Halliburton Readies for Years of Expansion

Halliburton Company, the biggest provider of fracking services, is gearing up for several years of expansion in both the US and foreign markets as spending recovers in the global energy industry.

“The positive activity momentum we see in North America and international markets today, combined with our expectations for future customer demand, gives us conviction for an unfolding multi-year upcycle,” Chief Executive Officer Jeff Miller said in a statement on the 20^th July.

Shares rose 2% in pre-market trading.

The Houston-based contractor reported second-quarter earnings per share excluding one-time items of 26 cents, exceeding the 23-cent average of analysts’ estimates, while revenue of US$3.7 billion trailed the US$3.75 billion average. Halliburton reported its largest North American quarterly sales since the onset of the pandemic last year.

Oil-services providers haven’t seen three straight quarters of share appreciation since the days of US$100-a-barrel crude back in 2014. Now, as drilling accelerates around the world, the Philadelphia Oil Service Index is showing just that.

Halliburton’s biggest rival Schlumberger said last month that the global economic recovery will trigger an energy-industry super-cycle which should lead to wider margins. The three main oil-services providers, which includes Baker Hughes, are expected to boost second-quarter profits by at least 20% compared with the first three months of the year when they report this week. The companies are pivoting away from North American shale work to focus on overseas customers.

Mr Miller, who slashed more than US$1 billion in costs during the downturn, three months ago forecast double-digit year-on-year growth in international orders during the second half of this year. But closer to home, he has left investors disappointed with a more subdued outlook for the North American market.

The shares have eked out a 2.4% gain this year as of close on the 19^th July, after four consecutive annual losses which saw the company’s market value cut by more than half.

The stock has 16 “buy” recommendations among analysts, compared with six “holds” and three “sells.”

Among its largest peers, Halliburton is most dependent on North America, where it generates roughly 40% of sales. Fracking in the US is expected to grow 7% in the current quarter before erasing that gain and falling back to second-quarter levels of 220 frack crews by the final three months of the year, according to Goldman Sachs.

Explorers are forecast to boost spending by 20% next year, the bank said last week in an note to investors.

Source: Rigzone