This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Halliburton Stock Is Not Done Climbing After China Partnership Deal

NEW YORK (TheStreet) -- Shares of oil services giant Halliburton (HAL) have performed well for investors. After beginning the year with 40% gains in its trailing 12 months, Halliburton has burned non-believers with year-to-date gains of 42%, outperforming the energy sector's 14% gain.

The stock closed Thursday at $70.35, just a few percentage points away from its 52-week high of $71.94. And the stock charged ahead further Friday, to $70.72 as of 11:45 a.m.

With second-quarter earnings due out Monday, investors want to know whether Halliburton has finally reached its ceiling. From where I sit, I don't believe it has.

5 Biggest Amusement Park Chains of Summer 2014

Why For-Profit Education Institutions Should Be Sent to Detention

eBay Is Smartly Treating StubHub Like Uber

White House Push to Stop U.S. Companies Moving Overseas Unlikely to Bear Fruit

In fact, with Halliburton's recent joint venture with Petrotech (Xinjiang) Engineering, a subsidiary of SPT Energy Group, Halliburton shares are now significantly discounted. The company's long-term growth projections now support a fair value of around $82, or 15% higher.

With this deal, Halliburton immediately becomes more diversified and no longer has to rely on North American production weakness. Although North America has drastically improved, Halliburton relied on 50% of its revenue from North America. That left it too susceptible to macro headwinds. With this deal, the story has now changed.

The new combined entity will be called Xinjiang HDTD Oilfield Services. It will conduct hydraulic fracturing and production enhancement operations to benefit from strong oil and gas reserves in Xinjiang, a Chinese province.

Given Petrotech's efficient upstream capabilities, this presents Halliburton with another revenue stream from exploration and production activities. What's more, Petrotech operated the Tarim oilfield for 20 years -- which minimizes the risk of failure.

But there will be challenges. This deal puts Halliburton toe-to-toe against Weatherford International (WFT), a Switzerland-based oilfield service provider that struck a similar deal with China’s Sinopec Group.

Although larger rival Schlumberger (SLB) has its own joint venture with Cameron International (CAM), Schlumberger may now feel pressured to form a similar partnership to exploit China's willingness to develop unconventional oil reservoirs. Schlumberger has shown it has the technology to do it.

For that matter, Baker Hughes (BHI) shouldn't be far behind, given China's sudden urgency to extract tight oil and shale gas. China is looking to lessen its dependency on coal and duplicate American production success in fracking in areas like the Eagle Ford and Marcellus shale plays.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7890 -13.6380 -0.30%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs