OREANDA-NEWS. Fitch Ratings has affirmed and withdrawn the ratings for Halliburton Company (Halliburton; NYSE: HAL) as follows:

--Long-Term Issuer Default Rating (IDR) at 'A-';

--Senior unsecured notes/debentures at 'A-';

--Senior unsecured bank facility at 'A-';

--Short-Term IDR at 'F2';

--Commercial paper program at 'F2'.

The Rating Outlook is Negative.

The Negative Outlook reflects the additional debt incurred from the terminated Baker Hughes merger and subsequent lack of additional cash flows, particularly in the current depressed oilfield services environment. The rating could come under pressure without a material improvement in E&P capital spending trends and/or a clearly defined plan by Halliburton to address its capital structure. Fitch recognizes that management's current plan is to delever as near-term maturities come due. The company's maturity profile over the next several years provides an opportunity to execute its deleveraging plan. Execution risk remains, but Halliburton's considerable liquidity, including approximately $3.1 billion in cash & equivalents balances, and Fitch's forecasted positive free cash flow profile should provide adequate funds for repayment.

Fitch has withdrawn Halliburton's ratings for commercial reasons. Fitch reserves the right in its sole discretion to withdraw or maintain any rating at any time for any reason it deems sufficient.

Approximately $12.9 billion of debt is affected by today's rating action.

KEY RATING DRIVERS

Halliburton's ratings consider its operational and financial flexibility, leading position in the oil & gas services sector with strong asset quality and a global footprint, strengthening international operations, and strong investment-grade leverage profile. These strengths are offset by the possibility of a prolonged oilfield services recovery, particularly in the U. S. (50%-55% of historical revenues), due to the weak oil & gas pricing environment and management's willingness to maintain a capital structure consistent with its current 'A' category rating.

RATING PRESSURED WITHOUT DEBT REDUCTION

Fitch's base case projects that Halliburton's debt/EBITDA leverage reaches approximately 5.3x in 2016. Fitch believes that a combination of early indications of oilfield services demand greenshoots and Halliburton's leading position in the services sector, strong liquidity position, and current plan to deleverage the balance sheet support a through-the-cycle view. In Fitch's base case forecasts, assuming a steady reduction in debt at maturity, debt/EBITDA leverage drops to approximately 2.6x in 2018 with further improvements thereafter.

KEY ASSUMPTIONS

Fitch's key assumptions within the rating case for Halliburton include:

--WTI oil price that trends up from $35/barrel in 2016 to a longer-term price of $65/barrel;

--Henry Hub gas price that trends up from $2.25/mcf in 2015 to a longer-term price of $3.25/mcf;

--Revenues reflect continued E&P spending weakness, particularly in the U. S., in 2016, followed by a modest uptick in market demand;

--Capital expenditures are forecast to be $850 million in 2016, consistent with company guidance, followed by spending generally consistent with historical levels;

--The final Macondo settlement payment is paid in 2016;

--Dividends remain relatively flat;

--Share repurchases are balanced with cash flows, divestiture proceeds, and other non-debt sources of cash.

RATING SENSITIVITIES

Rating sensitivities are no longer relevant given today's rating withdrawals.

ADEQUATE LIQUIDITY POSITION

Halliburton had cash and equivalents of approximately $3.1 billion, as of June 30, 2016. Supplemental liquidity is provided by the company's $3 billion senior unsecured credit facility due July 2020. No revolver balances were outstanding as of June 30, 2016. Further, the company maintains a commercial paper program consistent with the size of the credit facility that has not been materially used historically and does not currently have an outstanding balance.

MANAGEABLE MATURITIES PROFILE AND OTHER LIABILITIES

Over the next five years, Halliburton has $600 million, $45 million, $800 million, and $1 billion of existing senior unsecured notes maturing in 2016, 2017, 2018, and 2019, respectively. These represent the company's 1.0% senior notes due August 2016; 7.53% senior notes due May 2017; 2.0% senior notes due August 2018; 5.9% senior noted due September 2018; and 6.15% senior notes due September 2019. The company is not subject to material financial covenants. Other covenants consist of lien limitations and transaction restrictions.

The company had contractual obligations of under $1.2 billion during 2016, as of Dec. 31, 2015. These obligations consist of purchase commitments ($873 million), non-cancellable operating lease payments ($257 million), and other, primarily pension-related, obligations ($37 million).

Macondo litigation and payment risk has been substantially mitigated by the $1.1 billion settlement of punitive claims and the U. S. district court's finding of Halliburton not being grossly negligent for the spill, as well as the validity and enforceability of its indemnity and release clauses within the BP plc contract. The settlement payment will be paid into a trust in three installments over the next two years until all appeals are resolved. The first two settlement payments have already been made with the final payment of approximately $400 million remaining. Fitch believes that the combination of the company's cash position and our base case operating cash flow profile mitigate the need for any Macondo-related debt.