Oil field services companies should show caution in deals, Halliburton exec says

HOUSTON — Halliburton plans to be an active dealmaker when the unconventional oil and gas sector consolidates, but will be selective about the potential opportunities, a senior executive said Tuesday at a Houston energy conference.

The oil field services giant buys about 10 to 15 companies a year and expects its level of spending to continue, according to Mark McCollum, chief financial officer for Halliburton, who spoke at the 2013 Deloitte Oil & Gas Conference.

But he said that the company will be discerning about deals, looking hard at the value provided by a potential acquisition and how it fits into Halliburton’s broader strategy.

“We are not always going for the big, home-run deal,” McCollum said.

He said he believes that some recent headline deals in the oil and gas industry would not generate sufficient returns relative to their price tags.

“Some of the deals that have been done, I cannot justify for our shareholders,” McCollum said.

While upstream is the most active sector for energy deals, the oil field services sector has been fastest growing. Upstream accounted for $284 billion of the more than $400 billion spent on mergers and acquisitions in 2012, according to a Deloitte study.

In its search for potential acquisitions, Halliburton is focusing on new technologies that fit its existing infrastructure, and for adjacent services and product lines that help complement already existing services, McCollum said.

The company is also interested in investments that could help it move into new geographical areas, McCollum said, explaining that the company is working on partnerships in China to help establish its presence in the market.

Cameron has benefited from a 2012 deal it made with Schlumberger for a joint venture focused on subsea systems, said Gary Halverson, vice president of Cameron International and president of Cameron Drilling & Production Systems.

Halverson said that his company also plans to invest in additional acquisitions to expand its offshore services presence, but emphasized that oil field service companies should not plan to purchase their way into sustainable growth.

“Acquisition is not a strategy,” said Gary Halverson, vice president of Cameron International and president of Cameron Drilling & Production Systems. “The best way to do it is organically. You are seeing a lot of evaluations that don’t seem to work on a strategic basis.”