Oilfield service provider Halliburton Company (HAL) has won a shale natural gas exploration contract in Poland from Chevron Corporation (CVX). The financial terms of the deal were not disclosed.
The scope of the deal includes drilling services, mud logging, cementing, coiled tubing, slickline services, well testing, completion and hydraulic fracturing. Halliburton will also render management services for further enhancement of the project.
Although the contract spans for a period of three years, the duration is expandable. Initial drilling to search for shale natural gas at Chevron Polska’s field is expected to commence in the fourth quarter of 2011.
As per industry sources, Poland along with other Eastern European countries contain vast reserves of prolific shale gas formations that remains untapped. Hence, most of the countries in collaboration with foreign companies remain committed to development and expansion of the energy market in Europe. This would help the countries to minimize their dependence on the Russian supply of natural gas.
In recent times, French oil producer TOTAL S.A. (TOT) and U.S. oil giant ExxonMobil Corp. (XOM) have entered into a joint venture to look for shale gas in Chelm and Werbkowice exploration concessions in the Lublin Basin of southeastern Poland.
Halliburton, being the leading player in hydraulic fracturing of shale in the U.S., remains highly confident regarding this contract. Management believes that Halliburton’s superior technologies and manpower expertise will replicate its North American shale gas exploration success in Europe.
In August 2010, Halliburton executed the first ever shale hydraulic fracturing operation in the Markowola-1 exploratory well in Poland for PGNiG, the state-owned Polish oil and gas company.
We believe that Halliburton is perfectly positioned to take advantage of the upcoming energy expansion through its distinct competitive edge within the global oilfield services markets. However, our optimism is somewhat dampened by the cutthroat nature of the industry, depressed natural gas prices and new environmental regulations for hydraulic fracturing in the shale plays. We maintain our long-term Neutral rating on the stock.
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