Guar Gum Costs to Impact Halliburton Margins

Houston-based oil service company Halliburton said Wednesday that rising costs for guar gum, which is used as a blending additive for hydraulic fracturing fluids, 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 basin 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," Halliburton said in a statement Wednesday.

The company will release its second quarter 2012 earnings on July 23.

Guar gum costs have risen more quickly than expected due to concerns over guar gum shortages later this year. The company believes the price increases are temporary until new supplies are available early next year.

For the time being, Halliburton said it would mitigate costs through "seeking relief from customers and increased usage of synthetic and other guar alternatives."

Guar gum also is used as a food thickener for desserts such as ice cream.


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