017. Other company executives include:
- Lance Loeffler: Executive Vice President and Chief Financial Officer (CFO)
- Lawrence J. Pope: Executive Vice President of Administration and Chief Human Resources Officer
- Robb L. Voyles: Executive Vice President, Secretary and General Counsel
The company announced its full-year results for fiscal year 2019 on January 21, 2020. Revenue was 22.4 billion U.S. dollars. This is a decrease of 7% from the previous year, or 1.6 billion U.S. dollars. Halliburton reported an operating loss of US$448 million for the year, while operating income for the 2018 fiscal year was US$2.5 billion. This change was due to the weakness of the North American market, but was offset by international growth.
Acquisition strategy and recent acquisitions
Halliburton has a long history of acquisitions. Its subsidiaries are located all over the world, including the United States, the Netherlands, Canada, Brazil and Cyprus.
The number of countries in which Halliburton operates.
When Halliburton acquires another company, it usually integrates that company into one of its service lines. These cover everything from drilling products and services to production solutions, project management and more. Sometimes, its plan will not go as expected. For example, when the company announced in November 2014, it acquired Baker Hughes, one of the world’s largest oilfield services companies, in a cash and stock transaction worth nearly $35 billion in 2016. The plan was not due to antitrust issues, and the transaction failed to materialize because the US and European regulators believed that the merger would boost prices in the oil and gas industry.
Antitrust laws promote healthy competition and prevent price increases, just as Halliburton proposed to buy Baker Hughes.
In late July 2018, Halliburton announced plans to acquire Athlon Solutions, a supplier of specialized water and process chemicals and other related products. Athlon joined Halliburton’s multi-chemical business line to provide chemicals for specialty oilfield services. The acquisition of Athlon was finalized for an unknown amount. When Halliburton announced the news, the company’s CEO explained that the acquisition was part of Halliburton’s strategy to develop reactive chemistry capabilities in the United States and internationally.
Below are three of Halliburton’s more important subsidiaries, all of which help showcase the company’s great history in strategic acquisitions.
Baroid is part of the Halliburton Drilling and Evaluation Department, which is responsible for the modeling of oil and gas fields and reservoirs. Baroid supplies drilling fluid additives, performance additives, completion fluids and related products and services. It can also help oil and gas companies accurately drill oil fields and optimize the extraction of hydrocarbons.
Baroid became part of Halliburton in 1998, when Halliburton acquired its main competitor, Dresser Industries, in an all-stock transaction. The transaction was a one-to-one stock transaction, and Dresser was valued at nearly 8 billion U.S. dollars at the time. Dresser bought Baroid for $1 billion four years ago.
Like Baroid, Landmark (formerly Landmark Graphics) is also part of Halliburton’s Drilling and Evaluation Department. Halliburton originally acquired Landmark Graphics in 1996 in a stock-for-stock transaction similar to the Dresser deal.
Landmark is a leading supplier of technology solutions for the Halliburton upstream oil and gas industry, including software and data analysis solutions for exploration and production (E&P) companies.
According to the company, Landmark’s data management software is used by 44 of the industry’s top 50 exploration and production companies. One of the solutions is OpenWorks, a data management system used to organize data and information generated by drilling. OpenWorks facilitates communication between all parties to the project and encourages collaboration to optimize well locations.
Like Baroid and Landmark, Sperry Drilling is part of Halliburton’s drilling and evaluation product portfolio. Sperry provides the company’s customers with systems and services for a large number of drilling operations, such as horizontal and directional drilling, and drilling site information collection systems. It also provides engineering optimization to help Halliburton customers reduce drilling site risks and increase productivity. Sperry also provides real-time consultation to E&P companies to ensure safe drilling and extraction of oil and gas in the most efficient manner.
Sperry-Sun Well Drilling Company, the successor of Sperry Drilling, was established in 1929 as a joint venture between Sun Oil Company and Sperry-Gyroscope Company. Joseph N. Pew, Jr. of Sun Oil Company started business with Elmer Sperry to develop drilling methods that were better than those available at the time. Sun Oil bought the shares of Sperry-Gyroscope Company in 1947 and merged Sperry-Gyroscope with another drilling company, Reamco Inc. in 1974. The resulting company was renamed Sperry-Sun.
Sun Oil was later reorganized and sold Sperry-Sun to NL Industries (NL) in 1981 for $252 million. At that time, NL Industries contained Baroid before selling it to Dresser Industries. NL packaged Sperry-Sun as Baroid in 1988 and spun off Baroid during a difficult period in the oil industry, then was acquired by Dresser, and finally acquired by Halliburton.