Let’s take a look at a few of the pros and cons of this move and recap some of the key points that Jim Cramer said on Mad Money and key points made by Eric Bolling and Tim Strazzini made on CNBC’s Fast Money show (both shows aired on 3-12-07).
Dubai is the future center for oil. Analysts predict Middle East global oil production to continue to increase while production will continue decrease in United States. Halliburton has an opportunity to improve relations with the world’s largest oil producers. Dubai offers substantial tax savings should Halliburton choose to go that route.
Top corporate talent could leave the company as they may not desire to move to Dubai. Controversy surrounding company will probably worsen, as some see it as avoidance to possible U.S. investigations and U.S. corporate taxes.
Jim Cramer’s Thoughts on Mad Money
On the first half of Mad Money, Jim Cramer provided his viewers with his top five oil services stocks. He ranked Halliburton as his #2 oil services stock and commented that Halliburton is steadily losing business to rival Schlumberger. Jim feels that the move to Dubai is part of the solution that can help Halliburton gain back that business and possibly help Halliburton lose its image as a “tool of the Bush regime”.
Eric Bolling’s and Tim Strazzini’s Thoughts on Fast Money
Eric Bolling called Halliburton’s move to Dubai simply “a great move” and a “great place to be”. Tim Strazzini described the move as putting Halliburton in the “primary theatre of the entire product” and a “move into the hub for the entire world”. Strazzini commented that some of Halliburton’s biggest customers are located in Dubai’s region.
Critics will be out in full force describing Halliburton’s move to Dubai as un-American, tax evasive, or an avoidance of regulatory investigations. However, when you put the comments made by Jim Cramer, Eric Bolling and Tim Strazzini together I think you get the true story. Halliburton’s move to Dubai is about remaining a competitive force in the oil services industry and possibly gaining an edge over its closest competitors.
I believe CEO David Lesar is doing what is right for the long term prospects of the company and he is doing what is right in trying to improve shareholder value. Halliburton's growth is coming from international markets and focusing on the Middle East will be critical for Halliburton's long term success. In my opinion, this is a move that just makes sense.
Disclosure: Author holds a long position in HAL.
HAL 1-yr chart