Halliburton Inc. is working with several of its key customers that operate in North America’s natural gas basins by moderating prices and committing to not move equipment to “chase higher pricing” in more oily and liquids-rich plays, CEO Dave Lesar said Monday.

Lesar explained the service company’s new pricing model for dry gas services in North America during a conference call to discuss 3Q2010 earnings.

“We…continue to believe strongly in the long-term prospects of the North American gas market,” the CEO said. “Our footprint and integrated offerings give us a unique ability to experiment with new business models, customized to meet a wide range of customer-economic thresholds.”

The new approach will cut into Halliburton’s short-term revenues, he acknowledged. However, “we believe it is important to stick with our loyal and key customers in this low dry gas environment and to work together to build a long-term market stability.

“We believe this effort has the potential to reduce the number of rigs our key customers may have to lay down in response to any future weakness in natural gas prices.”

Despite the “potential weakness we see in natural gas fundamentals, we believe our North American revenue and margins are sustainable through 2011,” Lesar told analysts.

Halliburton estimates that North American oil and liquids-rich basins now support around 60% of the U.S. rig count. And the move by producers to those higher priced plays “should continue to provide an offset to any reduction in dry gas activity, moderating the typical market volatility associated with the North American market,” Lesar said.

Completions activity in North America is dramatically higher year/year, which should help the company absorb any new pressure pumping capacity, said the CEO.

“We have seen our horsepower requirements per job increase by over 50% in the last two years while the number of hours that the equipment has utilized power per well has also doubled,” said Lesar. “Additionally we are seeing that the successful horizontal drilling and stimulation techniques that we are using to exploit unconventional gas activities are now being transferred and applied to both conventional and unconventional oil plays.”

There may be 2,500-3,000 uncompleted wells in North America at the end of the year, “driven by the requirements to drill wells to hold leases…This also can provide some stability to ongoing completions work for some time, even in the lower rig environment. Further, we believe this backlog could continue to build if the rig count does not moderate and if income and pressure pumping capacity is added over the next nine to 12 months.”

Meanwhile, Halliburton’s Gulf of Mexico (GOM) business declined “sharply” in the latest quarter because of the impact of the drilling moratorium.

“In the fourth quarter, despite the lifting of the moratorium, we anticipate even further deterioration of our Gulf of Mexico business,” Lesar said. “We continue to believe that Gulf activity will remain restrained as operators adjust to the new regulations…”

Halliburton has transferred about 400 employees from its GOM operations to other regions in the United States and to global operations, the CEO said. It also has added more than 6,600 new employees to its onshore operations since the beginning of the year.

Net income for 3Q2010 was $544 million (60 cents/share), and consolidated revenue totaled $4.7 billion. Consolidated operating income was $818 million in the latest quarter, up sequentially from $762 million in 2Q2010. Excluding the impact of one-time charges in 3Q2010, operating income was $868 million, which is 14% higher than in the year-ago period.

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