Halliburton registers $1.7B loss
Other energy companies likely to follow with own brutal second-quarter earnings reports
With a massive second-quarter loss, Halliburton, one of the world’s largest oil field services companies, on Monday set the stage for a string of brutal energy company earnings reports.
The company lost $1.7 billion in the second quarter compared with a $75 million profit during the second quarter of 2019. Revenue declined 46 percent to $3.2 billion from $5.9 billion in the same period a year ago.
The bulk of Halliburton’s loss was attributed to a $2.1 billion write down on the value of its assets as the price of oil collapsed during the quarter, including a dive to negative territory in April. Halliburton took a $1.1 billion write-down in the first quarter.
The second quarter was the first full three-month period affected by shutdown orders across the country that wiped out demand, forced industrywide production cuts, and reduced drilling and well-completion activity. Halliburton’s rivals also post second-quarter results this week. Baker Hughes, which lost $10.2 billion in the first quarter, reports Wednesday, and Schlumberger, which lost $7.4 billion in the first quarter, is to report results Friday.
Minus the write-downs and other charges, Halliburton reported $456 million of free cash flow compared with $12 million during the first quarter.
“Halliburton’s second-quarter performance in a tough market shows we can execute quickly and aggressively to deliver solid financial results and free cash flow despite a severe drop in global activity,” Halliburton CEO Jeff Miller said. “Our results demonstrate a significant and sustainable reset to the power of our business to generate positive earnings and free cash flow.”
Halliburton shares closed 32 cents higher Monday at $13.41.
Jennifer Rowland, an energy industry analyst for financial advisory firm Edward Jones, said Halliburton’s stock went up because the company was able to cut costs faster than expected.
The company said it plans to close or sell a combined 100 locations — reducing costs further. With crude oil trading around $40 per barrel, about $10 less than most U.S. shale producers need to break even, Rowland said the company will need those savings.
“Halliburton and the industry still have some challenging quarters ahead,” Rowland said. “I don’t think we’re out of the woods by any means but they did a good job of cutting costs and getting some of those savings into their financial results sooner than people thought. That was their bright spot. But from a market standpoint and demand for their services standpoint, things still look pretty weak.”