Unfettered drilling for oil will more than offset any slowdown in natural gas drilling in North America, helping improve Halliburton Co.'s (HAL) business despite a bleak outlook for natural gas prices, Chief Executive Dave Lesar said Monday.
Unfettered drilling for oil will more than offset any slowdown in natural gas drilling in North America, helping improve Halliburton Co.'s (HAL) business despite a bleak outlook for natural gas prices, Chief Executive Dave Lesar said Monday.

"We believe there will be an overall increase in rig count in 2012," Lesar said in a conference call with analysts. "A more pessimistic scenario is priced into our stock, and we do not see that happening." Shares for Halliburton and other oilfield service providers have suffered in recent weeks due to a dramatic fall in natural gas prices due to oversupply combined with an unseasonably mild winter.

Lesar said that the ongoing shift towards oil drilling requires producers to purchase more expensive materials and services from oilfield services providers, providing growth opportunities for Halliburton. "The idea that North American margins will collapse is a ridiculous one."

Lesar said he expects revenues and operating income to increase in North America in 2012. He added that the drop in natural gas drilling activity would eventually remove the overhang in natural gas supply Halliburton is going to spend between $3.5 billion and $4 billion in capital expenditures in 2012, Lesar said.

Lesar said that oil production in Libya has resumed, but it is still awaiting "well-defined plans" from its customers there.

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