SLB Schlumberger Ltd

Leading product and service provider for the energy industry, Halliburton (HAL) announced plans to acquire San Angelo, Texas-based privately held oil field service company Multi-Chem Group LLC. The financial terms of the deal were not disclosed.

The acquisition, expected to be completed in the fourth quarter, is pending regulatory and customary approvals.

Management of Multi-Chem, which has a record of providing chemicals and services to more than 30,000 oil and natural gas wells across North America, believes that this transaction will open various opportunities for the company based on Halliburton’s strong customer base and overseas operational strength.

As elucidated by Halliburton, this step will enable to company to diversify its product and service offerings and drive sales. The world's second-largest oilfield services company after Schlumberger Ltd. (SLB) will also be able to serve and fulfill the demands of a large number of customers.

Houston, Texas-based Halliburton offers a variety of equipment, maintenance, and engineering and construction services to the energy, industrial and government sectors. The company operates under two main segments: Completion and Production, and Drilling and Evaluation.

We believe that Halliburton enjoys the top notch in the U.S. pressure pumping market, with significant acreage positions in the highest profile plays, such as Haynesville, Eagle Ford shale and Bakken. Additionally, the company is set to benefit from demand improvements in select North American basins, as operators continue to focus their investments on exploitation of unconventional resources.

Additionally, the company remains in excellent financial health with about $1.4 billion in cash and a debt-to-capitalization ratio of around 25%. This helps Halliburton to capitalize on investment opportunities and offer strategic acquisition options, thereby improving its growth visibility.

Considering these factors, we believe Halliburton has secured a good position for itself, and hence maintain our long-term Outperform recommendation. Halliburton currently retains a Zacks #1 Rank (short-term Strong Buy rating).

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