When: Wednesday, August 24, 2011
When: CNBC’s “Mad Money w/Jim Cramer”
Following is the unofficial transcript of a CNBC interview with Jim Brown, President of Western Hemisphere at Halliburton Co., on CNBC’s “Mad Money w/Jim Cramer” (M-F, 6PM & 11PM ET).
All references must be sourced to CNBC.
Haliburton's Brown Talks to Cramer: http://video.cnbc.com/gallery/?video=3000041363
JIM CRAMER, host: One thing is for certain, you can’t come to an oil field and not think about Halliburton, the second largest oil service and equipment company on earth. Now, look, the stock's been pounded lately, the price of crude has come down, but in my view, the market is making a huge mistake. Oil companies won't stop drilling just because the price of oil is only expensive rather than exorbitantly expensive. It's still profitable for them to drill and pump the stuff. And that means they need Halliburton's help. I like to think of HAL as a technology play, one that's helped create a 75 percent increase in production and a 50 percent reduction in pumping time right here in the Bakken Shale. Got it from all the oil guys I spoke to. Now, Halliburton is the dominant North American service company and 40 percent of its revenues come from North American pressure pumping. Those are services related to hydraulic fracturing. That's that drilling method that's been used to such terrific effect in all these shale plays, although one that's stirred up a lot of controversy, mostly in states where drilling's a whole new thing. There are tremendous opportunities for growth out here, just tremendous. With the Bakken in particular being one of the most service-intensive out there. The fact is, this domestic drilling boom means more work for HAL, regardless of what the oil futures say on a given day. To get a real read on this business, let's talk with Jim Brown, president of Halliburton's Western Hemisphere Division. There's a title for you.
Mr. Brown, welcome to MAD MONEY.
Mr. JIM BROWN: Hi, Jim.
CRAMER: Thank you so much. Have a seat.
Mr. BROWN: Welcome to North Dakota.
CRAMER: Well, thank you.
Now, when we were on that rig yesterday, I learned that the reason why we can extract this oil isn't just because it's so clean and near to the top it is actually anything but. But because of your technology, you've made it cheaper and faster so that the umbrella of 100 makes a ton of sense to call Halliburton and drilling, right?
Mr. BROWN: That's right. And it is all about technology.
CRAMER: Tell us. Tell us.
Mr. BROWN: In fact, we were pioneers in terms of the Bakken specific. And there's been oil field just west of here on the Montana side of the border. It's called Sleeping Giant. In 1998, we partnered up with an operator and we started looking at early applications of horizontal drilling and horizontal completions.
CRAMER: Is that underneath...
Mr. BROWN: Correct.
CRAMER: ...two miles this way, down two miles, over two miles.
Mr. BROWN: Exactly. And those early applications now have spread over into the western side of North Dakota in the main part of the basin. Today, we have 200 rigs running. Halliburton touches about every aspect of drilling and completion of oil and gas wells, the directional drilling. The bottom hold assemblies that can--you know, to put it into your words, we can go down two miles.
CRAMER: Right, right.
Mr. BROWN: We can go out two miles. We can stay within an eight-to-five foot zone and hit the target of a coffee can. Now, that's rocket science, right?
CRAMER: Yes, it is.
Mr. BROWN: Not up, but down.
CRAMER: Now, listen.
Mr. BROWN:...going down.
CRAMER: Now, this is American technology developed by American engineers typically in American universities. Where did you learn this stuff?
Mr. BROWN: Well, we are an engineering company.
Mr. BROWN: This year alone we'll hire 11,000 people in North America.
CRAMER: If there's someone here with an engineering background watching at Texas A&M, MIT, should they be calling you, because I saw a big sign from--Baker Hughes is hiring.
Mr. BROWN: Oh, we're hiring all the time. We've partnered with universities across the country.
Mr. BROWN: We're hiring petro techs, engineering--and engineering skills from all disciplines.
Mr. BROWN: As well as the hard sciences, biology, chemistry, physics. We're hiring MBAs. We've got it all, a wide spectrum in terms of skill sets.
Mr. BROWN: But here's the important side. Eleven thousand people we're going to hire in North America this year. A lot of...
CRAMER: I love that. Actually, that may be one of the ho--you know, I keep track if anyone hires more than 10,000. I don't know if there's 10 companies in this country that hire more than 10,000 people this year.
Mr. BROWN: That's right. And if you look at the front line, right here in North Dakota, you could go to halliburton.com. You got a high school education, you can come to work for this organization. If you have, as Boone Pickens stated, if you have a willingness to work and an aptitude to learn with a high school education, within a year and a half, two years, you can become a front-line supervisor.
CRAMER: But hold on, don't I need a government handout to get this job?
Mr. BROWN: No. That job will pay 125, 130,000 a year. Now, that's...
CRAMER: But wait a second. You're talking about unskilled job that could conceivably pay $125,000 a year?
Mr. BROWN: Exactly.
CRAMER: For people out there who are--do not--who are underemployed, do not have a job? A hundred...
Mr. BROWN: Correct, 125, $130,000 a year. Again, if you have the work ethic...
Mr. BROWN: ...and the aptitude to learn. So it's a tremendous opportunity. You got to come to North Dakota. But what we're doing here, we're replicating across the nation in all...
CRAMER: But let's talk about this. Eagle Ford, Utica. Do these matter? Like when you hear about a big find in Utica, do you say, `Well, you know what, they need Halliburton'?
Mr. BROWN: Big time. We're first movers. We are the largest service company in North America. We move quickly.
Mr. BROWN: Up here, we're in three operating cities. We have the field surrounded with seven of our primary product lines and a multiple of subproduct lines. So it is about technology.
Mr. BROWN: Producing American jobs.
Mr. BROWN: Producing American energy.
CRAMER: But let stop you. Fifteen years ago, if you'd been told, listen, you're going to be president of the West Hemisphere, wouldn't you say, well, wait a second, what am I going to do? That is a--that's not a great position in a big international oil services company.
Mr. BROWN: Well, I tell you what. You know, I started out driving a truck, so I'm an example of exactly what I've talked about. But again, what we're replicating here, the international community is starving for that technology. We have operations in Latin America, as well as continental Europe, Asia and Australia.
CRAMER: One last question. Fracking, dangerous?
Mr. BROWN: Oh, no. The three--there are three myths of fracking. Let me tell you about them, the assertions.
Mr. BROWN: The first assertion is that it's relatively new and untested.
Mr. BROWN: Untrue.
Mr. BROWN: It's been around--we did our first job in 1949 in western Oklahoma. There have been over a million hydraulic fracturing treatments done since then.
CRAMER: Really? OK.
Mr. BROWN: It is a proven, tested science. Secondly, the second assertion, Jim, is that it is unsafe.
Mr. BROWN: Relative to water tables
CRAMER: Everyone knows that, right?
Mr. BROWN: Yeah.
CRAMER: They saw the documentary on HBO.
Mr. BROWN: Of course not. As you said, 10,000 feet with thousands of feet of hard rock in between the aquifers.
Mr. BROWN: Not one documented case where as a result of hydraulic fracturing a water table was breached. And finally, the last point is that it's a safe practice.
CRAMER: OK. It's a safe practice. And here it is, right? This is our fracking field?
Mr. BROWN: This is it. This is it.
CRAMER: All right.
Mr. BROWN: This is part of our new technology. They were reusing water for hydraulic fracturing reasons. This is a fracturing fluid made up entirely of ingredients from the food industry. Same stuff you'd bake...
CRAMER: So I can drink that?
Mr. BROWN: Bake cake.
CRAMER: All right.
Mr. BROWN: Bake cake, beer. You make ice cream with it.
CRAMER: Jim Brown, I'm drinking this right now. Thank you so much for coming on MAD MONEY.
Mr. BROWN: There's a big booyah...
CRAMER: Ooh, not bad.
Mr. BROWN: ...from your...
CRAMER: I feel like--I feel like--a little like a McFlurry. Thank you so much, sir. Good to talk to you.
Mr. BROWN: You bet. you. Thank you, Jim, for having us.
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