Halliburton Warns on Contract Cuts by Pemex

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(Bloomberg) Halliburton Co., the world's second- largest oilfield-services provider, said a reduction in business from Petroleos Mexicanos will cut earnings by about 2 cents per share in the fourth quarter. Halliburton's work in the Burgos, Veracruz, and southern areas is being affected by a decision from Pemex, as the Mexico City-based company is known, to decrease activity in part because of low natural-gas prices, Houston-based Halliburton said today in a statement.

Pemex has cut drilling plans at its $11.1 billion onshore Chicontepec field, where Halliburton (HAL), Schlumberger Ltd. (SLB) and Weatherford International Ltd. (WFI) all have service contracts. The state-owned oil company may drill 700 wells this year at Chicontepec and about the same next year, Carlos Morales, head of exploration and production, said this month. That's less than a goal of drilling 1,500 wells annually.

Pemex is pumping about 30,000 barrels a day at the field this year, below a goal of 100,000 barrels a day. The Energy Ministry estimates the field may reach about 600,000 barrels a day by 2017.

Halliburton also has contracts with Pemex to provide work at the Burgos gas field in northern Mexico that borders Texas. Burgos is Pemex's largest field producing only gas. Pemex pumped 1.383 billion cubic feet of gas a day from Burgos in 2008, about 20 percent of the company's total gas production, according to its Web site. Pemex began a 15-year plan in 1997 to boost output at Burgos, which has been in operations since the 1940s, by hiring Halliburton, Weatherford and others.

Today's statement was issued after the close of regular U.S. trading. Halliburton fell 81 cents, or 2.7 percent, to $29.65 in after-hours trading. Excluding one-time items, Halliburton's fourth-quarter profit is expected to be about 28 cents a share, the average of 25 analyst estimates compiled by Bloomberg.

Schlumberger is the world's largest oilfield-services provider.

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