February 7, 2012 / 3:52 PM / in 6 years

UPDATE 1-Halliburton feels natgas drag on N.America margins

Feb 7 (Reuters) - Halliburton Co, the North American leader in hydraulic fracturing services, believes more weakness in natural gas prices may lead to a further drilling decline that could start weighing on its margins by the middle of this year.

The company had expected North America’s fracking market to stay in balance through the year, but Chief Financial Officer Mark McCollum said the effects of a mild winter on gas prices could deepen the slump and lead to some overcapacity by mid-2012.

Speaking at the Credit Suisse Energy Summit on Tuesday, McCollum repeated warnings about the disruptions of moving fracking crews out of natural gas basins to liquids regions. He also said weather disruptions could temporarily knock about a percentage point off profit margins, which were above 27 percent in the fourth quarter. “That then would go away as the year progresses,” he said.

He anticipated improvement in margins outside North America, which were 15 percent last quarter, throughout the year.

Shares of Halliburton were down 1.5 percent at $36.85 in morning trading on Tuesday. (Reporting by Braden Reddall in San Francisco, editing by Dave Zimmerman)

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