Halliburton Lowers Guidance, Margins Affected by 300 Basis Points

As a result of the recent rapid expansion of oil and liquids-related activity in North America, Halliburton HAL has experienced increased costs for guar gum, an agricultural commodity used as a blending additive to its fluids utilized in hydraulic fracturing. The price of guar gum has inflated more rapidly than previously expected due to concerns over the potential for shortages for the commodity later in 2012. As such, the costs have impacted the company's second quarter North America margins more than anticipated. As a result, the company now believes that its North America margins will be impacted 300 basis points more than its previous guidance of 200 to 250 basis points, for a total impact of 500-550 basis points lower than first quarter levels.