Halliburton Company (NYSE:HAL) Q2 2019 Earnings Conference Call Transcript
Jul 22, 2019 • 09:00 am ET
like to provide some regional commentary, beginning with the international markets. I'm excited by what I see internationally a continued broad-based recovery across multiple geographies, primarily driven by land and shallow water operations. Our business in the North Sea is extremely busy, both in the Norwegian and UK sectors. We have significantly increased our market share there by winning large tenders. Currently, we are sold out of Drilling and Wireline tools in the North Sea. Is activity keep ramping up especially with independent operators taking over IOC assets in the UK, supply and demand balance is significantly tightened for tools and I expect that incremental work will come with better pricing.
We see similar dynamics in the Asia-Pacific markets. Malaysia, Australia and India are all showing strong activity growth. Increased activity leads to better pricing dynamics and we are already seeing the leading edge of pricing improvement in those markets. For instance, tightness in the supply of open-hole Wireline tools is allowed us to raise prices in certain markets.
As to the broader offshore market, we've seen enough size to anticipate future growth. In June, the year-over-year change in offshore rig count was up for the 12th consecutive month and appears to be gaining momentum. However, the majority of large offshore projects being sanctioned or awarded today have a 2020 or 2021 start date.
For example, this month we announced an integrated offshore drilling services contract win with Kuwait Oil Company. This is the first offshore project in Kuwait since the 1980's and it includes six high-pressure, high-temperature exploration wells on two jack-up rigs in the Arabian Gulf. Starting next summer Halliburton will provide well construction services, well testing, coring, coiled tubing and the majority of offshore logistical services under this three-year contract.
Halliburton entered this international recovery a much stronger competitor. Over the last decade, we've taken strategic actions that have increased the market opportunities in which we can compete. To be specific; first, we made substantial investments to grow our international footprint in the years prior to the downturn. We increased our product service line presence in various geographies. Expanded our manufacturing capacity in Singapore and opened technology centers and Saudi Arabia, India and Brazil. I cannot emphasize enough how important physical footprint is in the international markets. You simply must be present to win.
Second, we made strategic investments in closed technology gaps and product lines that we believe are critical to our success in the international markets. These product lines are Sperry Drilling.
I've talked to you a lot about iCruise, our new rotary steerable platform. Rotary steerable's are used globally for drilling, both onshore and offshore wells. The competitive drilling technology is critical, because it's not only a higher margin business. It's also the cornerstone of integrated well construction services. Because of superior technical specs and the modular design of this tool, we're confident that replacing our legacy platform with iCruise will enhance our competitiveness, save on maintenance costs and improve asset velocity. We are