Halliburton revenue races higher
Houston energy services company Halliburton said Monday that its revenue jumped in the second quarter as its North American hydraulic fracturing business boomed, but the company expects the pace of growth to slow as oil prices remain low in the coming months.
The slowdown should help keep Halliburton customers — the oil producers — from pumping too much oil too fast and further undermining prices and the industry’s recovery, executive chairman Dave Lesar said.
“The rig count growth
is showing signs of plateauing, and customers are tapping the brakes,” said Lesar, who will remain executive chairman until he retires at the end of 2018.
The second-quarter report and subsequent call with analysts was a swan song for Lesar as Halliburton’s public face. Lesar stepped down as CEO in June after 17 years running the company, one of the largest energy services providers in the world and one of Houston’s biggest employers.
Lesar’s successor, CEO Jeff Miller, downplayed the slowdown, saying the growth in North American shale drilling is “going from 80 miles an hour to 70 miles an hour.” James West, an analyst at investment bank Evercore ISI in New York, agreed with Miller, arguing that “tapping” is not the same as “slamming” the brakes.
“We’ve been ramping back up at just an unbelievable rate,” West said of the ongoing West Texas boom after the two-year oil bust. “It’s hard to keep up that kind of momentum.”
Halliburton reported nearly $5 billion in revenue in the second quarter, up nearly 30 percent from the same time last year and 16 percent from the first quarter of 2017, as exploration and production companies flocked to U.S. shale plays, particularly the Permian Basin in West Texas. Halliburton is the North American leader in oil field services, especially hydraulic fracturing.
Halliburton swung to a small profit of $28 million in the second quarter, after a $32 million loss in the first quarter and a $3.2 billion loss in the second quarter of 2016 after it paid the $3.5 billion termination penalty from its failed takeover of Houston rival Baker Hughes. Halliburton’s stock fell $1.87 a share, or 4.2 percent, to close Monday at $42.51.
The world’s leading energy services company, Schlumberger, last week also reported big revenue gains, but its stock slipped, too, on Friday over investor fears that the worldwide oil glut would persist and ultimately undercut drilling activity. Schlumberger’s stock dipped 11 cents Monday to $66.42 a share.
The nation’s active drilling rig count is now at 950 rigs, up from an all-time low of 404 rigs in May 2016, according to Baker Hughes, a GE company, which tracks the data. This past week saw the total rig count slip by two, only the second time since early January the number of active oil rigs has declined.
“It’s not rocket science that — with oil prices in the mid-$40s — the rig count will start to slow,” said Byron Pope, an energy analyst with Tudor, Pickering, Holt & Co. in Houston.
That slowdown doesn’t mean the nation’s oil field activity will plummet, he said. It should grow at a more measured and maybe even healthier pace, Pope added.
U.S. oil prices settled Monday at $46.34 a barrel, up 57 cents on the day.
Halliburton has recently focused on gaining market share as the oil and gas industry recovers. Halliburton’s North American revenue jumped 24 percent over the first quarter of 2017.
In March, Halliburton said it was adding 2,000 jobs to North American oil fields, especially in the Permian Basin. Halliburton now counts more than 50,000 employees after cutting 35,000 positions over the two-year oil bust.