Leading oilfield service provider Halliburton (HAL) and Louisiana Economic Development (LED) have teamed up to construct a manufacturing unit in Lafayette, Louisiana. The cost of the plant is estimated at around $ 65 million and will be on a 200,000-square-foot ground. The project is expected to start by July 2011.
The facility will manufacture complex components for oilfield service activities and is expected to generate employment for about 150 people. LED stated that the new plant will likely contribute approximately $ 16.3 million in new, state tax revenue and almost $ 4.4 million in new, local tax revenue over the next 10 years.
LED has extended its support to Halliburton through a customized incentive package, a performance-based grant for site acquisition, infrastructure from the Louisiana Rapid Response Fund and customized workforce solutions from Louisiana FastStart. Halliburton also enjoys a rebate on new payroll expenses and certain sales taxes from the Quality Jobs Program as well as property tax abatement for materials utilized in new manufacturing from the Industrial Tax Exemption Program.
Houston, Texas-based Halliburton offers a broad array of products and services to upstream oil and gas customers worldwide, ranging from integrated software and services to drilling tools, logging and perforating technology from manufacturing of drill bits and other down-hole and completion tools to pressure pumping services.
We believe that the company displays a varied product and service mix, with a sharp focus on high returns. Halliburton is also expected to sustain a steady earnings growth over the next several years aided by continued improvements in the North American markets.
However, Halliburton remains vulnerable to uncertain oil and gas fundamentals, commodity price fluctuations and labor and materials cost inflations. Hence, we expect the company to perform at par with its peers Baker Hughes Incorporated (BHI) and Schlumberger Limited (SLB). Halliburton currently retains a Zacks #3 Rank (short-term Hold rating).
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