We issued an updated research report on Halliburton Company HAL on May 25, 2015. The company is a leading player in the oilfield services industry. Its $35-billion deal to buy smaller rival Baker Hughes should pay off as the combined company will be in a better position to dominate the oilfield services industry. However, the company’s drilling activities are expected to suffer as a result of weak crude prices.

The positives and negatives are reflected in Halliburton’s current Zacks Rank #3 (Hold), which implies that the stock will perform in line with the broader U.S. equity market over the next one to three months.

Halliburton is among the top three players in each of its product/service categories, and is present in all major hydrocarbon-producing regions of the world. The company enjoys a strong relationship with both the publicly-traded and the national oil companies worldwide.

Moreover, Halliburton is set to benefit from its deal to buy Baker Hughes. Following the closure of the acquisition – expected by the latter half of this year – the combined company will be a force to reckon with.

Recently, Halliburton declared that it has joined BP plc BP to settle all the remaining 2010 Deepwater Horizon oil spill related issues between them. Although, Halliburton has not disclosed any terms of the deal, it declared that the issues under consideration are indemnities and the closure of all the pending claims between Halliburton and BP.

Hence, with the agreement, the oilfield services firm has strengthened its relationship with BP and has also reduced its liability related to the 2010 Macondo oil spill incident.

However, the crude pricing environment is still weak. On top of that, oil price is expected to remain low in 2015. Following the low crude price, most of the drillers have decided to halve their 2015 capital spending from 2014. Hence, Halliburton, which supports the drilling players in setting up oil wells, is also anticipated to earn less in 2015.

Stocks to Consider

Better-ranked players in the energy sector include LRR Energy LP LRE and Pembina Pipeline Corporation PBA. Both these stocks sport a Zacks Rank #1 (Strong Buy).