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In January 2014, Halliburton (HAL) successfully provided wireline services to Cobalt International Energy (CIE) for exploring the characteristics of two deepwater exploration wells in the pre-salt formation in offshore Angola. Oil and natural gas companies use wireline services to gather information on the petrophysical properties of a rock formation and determine hydrocarbon prospects. Halliburton used an advanced tool called the Reservoir Description Tool, or RDT, tools to collect the reservoir formation pressure and samples. Previously, Halliburton's RDT system successfully provided results on reservoir characteristics with fewer data points, 20 instead of 80 data points, and within 24 hours. Quick analysis helps save around one to two days of rig drilling time, resulting in cost savings. This tool helped one oil and natural gas company save around $25 million in operation costs in offshore Angola. The success of this service will further strengthen Halliburton's position in West Africa's oil services market.

Between the two exploratory wells, Cobalt drilled one of the exploratory wells named Bicuar #1A located in the syn-rift reservoir at a depth of around 5,739 meters with a net pay zone of around 56 meters of oil and condensate. The syn-rift reservoir is located in Block 21 offshore Angola in which Cobalt has a 40% stake. Cobalt mainly focuses on the subsalt and pre-salt reservoirs in offshore West Africa with assets in Gabon and Angola and is taking a lead role to develop the pre-salt formation. Subsalt and pre-salt are geological formations that could contain hydrocarbon deposits. The association of Halliburton and Cobalt in drilling the pre-salt reserves in offshore Angola will increase exploration capabilities for both of the companies. Halliburton's RDT system was used in the exploration of the Bicuar #1A well and could be one of the reasons for the short drilling and completion time. Bicuar #1A well is Cobalt's fourth pre-salt discovery in offshore Angola. It drilled this Bicuar well in 59 days, 63 days ahead of schedule.

The pre-salt region of Angola bears resemblance in structure to the pre-salt formation in Brazil, thus enticing oil and natural gas companies to explore the region. Certain estimates indicate the total pre-salt hydrocarbon reserve could be around 50 billion barrels of oil equivalent, or bboe. The pre-salt formation of West Africa could have a potential reserve between 10 to 15 billion barrels.

Bringing oil expertise to Saudi Arabia

Saudi Arabia is one of the largest producers of oil with production of around 10 million barrels per day since the start of 2011. The country plans to increase production further by increasing the number of rigs from around 160 in 2013 to 210 by the end of 2014. This initiative to increase oil production is creating demand for oil service companies.

The increase in oil drilling activity in Saudi Arabia allows Halliburton to expand its revenue from the region to offset the declining revenue in the North American drilling market. The revenue from the North American drilling market fell from around $4.16 billion during the first quarter of 2012 to $3.82 billion in the fourth quarter of 2013. During the same period, the revenue from the Middle East grew from $908 million to $1.4 billion. The growing drilling activity in Saudi Arabia could help Halliburton diversify its revenue base and grow it as well. In November 2009, Halliburton received the rights to drill the South Ghawar field for five years with an option to extend the drilling contract for another five years. If this contract in the Saudi Arabian oil and natural gas fields is extended for five years after 2014, it will provide further revenue growth for Halliburton in the coming quarters.

Growing in the salts and the sands

Halliburton's exploration in the pre-salt formation in offshore Angola provides the company with expertise about the exploration techniques of the rock formation in the region. In addition, the company's operational expertise resulted in cost savings for oil companies. Halliburton's services are likely to gain momentum in the coming quarters as pre-salt exploration gains traction with multiple companies investing in the same.

Halliburton's Saudi Arabia initiatives should help the company develop technology localized to the Saudi Arabian condition and develop a skilled personnel base to carry out drilling operations in the region. Further, increasing expenditure for oil exploration in Saudi Arabia will provide a tailwind for the company in the coming quarters.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.