Halliburton (HAL) Amends & Raises Credit Facility By $500M

Halliburton Company (NYSE:HAL) recently boosted its available credit facility by $500 million. Per its recent SEC filing, the company has superseded its previous five-year credit facility of $3 billion with a new deal worth $3.5 billion. The credit facility is expected to enable the company draw debt to cover general working capital requirements until March 2024.

Notably, as of Dec 31, 2018, it had approximately $2 billion in cash/cash equivalents and $10.4 billion in long-term debt, representing a debt-to-capitalization ratio of 52.2% compared with the industry average of 30.3%. The credit facility can increase the company’s financial flexibility.

Halliburton, one of the largest oilfield service providers in the world, intends to concentrate on cost-cutting moves and increase efficiency to boost profit margin. As the exploration and production companies are slashing their respective 2019 capital investment budget, it becomes tougher for oilfield service providers to receive new contracts and generate more revenues. To cope with the situation, the company has reduced its 2019 capital spending guidance by 20% to $1.6 billion. The spending will be primarily focused on technologies and capabilities, which are capital intensive, like the directional drilling platform and production business expansion.

Notably, the profoundness of Halliburton’s global oilfield service franchise is evident from the fact that the company generated combined free cash flow in excess of $1 billion in 2018. Halliburton’s ample cash flows provide it with the flexibility to pursue growth-oriented initiatives. Historically, the company has not been shy of making acquisitions to plug holes in its product or service portfolio and increase geographic footprint.

Price Performance

Houston, TX-based Halliburtonhas gained 6.3% in the past three months compared with 38% rally of the industry it belongs to.

Zacks Rank and Stocks to Consider

Halliburton presently carries a Zacks Rank #3 (Hold). Investors interested in the energy sector can opt for some better-ranked stocks as given below:

Fort Lauderdale, FL-based Seacor Holdings Inc. (NYSE:CKH) is a transportation and logistics provider for energy companies. Its bottom line for first-quarter 2019 is expected to increase almost 118% year over year. The stock currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Midland, TX-based ProPetro Holding Corp. (NYSE:PUMP) is an oil and gas equipment providing company. For 2019, its bottom line is expected to grow 17% year over year. The company currently holds a Zacks Rank #2.

Archrock, Inc. (NYSE:AROC) is a Houston, TX-based energy infrastructure company. Its bottom line for 2019 is expected to increase 39.6% year over year. It currently has a Zacks Rank #2.

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