Major oilfield service provider Halliburton Company (NYSE:) recently announced that its board of directors has appointed Jeff Miller as the new CEO of the company effective Jun 1.
Miller will replace Dave Lesar, who will continue to serve as the executive chairman of the company till Dec 2018, when he reaches Halliburton’s mandatory retirement age of 65. As the executive chairman, Lesar will mainly focus on the strategic direction of the company. Per his new executive employment agreement, Lesar will be prohibited to work for any of the company’s peers for the next four years. Lesar took over as the company’s CEO in 2000, after Dick Cheney became the U.S. Vice President.
Miller is known for his solid rapport with customers and employees, and for leading successful projects. Miller joined Halliburton in 1997 and was promoted to the post of President and a fellow board member in mid-2014. As the company’s new CEO, Miller will be responsible for the day to day leadership and management, planning and execution of the company’s strategic direction. He would also be in-charge of the financial objectives and technology development with the company’s management team who would be reporting directly to him.
The much expected election of the new CEO seems to be a judicious move by the company which is trying to recover from the oil downturn and the failed merger with rival Baker Hughes Inc. (NYSE:) . Halliburton is also facing stiff competition in the changing energy services industry. Post the failure of the acquisition, Baker Hughes agreed to combine with the oil and gas division of industrial conglomerate General Electric Company (NYSE:) , forming a company which poses risk to Halliburton’s position as the world’s second-largest oil field services company just behind Schlumberger Ltd. (NYSE:) .
All these factors have hurt the company’s liquidity and profits. Halliburton’s total revenue for 2016 fell by about 33% year over year. Halliburton’s cash reserves also dropped from $4 billion at the end of 2016 to $2.1 billion on Mar 31. However, the company reported better-than-expected profits in the first quarter owing to improved utilization of resources on the back of growing North American rig count.
Of late, many top executives of Halliburton are contemplating about raising the company’s various services rates. This in turn is likely to boost the revenues of the company. Miller will be renegotiating contracts with oil producers to pay more for the company’s services. Halliburton expects the prices to increase by at least 10% and in some cases 20% or more this year. Many customers had locked in the service rates during the downturn when the company had cut down nearly 35,000 or 40% of its workforce. However, with growth in North America’s shale oil patch activities, Halliburton hired nearly 2,500 people during the recent quarter.
Halliburton is one of the largest oilfield service providers in the world, offering a variety of equipment, maintenance, and engineering and construction services to the energy, industrial, and government sectors.
The company has outperformed the Zacks categorized Oil and Gas Field Services industry year to date. During the aforesaid period, shares of Halliburton declined 14% while the broader industry fell 18%.
The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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