Crude oil and natural gas prices have climbed sharply since late 1998, but that upturn hasn't been matched yet by a similar jump in international drilling, Halliburton Co. chairman and CEO Dick Cheney told shareholders Tuesday.
However, Mr. Cheney said that he expects activity to increase as the year progresses and international exploration and production pick up.
While the number of drilling rigs has increased greatly since bottoming out in mid-1999, much of that increase has come in North America, Mr. Cheney said at Halliburton's annual meeting in Dallas.
Halliburton's business is heavily tied to the energy industry with a broad range of services and products sold, including drilling and production services, project management and heavy construction.
Mr. Cheney noted that 70 percent of Halliburton's business comes from outside North America.
"One of the things that continues to affect our business has been the fact that the international markets have still been relatively flat. We had a pickup in March of about 44 rigs, but April was relatively flat," he said.
Halliburton is "poised to do very well when this does kick up again, and we think it will. Until it does, I see us sliding a little bit behind some of those companies that are focused just on the North American market," he said.
Oil prices have risen steadily since the Organization of the Petroleum Exporting Countries decided in March 1999 to cut back on oil exports.
Oil peaked at $34.07 a barrel in futures markets in March and have remained in the mid- to upper $20s since OPEC decided in late March 2000 to increase production.
Elaborating after the meeting about the lag in new activity despite higher oil prices, Mr. Cheney said many companies have decided to hold down their investment in new drilling and "reap the benefits of higher prices. It's a business judgment."
In addition, many companies "were curious to see if OPEC was for real, whether they were going to be able to sustain it over time," Mr. Cheney said, "which now it looks like they can do."
Several major players also have been busy digesting their mergers, he added, citing Exxon Corp. and Mobil Corp.'s merger, the BP-Amoco Corp. merger, followed by BP Amoco's merger with Atlantic Richfield Co.
"They had a lot of things they had to sort through as they got through the regulatory process, sorted through those new portfolios, decide which ones they wanted to develop [and] which ones they didn't want to develop," he said.
Mr. Cheney said there is typically a 12-month lag between the time that prices rise and when international business increases significantly.
"It's not that far out of cycle," he said.
On another matter, Mr. Cheney told shareholders he would not return to government service if Gov. George W. Bush were elected president this November.
Mr. Cheney, a former congressman and secretary of defense, is supporting Mr. Bush.
When he joined Halliburton in 1995, "I made a long-term commitment to the company and I have absolutely no desire to go back to government. I've done that. I am set in my ways at my stage. I'm 59 years old, and I didn't leave anything in Washington," he said.
While he is "doing what I can" to support Mr. Bush's candidacy, "I have no plan, intention, desire under any circumstances to return to government," he said.