Halliburton Company provides a range of services and products to the upstream oil and natural gas industry worldwide. The company's Completion and Production segment offers production enhancement services, including stimulation and sand control services; and cementing services, such as bonding the well, well casing, and casing equipment. It also provides completion tools that offer downhole solutions and services, including well completion products and services, intelligent well completions, liner hanger systems, sand control systems, and service tools; pressure control services comprising coiled tubing, hydraulic workover units, and downhole tools; and pipeline and process services, such as pre-commissioning and maintenance, subsea pipeline, conventional pipeline, and process services. In addition, this segment offers oilfield production and completion chemicals and services; electrical submersible pumps and progressive cavity pumps; and installation, maintenance, repair, and testing services. The company's Drilling and Evaluation segment provides drilling fluid systems, performance additives, completion fluids, solids control, specialized testing equipment, and waste management services; and drilling systems and services. It also offers wireline and perforating services, including open-hole logging, and cased-hole and slickline services; and drill bits and services comprising roller cone rock bits, fixed cutter bits, hole enlargement, and related downhole tools and services, as well as coring equipment and services. In addition, this segment offers integrated exploration, drilling, and production software, as well as related professional and data management services; testing and subsea services, such as acquisition and analysis of reservoir information and optimization solutions; and oilfield project management and integrated solutions. Halliburton Company was founded in 1919 and is based in Houston, Texas.
Business Analysis of Halliburton
The Oil & Gas Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how Halliburton compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by Halliburton to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.
Here is the performance snapshot of Halliburton with an interactive chart.
- Revenue Growth: Halliburton reported a revenue growth of -32.8% year-on-year during 2016. Oil & Gas Equipment and Services Industry grew at -33.3% in the same period
- COGS share of Revenues: As a percentage of revenue, Halliburton spent 94.6% of its total revenues on COGS. Oil & Gas Equipment and Services industry average (COGS share of revenue) in the same period was 82.2%
- R&D share of Revenues: Halliburton R&D share of Revenues details are not available because either company does not share the data or we do not have it
- SG&A share of Revenues: As a percentage of revenue, Halliburton spent 1.4% of its total revenues on Sales, Marketing, and General Administration (SG&A). Oil & Gas Equipment and Services industry average SG&A spending in the same period was 8.3%
- Inventory share of Revenues: As a percentage of revenue, Halliburton spent 14.3% of its total revenues on Inventories. Oil & Gas Equipment and Services industry average Inventory spending in the same period was 16.1%
- Accounts Payable share of Revenues: As a percentage of revenue, Halliburton invested 11.1% of its total revenues on Accounts Payable (A/P) Oil & Gas Equipment and Services industry average Accounts Payable investment in the same period was 16.8%
- Accounts Receivable share of Revenues: As a percentage of revenue, Halliburton invested 24.7% of its total revenues on Accounts Receivable (A/R). Oil & Gas Equipment and Services industry average Accounts Receivable investment in the same period was 26.6%
- PP&E share of Revenues: As a percentage of revenue, Halliburton invested 53.7% of its total revenues on Property, Plants, and Equipments (PP&E). Oil & Gas Equipment and Services industry average PPE investment in the same period was 127.7%
- Intangibles share of Revenues: As a percentage of revenue, Halliburton invested 15.2% of its total revenues on Intangibles. Oil & Gas Equipment and Services industry average Intangibles investment in the same period was 56.5%
- Net Margins: Halliburton Net Margins in the year 2016 were -36.3%. Oil & Gas Equipment and Services industry average Net Margins in the same period were -18.4%
Sector and Industry Association of Halliburton
For the purpose of performance benchmarking of a company with a sector or industry average, R&P Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries.
Halliburton is associated with Oil & Gas Sector and Oil & Gas Equipment and Services Industry.
Oil & Gas sector is comprised of the following industries: Oil & Gas Production; Oil & Gas Distribution; Oil & Gas Equipment and Services; Alternative Energy. The definitions for each of the industries is as follows:
- Oil & Gas Production industry includes companies primarily engaged in operating oil & gas properties. Key activities may include exploration for crude petroleum and natural gas; drilling, completing, and equipping wells; and all other activities in the preparation of oil and gas up to the point of shipment from the producing property. It also includes companies engaged in crude petroleum refining and producing gasoline, kerosene, distillate fuel oils, residual fuel oils, and lubricants, through fractionation or straight distillation of crude oil.
- Oil & Gas Distribution industry includes companies primarily engaged in the pipeline transportation of petroleum, natural gas, and other commodities. It also includes companies primarily engaged in the wholesale and retail distribution of petroleum and petroleum products.
- Oil & Gas Equipment and Services industry includes companies primarily engaged in drilling wells for oil or gas field operations for others on a contract or fee basis. It also includes companies providing exploration services and machinery & equipment for oil and gas field operations.
- Alternative Energy industry includes companies that develop or manufacture renewable energy equipment utilizing sources such as solar, wind, geothermal, hydro, and waves. It also includes companies that produce alternative fuels such as methanol, ethanol, hydrogen and biofuels that are mainly used to power vehicles.
Industry Ranking of Halliburton
With $15.9 billion revenues, Halliburton ranked number 2 of all the companies in the US Oil & Gas Equipment and Services industry. There were a total of 55 public companies in the US Oil & Gas Equipment and Services industry that had revenues greater than $50 million during 2016.
The top-10 companies in the US Oil & Gas Equipment and Services industry by revenues during 2016 were:
- Schlumberger ($27.8 billion)
- Halliburton ($15.9 billion)
- Baker Hughes ($9.8 billion)
- National Oilwell Varco ($7.3 billion)
- Weatherford International ($5.7 billion)
- Transocean ($4.2 billion)
- Ensco ($2.8 billion)
- McDermott International ($2.6 billion)
- Noble Corp ($2.3 billion)
- Oceaneering International ($2.3 billion)
Business Model Analysis (BMA) Framework
We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.