Oilfield service behemoth Halliburton Company HAL is now taking advice from investment banks Deutsche Bank AG DB and Bank of America Corp. BAC to sell two if its businesses, as per Reuters. Halliburton might get an estimated $5 billion from the sale.
Bank of America is assisting the oilfield service firm to sell a portion of its Sperry Drilling business that has been providing services related to both offshore and onshore drilling and petrophysical engineering services all over the world. As per the media report, Halliburton might get $3 billion from this divesture. The Sperry units of Halliburton usually generate the same amount every year.
The other business that Halliburton is keen to sell is its drill bits operation that includes roller cone bits and fixed cutter bits. Deutsche Bank has been hired to support this sale. Halliburton is expected to get roughly $1.5 billion to $2 billion as proceeds from this divestiture, according to Reuters.
With the free fall in crude prices since last June, most of the clients of Halliburton have postponed their drilling projects. People familiar with the matter believe that this will eventually drag down the value of the assets to be sold.
Investment bank Credit Suisse Group AG is Halliburton’s global coordinator supporting all the asset sales. The bank also assisted Halliburton’s $35 billion merger deal – yet to get regulatory approval − with its smaller rival Baker Hughes Incorporated. We believe that with the closure of this merger, the combined company will get closer in size and scale to Schlumberger Limited SLB, the world's largest oilfield services provider.
Investors should note that Halliburton’s main motive for the asset divestures is to support its merger with Baker Hughes. Halliburton had been asked by the U.S. Department of Justice to sell some of the overlapping business units as a prerequisite for the amalgamation.
Houston, TX-based Halliburton primarily offers a variety of equipment, maintenance, and engineering and construction services to the energy, industrial, and government sectors. The company currently carries a Zacks Rank #4 (Sell).
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