Our continued Sell recommendation on Halliburton Co. (HAL) shares reflects the weak fundamentals of the U.S. natural gas market, to which the company enjoys a strong leverage through its leading position in the pressure pumping business.

Weak natural gas prices and the continued credit market turmoil have prompted E&P players to curtail spending plans, significantly affecting the outlook for companies such as Halliburton.

The expected slowdown in overall activity levels — particularly in the U.S. — over the coming months will idle a large part of the built-up pressure pumping capacity, which is expected to weigh on prices and margins well into 2010.

Being a global leader in this vital oilfield service, Halliburton remains more exposed to pressure pumping s travails than most of its large-cap diversified oilfield service peers. Our unchanged $14 price objective reflects 2009 P/E and EV/EBITDA multiples of 9.2X and 6.0X, well within historical trading ranges.

Read the full analyst report on “HAL”
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