Company Background

Discuss about the Impacts of Gas Drilling on Human and Animal Health?

The report emphasizes on the strategic management of Halliburton, which takes active participation in offering a broad range of oilfield services and products to upstream the oil and gas consumers in the global market. A brief description would be given about the current state of the organization from the starting of 2014 until today.  Upon identification of the organization’s position in the competitive market, the learner would consider the strategic options available to the oil field service provider (Wang and Roberts 2013). The report would analyze the business ethics and the scandals faced by the organization off late. The study would also emphasize on the application of appropriate academic models while considering the strategic options available to the chosen firm.

Halliburton is one of the most reputed providers of products and services to the oil and gas industry. The organization invented in the year 1919 and comprise of more than 65000 employees symbolizes 140 nationalities in more than 80 countries. The organization continuously probes for expansion and innovation in the global market for meeting the perceived needs and demands of the oil and gas consumers. The corporate headquarters of the organization is located in Houston, Texas and Dubai, United Arab Emirates.

Figure: Completion and Production Revenue of Halliburton

(Source: Wang and Roberts 2013)

The most integral business segment of Halliburton is the Energy Services Group. The exploration and production of petroleum and natural gas is dependent on the technical products and services initiated by the ESG. In accordance to 1^st August 2014, Jeff Millar is the president of the organization. Halliburton constitutes of thirteen product service lines. The product service lines of the organization segregate itself under two categories- Drilling and evaluation and completion and production. (Inkpen and Moffett 2011) The product service lines are primarily useful for strategic and technological development, people development, process development and allocation of the capital. The organization takes active participation in serving the upstream oil and gas industry throughout the world in a complete lifecycle of the reservoir.

Figure: Forecast of Oil Price for Halliburton

(Source: Melvin et al. 2016)

Strategic management refers to the strategy that an organization undertakes to gain supremacy in the competitive market. Through implementation of strategic management, the oil and gas industries seek a deep insight to achieve the objective oriented outcomes. The identification of proper strategic management is identical for oil and gas industries as it analyzes the business environment and recognizes any issues concerning sustenance of the organization in the competitive market (Melvin et al. 2016).

Concept of strategic management

The oil and gas industries identify suitable strategies by analyzing its impact on revenue generation and profit margin of the organization. Strategic management also seeks a deep insight to track the past records and avoid such practice that may hurt the in5egrity of the organization (Grant 2012). The strategic implementation of oil and gas industries helps the organization to take corrective decisions and practical solutions in crunch scenarios for ensuring long-term sustainability.

In accordance to the contemporary scenario, Halliburton does not want to expose itself to any more risks, rather acquire as much market share as possible for gaining supremacy in the competitive market. The concurrent scenario of marketing downturn and price sprawl urges the management of the organization to reduce their capital expenditure and invest in greater industry consolidation. In accordance to the contemporary scenario of lessened price and costlier environment that is anticipated to continue through 2016, Halliburton takes active participation in initiating a multi- prolonged approach to cut down costs, enhance efficiency and minimizing the risks in the offshore operations. Furthermore, Halliburton is trying their level best to restrict its exposure to asset risks. The organization always urges to enhance their daily operational process for reflecting on the revenue generation and profit margin of the organization (Kerschner et al.  2013). the practice of integrated service strategy allows the organization to get an edge above its competitor brands.

Figure: Halliburton’s Dividend per Share

(Source: Lynch 2012)

The successful implementation of strategies made Halliburton one of the leading Oil service providers in the world. The management always aims to set up business plans and activities in alignment with the area of knowledge and experience. Successful organizations comprise of experienced individuals, which allows them to climb the ladder of success in an easy manner (Lynch 2012). Halliburton always provides quality products and services to the consumers. Positive word of mouth from the consumers assisted the organization to enhance its brand recognition in an easy manner.

The organization creates high value products and services to meet with the perceived needs and requirements of the consumers. Legal documentation of the business activities has allowed the organization to maintain its integrity in the competitive market. Halliburton was clever enough to patent the inventions of the organization (Bamberger and Oswald 2012). In order to maintain supremacy in the competitive market, Halliburton should manufacture uncommon products that cannot be duplicated easily. The service excellence and mechanism would can leave its competitor far behind. However, for achieving this organization requires a research and development team.

Strategic management of Halliburton

Figure: Halliburton Quarterly EPS: Adjusted versus Estimates

(Source:  Bamberger and Oswald 2012)

The research and development unit often rejects a non –productive approach, which could otherwise hurt the image of the brand. There is no doubt about the fact that the research and development unit of Halliburton have continuously dominated this sector over the last few years (Johnson, Whittington and Scholes 2013). However, lack of funding and marketing downturn hinders the performance and productivity of the organization in the competitive market.

In the contemporary scenario, the price of oil  have show a decline of  40% since July 2014, potentially affecting the enhanced cost new shale and deep water projects in North America. However, in this crisis scenario, Halliburton is confident of overcoming the obstacle in a successful manner through effective interpretation of enhanced market share and cutting down of financial acquisitions (Fang and You 2014).

Figure: Halliburton Vs Big Oil Stocks in 2015

(Source: Fang and You 2014)

In the year 2015, the situation did not develop either. The upstream oil and gas companies experienced a 50% drop in their revenue generation. However, within 2016, the industry is hoping to retrieve its position (Weber 2012). The prices of the oil barrel came down from 90$ per barrel to 60$ in the year 2014.The slower trends of economic growth and weakening global demand are the some of the major concerns for the oil and gas industries.  It was even lower in the year 2015, as each oil barrel was costing 40$. As per the early trends of  2016, the oil prices continues to remain on the lower side, keeping the fact in mind that volatility could come back at any point of time.

Figure: Cumulated Impact on GDP and Decline in Oil Prices

(Source: Shahriar, Sadiq and Tesfamariam 2012)

Despite the fact, the organization has faced uncertainties in the pricing of oil and gas, Halliburton seeks a deep insight to come out of this turmoil in a successful manner. The grounds covering the oil patch have significantly changed over the years. The future estimation of the oil and gas industry is totally different than what it was few years ago, as the basic fundamentals of the oil and gas industries were initiated by the cartels (Murray 2013). The traditional structural discipline has its alteration in the form of systematic imbalance due to enhanced supply and retreating demand growth. Global economical weakness, tuff economical regulations of fuels, subsequent viable forms of alternative energy and the involvement of special efficient engines have curtailed the need for oil in the competitive market.

Current State of the chosen oil field

Figure: Comparing North American Cycles in Oil and Gas Industries

(Source: Murray 2013)

In order to get a grasp of the international market, the organization has successfully taken an edge over its competitor brands. The organization has expertise in drilling activities and has the ability to completing the project from starting until the end. The strategic compliance of the organization with the government rules and regulations allows Halliburton to exploit their potentials fully. The diverse workforce culture of the organization allows the employees to implement their creative thoughts and innovative applications (Shahriar, Sadiq and Tesfamariam 2012). The employees get enough time and opportunities to reflect productive performance for the organization. The potential capital base of Halliburton gives them an chance to conserve difficult financial times like global recessions where they always opt to utilize their profit margins in areas of expansion and operating expenses. When economical challenges grasps the sustainability of several oil and gas industries, Halliburton still stands firm due to its strong capital base.

Upon successful identification of competitive analysis and market skimming, the available strategic options are available that could assist the organization over its competitor brands. The strategic plan probes for a preference of investment options, which comprise of the Target Date Portfolios and ten single focus strategies demonstrating asset classes.  Further data and information about the objective, benchmark, fees, strategies, performance, volatility, risk analysis and portfolio statistics of each of the investment options available in the strategic options are the driving factors of success for Halliburton (Schneising et al. 2014). The implementation of Non Us Equity Index strategy could serve as a strategic option for Halliburton.

Figure: Biggest Oil Layoffs

(Source: Grant 2012)

The Non Us Equity index strategy takes active participation in identifying the risks and returns of international equities. The strategy reflects an investment approach itself to track the performance of MSCI across the country (Rudberg, Waldemarss and Lidestam2013). The implementation of stable value strategy ensures safety of principle and consistency of returns with lesser percentage of volatility. This does not state that Halliburton would experience poor or negative rate of return. However, the option of investment is managed by reducing these changes. No government bodies give assurance about the performance of the investment options. Implementation of the above-mentioned strategic options would assist the organization churn profitable ventures at times of distress or economical disarray.

In order to decrease uncertainty in the drilling and production process , the geologists of Halliburton takes active participation in formulating sophisticated and complex stimulations of 4Dand 3D  modelling technology. The 3D modelling technologies emphasizes on compensating the fluids and 4D modelling technologies has its relation with the history of production (Popoola et al. 2013). Halliburton implements procure high performance computer solutions to reduce the amount of time required for processing lump sum amount of data to fasten reservoir and seismic stimulations. The application of 3D and 4D modelling are cost effective by nature and it saves a lot of time in its process.

As for example, application of reservoir simulation models are implemented for the utilization newer and older fields where the forecasts of production are required to initiate investment decisions, recognizing the number of wells essential, and recovering oil capacity and refer to opportunities for enhancing oil productions in heavy oil deposits (Lasserre 2012). The oil and gas industry takes active participation in investing for the essential infrastructure to empower the engineers in alignment with the advanced high-performance computing resources. However, the HPC systems need “high bandwith” “low latency connections amongst multiple processors”, “multiple CPU” and “high speed storage systems”.

The unethical practices of Halliburton have been highlighted over the years. Despite being one of the leading corporations in oil and gas industries, the organization received several allegations and criticisms in the contemporary scenario. The organization got involved into trade relationships with certain countries prohibited by the US government. The organization also received criticisms for violating certain rules of accounting practises due to falsification of information in the income statement. Furthermore, KBR, the subsidiary of the organization got involved in extra billing of oil and food supplies to the US army during the onset of the Iraq war in the year 2003. The political connections of the organization also got several advantages that benefited them over the years (Tordo et al. 2013). In accordance to the above ethical issues, several untold mysteries were associated with the horizontal oil spill in the year 2010. The organizations were also alleged of taking bribes in certain business acquisitions.

Figure: Deep water Horizontal Oil Spill

(Source: Lasserre 2012)

The Deepwater Horizontal oil spill was the most destructive scandal faced by Halliburton in the year 2010, when the flowing of the oil continued for three months. The explosion took away the life of 11 workers and further injured 17. On July 15, the leak was restricted before it poured 4.9 billions of crude oil on the sea floor. Halliburton energy services had the responsibility of cementing and installing the production casing. Upon completion of the cementing, the well should have been tested for integrity by plugging a cement set, where no activities should have taken place until the well has its activation as a sea producer.

Instead, the modelling systems of Halliburton were used several times throughout the day, which finally caused the leakage of the Deep Water Horizontal Oil spill. The ill effects of horizontal oil spill not only affected the marine life in a negative manner but also affected the tourism industry. The chemical reactions caused several diseases individuals and the population continued to suffer for a subsequent amount of time. The organizations received severe criticisms for their deeds. Criminal charges were launched against the organization and therefore, it remains as one of the darkest scandal in the history of Halliburton.

Slashing Costs

The drilling activities in the Gulf of Mexico have slowed down in the contemporary scenario. Therefore, Halliburton must prompt its marketers to cut down on the costs and seek enhanced operational efficiency onshore.  The organization needs to discontinue 5000 to 7000 employees in regards to the falling oil prices and the resulting declination of oil and gas industries. The organization should also check their expenditure towards technological implosion. 

Efficiency gains

Optimized operations are one of the key ways of reflecting marginal profits in the volatile price climate. The production of the organization could be enhanced by improving the day-to- day operational activities. The management should seek a deep insight to restrict the non-productive time for eliminating the poor work quality. Efficiency gains would allow the organization to flourish in context to the oil and gas industries.

Managing risk factors

Inclusion of risk management activity is very much essential for Halliburton, due to the contemporary scenario arising against the favour of oil and gas industries. The particular scenario would urge the management to keep an eye on the organization assets and draw itself out from the existence of any potential risk. The managers are always looking forward to increase the market share as much as possible. Since more than 90% of the oil and gas operators are asking for concessions, the trickery of maximizing marketing share would allow Halliburton to gain momentum when the prices of oil and gas recover.

Conclusion

On the contrary, it concludes that Halliburton is one of those organizations what has both huge prospectus and dark secrets in terms of business acquisitions. The organization tends to maintain its exposure in down turn scenarios by enhancing market share and cutting of organizational cost. The organization is very calculative in its approach and avoids unnecessary risks. The horizontal oil spills have created negative vibes about the brand identity of the organization as the unethical practises were highlighted. However, the organization still rules the competitive market in terms of production and sustenance in the competitive market.

Reference List

Bamberger, M. and Oswald, R.E., 2012 Impacts of gas drilling on human and animal health New solutions: a journal of environmental and occupational health policy, 22(1), pp.51-77

Fang, C.R. and You, S.Y., 2014 The impact of oil price shocks on the large emerging countries’ stock prices: Evidence from China, India and Russia. International Review of Economics & Finance, 29, pp.330-338

Grant R (2012) Contemporary Strategy Analysis: concepts, techniques, Applications, 8th Ed, Blackwell

Inkpen, A, and Moffett, M, H, (2011), the Global Oil and Gas Industry: Management, Strategy and Finance, PennWell

Johnson G., Whittington R., and Scholes K, (2013), Exploring Strategy, Ed 10, Prentice Hall

Kerschner, C., Prell, C., Feng, K. and Hubacek, K., 2013. Economic vulnerability to peak oil Global environmental change, 23(6), pp.1424-1433

Lasserre, P., 2012. Global strategic management Palgrave Macmillan

 Lynch R (2012) Strategic Management, 6th Ed, Prentice Hall

Melvin, A.T., Thibodeaux, L.J., Parsons, A.R., Overton, E., Valsaraj, K.T. and Nandakumar, K., 2016 Oil-material fractionation in Gulf deep water horizontal intrusion layer: Field data analysis with chemodynamic fate model for Macondo 252 oil spill. Marine pollution bulletin

Murray, K.E., 2013. State-scale perspective on water use and production associated with oil and gas operations, Oklahoma, US. Environmental science & technology, 47(9), pp.4918-4925

Popoola, L.T., Grema, A.S., Latinwo, G.K., Gutti, B. and Balogun, A.S., 2013. Corrosion problems during oil and gas production and its mitigation.International Journal of Industrial Chemistry, 4(1), pp.1-15

Rudberg, M., Waldemarsson, M. and Lidestam, H., 2013 Strategic perspectives on energy management: A case study in the process industry. Applied Energy, 104, pp.487-496

Schneising, O., Burrows, J.P., Dickerson, R.R., Buchwitz, M., Reuter, M. and Bovensmann, H., 2014. Remote sensing of fugitive methane emissions from oil and gas production in North American tight geologic formations Earth’s Future, 2(10), pp.548-558.

Shahriar, A., Sadiq, R. and Tesfamariam, S., 2012. Risk analysis for oil & gas pipelines: A sustainability assessment approach using fuzzy based bow-tie analysis. Journal of Loss Prevention in the Process Industries, 25(3), pp.505-523

Tordo, S., Warner, M., Manzano, O. and Anouti, Y., 2013 Local content policies in the oil and gas sector World Bank Publications

Wang, P. and Roberts, T.M., 2013 Distribution of surficial and buried oil contaminants across sandy beaches along NW Florida and Alabama coasts following the Deepwater Horizon oil spill in 2010. Journal of Coastal Research, 29(6a), pp.144-155.

Weber, J.G., 2012. The effects of a natural gas boom on employment and income in Colorado, Texas, and Wyoming. Energy Economics, 34(5), pp.1580-1588