UPDATE 1-Halliburton also part of US fracking antitrust probe

Thu Jul 25, 2013 5:22pm EDT

By Braden Reddall

July 25 (Reuters) - Halliburton Co, the largest provider of pressure pumping services used in hydraulic fracturing, said on Thursday it had also been contacted by the U.S. government regarding potential antitrust issues in the pressure pumping market.

Halliburton said it had received an information request from the Department of Justice. In a quarterly filing on Wednesday, rival Baker Hughes Inc disclosed the receipt of a civil investigative demand from the DOJ on May 30.

"We understand there have been other participants in the industry who have received similar correspondence from the DOJ, and we do not believe that we are being singled out for any particular scrutiny," Halliburton said in a statement.

Halliburton, without disclosing what the government was seeking, said it was cooperating with the investigation.

DOJ spokeswoman Gina Talamona confirmed on Thursday that the antitrust division was investigating possible "anticompetitive practices" in pressure pumping services for oil and gas wells.

Stephen Ellis, oil services analyst at Morningstar, pointed out that the market share of the big three in pressure pumping - Halliburton, Schlumberger and Baker Hughes - had fallen to 63 percent last year from 85 percent a decade before.

Their market share stabilized with the roll-out of integrated service packages following consolidation a few years ago that included Schlumberger buying drillbit specialist Smith and Baker buying pumping company BJ Services. So Ellis wondered if the DOJ inquiry revolved around the bundling of services.

Baker Hughes said the request for documents and information covered the two years prior to May 30. The year 2011 was a significant year for the pressure pumping market, during which capacity in North America expanded by an estimated 50 percent.

That has left the market severely oversupplied with pumps for the past year and a half amid a prolonged slump in natural gas prices. The drop in gas prices led to a sharp drop in gas-directed drilling to an 18-year low in June.

The equipment glut even forced FTS International, owner of North America's fourth-largest pressure pumping fleet, to withdraw an initial public offering last year.

Schlumberger declined to comment when asked if it had been contacted by the DOJ.

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