Halliburton Quarterly Profits Fall as Operating Costs Rise
Monday, July 23, 2012
According to Businessweek.com, Halliburton’s profits are falling, though sales are up, because of the recent fracking boom.
The company’s net income dropped from $739 million last year to $737 million this year.
Read it:
“North America’s probably finding a bottom,” Stephen Gengaro, an analyst at Sterne Agee & Leach in New York who rates the shares a buy and owns none, said today in a telephone interview. “International has been a little bit better than we think.”
Fracking capacity in North America was expected to rise 28 percent in 2012. The industry grew 42 percent in 2011 according to Spears & Associates, an Oklahoma based consulting firm.
Operating profit margins for North America dropped 4.8 percentage points this year, due to higher material costs. A shortage of guar gum, an agricultural commodity used in fracking, has driven up prices more than expected.
» Via: Bloomberg Business Week › Halliburton Quarterly Profit Falls on Inflated Fracking Costs
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Shale FAQ
What is fracking?
Fracking is a slang term for hydraulic fracturing. Fracturing is a process by which highly pressurized fluid is pumped thousands of feet into the ground to fracture rock formations. The goal is to release the natural gas that’s locked inside the rock.
Is it safe?
What most concerns people about fracturing is ground water contamination. The worry is that fractures underground, caused by the process, will extending upwards and into aquifers, releasing gas and chemicals into the ground water supply. There’s been no confirmed reports of such a thing happening. Though surface spills and drill site blowouts can lead to localized environmental concerns.
Will my water catch on fire?
Flammable water is caused by the release of methane gas into a drinking water supply. Methane gas occurs naturally and can be released by any kind of drilling, including water wells. In Pennsylvania officials fined Chesapeake Energy $1 million for contaminating ground water with methane. It was determined that the company had not properly cemented it’s boreholes and gas migrated up the well, between rock and into aquifers.