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Halliburton: Abysmal $700 Million Exposure To Venezuela

Summary

Schlumberger is curtailing operations in Venezuela due to slow payments.

Halliburton, Baker Hughes and Weatherford all have outsized exposure to Venezuela.

In addition to a potential $3.5B merger break-up fee, a deterioration in receivables from Venezuela could sting HAL.

Weatherford has limited liquidity. It can ill-afford a deterioration in short-term assets.

Avoid Halliburton and Weatherford.

Venezuelan President Nicolas Maduro

Earlier this week Schlumberger (NYSE:SLB) announced it was paring back its operations in Venezuela due to slow payments from Venezuelan state oil company PDVSA. Schlumberger receives 3% of its revenue from Venezuela and has over 10% of its receivables in the country. Instead of continuing to work for free it decided to cease doing work. According to RBC analyst Kurt Hallead Halliburton (NYSE:HAL), Baker Hughes (NYSE:BHI) and Weatherford International (NYSE:WFT) all have outsized exposure to Venezuela, as Bloomberg reports:

Here's the breakdown of RBC estimates for four big services companies:

Schlumberger (target price, $95)
Revenue: Venezuela accounted for ~3% of total 2015 revenue.
Accounts receivable (A/R): Venezuela exposure is >10% of total accounts receivable. SLB had $8.8 billion total accounts receivable as of Dec 31, 2015.

Halliburton (target price, $42)
Revenue: Venezuela accounted for ~3% of total 2015 revenue.
A/R: Venezuela accounts receivable exposure is $704 million (~13% of $5.3 billion total).

Baker Hughes (target price, $66)
Revenue: Venezuela accounted for ~2% of total 2015 revenue.
A/R: The company does not disclose A/R exposure concentration for any customers in its 10-K.

Weatherford...


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