Halliburton tumbles as fracking giant sees second-half slowdown
Fracking-services king Halliburton plunged the most in almost three years after warning that second-half profits will suffer on a slowdown in the Permian shale and other parts of the U.S.
The Houston-based oil field servicer dropped8percent in New York trading for its biggest decline since August 2015. The company on Monday reported a weaker-than-expected operating profit in the second quarter, and CEO Jeff Miller told analysts on a call that he expected similar results in the third quarter.
Pipeline shortages and other issues will delay work in the Permian and Marcellus Shale basins, Miller said. Halliburton, the world’s biggest frack provider, is facing a double whammy in North America with the Permian headed for a temporary slowdown and the company’s chief rival, Schlumberger, ramping up competition in Halliburton’s home market.
“People definitely expect the pause in the second half, but you need a substantial beat in 2Q to start from a new level,” Luke Lemoine, an analyst at Capital One Securities, said Monday in a phone interview. “We all know the second half is coming down, but you want to come down from a higher level.”
Halliburton’s oil-service peers also dropped on the disappointing outlook, headed by a 5.6 percent plunge for Patterson-UTI Energy.
The company announced a $789 million second-quarter operating profit that fell short of the $816 million average estimate from 14 analysts in a Bloomberg survey. Halliburton had been a consistent outperformer in most earnings measures until now.
Thanks to the Permian Basin, North America has been the world’s growth engine, leading the global oil industry out of the worst crude crash in a generation. That’s allowed Halliburton and its peers to push up pricing for everything from drilling to fracking and even the grains of sand that prop open rocks for the oil flow.
Schlumberger posted a 43-cent per-share profit on July 20 that matched analysts’ estimates. Baker Hughes, the No. 3 player in oil field services, fell short of expectations. Still, both companies expressed optimism that a global recovery in demand for their expertise and gear will yield tangible financial benefits by the end of this year.