Unlike Schlumberger, Halliburton is focused on the North American market.
As per Halliburton's latest quarterly results, the company generated about 54% of its revenue and 73% of its operating income, excluding the impact of corporate expenses, from North America. As a result, Halliburton's performance and its future depend heavily on the strength of the North American market.
Halliburton expects further improvements in North American activity levels, which should continue to fuel its growth. To capitalize on this business environment, Halliburton has been building on its fleet of equipment used to extract shale oil and gas.
Meanwhile, the company is also ramping up its logistics capabilities, such as its rail cars.
Rail bottlenecks could worsen in the future, but companies such as Halliburton, whose rail car fleet could touch 7,000 cars by early next year, "are likely to fare better than those without," Robert Mackenzie, director of research at Iberia Capital, wrote in an email.
Oilfield services companies use rail cars to transport goods, primarily fracking sand, which is used in extraction of shale oil and gas.
Halliburton is also eyeing growth in international markets, particularly in Latin American and the Eastern Hemisphere. The company could witness a turnaround in Mexico, where rig count hit 10-year lows in the previous quarter, on the back of the oil reforms.
Meanwhile, Halliburton is targeting about $3 billion worth of long-term asset management projects in Ecuador.
Mackenzie thinks that Halliburton gets just about 2% of its revenue from Russia and 1.5% from Iraq, making it least exposed to these countries as compared with its peers.
On the other hand, the company's growth is being driven by several markets, particularly Saudi Arabia, which has become its second-largest international market. At the time of publication, the author held no positions in any of the stocks mentioned. This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.
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