Is Halliburton Company (HAL) a Buy?

Future prospects

Natural gas prices in U.S. have slumped drastically primarily due to oversupply of capacity. This hurts the oilfield industry, and as expected its revenue levels are not lucrative.

In contrast, the price of natural gas in global markets is 3-4 times higher. Going forward, export facilities for LNG are the most viable way to transport natural gas to Asian and European markets, and will be extremely crucial to the sector’s growth. This will not only improve exports but will propel local gas prices and drive exploration and production activities. Nevertheless, the road to growth is expected to be undulating due to internal lobbying from chemical and other forward industries that are contesting for low gas price.

Considering the initiatives taken by Halliburton Company (NYSE:HAL) such as transitioning ‘fracking’ fleet from diesel fuel to natural gas, successful implementation of multi-pad drilling and 24 hour operations to improve service intensity are expected to elevate its profitability in the coming future.

The second quarter witnessed a slowdown predominantly due to low gas prices, however, projections made by Trefis and World Bank suggest that gas prices will go through an escalation in the coming future, therefore, I suggest investors to hold on to Halliburton’s stock.

Ashit Gulati and Equity Dimensions has no position in any stocks mentioned. The Motley Fool recommends Halliburton.

The article Is Halliburton a Buy? originally appeared on Fool.com.

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