Halliburton blames guar bean shortage for profit warning
- 7 June 2012
- From the section Business
Halliburton has warned that a shortage of guar beans in India will hit its profits.
The oilfield services company said its North American profit margins would fall by twice as much as expected in the current quarter.
Guar is a key ingredient in hydraulic fracturing, or fracking, fluids, which are used to extract natural gas from rocks.
Guar is also used to make ice cream and sauces.
The rising price of the beans, which are mostly grown in India, was also noted in Tate & Lyle's results last week.
The increase in fracking, especially in North America, has led to a big increase in demand for the beans.
Halliburton said it expected its profit margins in North America to fall from 25% in the first quarter of the year to between 19.5% and 20% in the second quarter, which is three percentage points more than it predicted in April.
"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," Halliburton said in a statement.
The company is looking for alternatives to use in the fracking process, which has led to an increase in drilling for oil and gas in North America.
Halliburton shares closed on Wednesday down 3.5%.