What’s Driving Halliburton's Improved Competitiveness?

To even the sharpest-eyed observers, progress at today’s largest corporations can sometimes prove frustratingly imperceptible. Accordingly, one could be forgiven for viewing Halliburton’s (HAL) fourth quarter 2007 earnings as falling somewhere between average and middle-of-the-road. However, if you look at the larger picture and at the right data, there’s evidence that more progress than meets the eye might be underway at the global oilfield giant. With the spin-off of KBR and its nagging asbestos affair now firmly in the rearview mirror, the company seems to have a little more bounce in its step these days. Certainly, its decision to relocate its CEO to Dubai signals a fresh willingness to compete head on with archrival Schlumberger (SLB) for lucrative business in the promising Eastern Hemisphere.

But the real key to understanding the improved competitiveness we see at Halliburton lies in the gains the company is enjoying with customers. Since 2004, Halliburton’s customer satisfaction ratings, as measured by EnergyPoint’s annual independent surveys, have suggested the company is not only holding its own in the minds of customers, it’s now gaining some valuable ground when compared to key rivals. For example, in our most recent survey, respondents utilizing both Halliburton and Schlumberger’s drilling and wellsite products rated Halliburton higher overall, both from the standpoint of satisfaction and in terms of their willingness to recommend the company to others. This compares to only a few years ago when such direct comparisons showed little in the way of differences in these two areas.

So what’s specifically driving Halliburton’s improved competitiveness? While it’s true that differences in the two companies’ pricing produced the highest gaps, Halliburton also outperformed when it came to product availability and delivery, as well as in the categories of downhole completion equipment and oilfield fluids and chemicals. For its part, Schlumberger stood out in terms of the technical soundness and sophistication of its products, along with the depth and breadth of its offerings. Nevertheless, on balance, Halliburton appears to hold the momentum as it emerges as an increasingly viable alternative to Schlumberger in many areas. And who knows, if trends continue, we might even see that bounce in Halliburton’s step replaced by some good old-fashioned swagger.

Disclosure: none