Halliburton secures $500 million to fund drilling in old wells
By Amrutha Gayathri
(Reuters) - Halliburton Co (HAL.N: Quote) said it had tapped BlackRock Inc (BLK.N: Quote) for $500 million to help fund drilling in existing shale wells, the first such move by a major oilfield services provider at a time when oil producers are shying away from drilling new wells.
The world's No.2 oilfield services provider, which is buying No.3 Baker Hughes Inc BHI.N to cope with a fall in demand, also reported a better-than-expected profit, helped by cost cuts.
Market leader Schlumberger NV (SLB.N: Quote) and Baker Hughes have touted refracking, the practice of fracking existing wells, as means for oil producers to save money. Drilling normally accounts for about 40 percent of the cost of a new well.
"Though a relatively small market today, we see significant runway for refrac in the future," Halliburton President Jeffrey Miller said on a post-earnings call on Monday.
Oil and gas companies have said refracking is still too unpredictable, but some such as Devon Energy Corp DVN.N and Chesapeake Energy Corp (CHK.N: Quote) are using the technology to revive output from existing wells.
The funding could help Halliburton speed up adoption of refracking, Edward Jones analyst Rob Desai said.
"I think people are wondering why Halliburton themselves weren't providing some of that financing."
Halliburton's shares rose 2.7 percent to $41.05 and Baker Hughes' rose 2.4 percent to $59.70, while the broader U.S. oil and gas index .DJUSEN was down 1 percent. Continued...