Halliburton Co. (HAL) Chief Executive Dave Lesar said Monday that demand for oil field services in North America, such as hydraulic fracturing, continues to grow faster than companies like his can add equipment as producers rush to drill unconventional oil basins.
Halliburton Co. (HAL) Chief Executive Dave Lesar said Monday that demand
for oil field services in
North America
, such
as hydraulic fracturing, continues to grow faster than companies like his can
add equipment as producers rush to drill unconventional oil basins.
"Overall, growth in the demand for our service has outpaced capacity
additions and we expect this imbalance to continue going forward," Lesar
said on a conference call to discuss second-quarter results.
Halliburton reported a profit of $739 million, or 80 cents a share, up from
$480 million, or 53 cents a share, a year earlier. The latest period included a
penny in restructuring-related costs. Revenue climbed 35% to $5.94 billion,
which set a new company record.
Analysts polled by Thomson Reuters most recently forecast earnings of 74 cents
a share on revenue of $5.71 billion.
Much of the quarter's success is attributed to activity in
North
America
, where high crude prices, producers' healthy balance sheets and easy
capital have fueled a rush to unlock unconventional onshore oil reserves,
including shale formations.
Natural gas drilling in North America, though down 2% in the quarter, remained
"relatively resilient, spurred by the increase demand for power generation
due to the substitution of natural gas for coal and harsh summer temperatures
in various regions," Lesar said. Though Halliburton remains "a bit
cautious" on natural gas drilling, the company's move to reduce prices in
order to keep customers drilling has been fruitful, he said.
Halliburton also cited an uptick in work in the U.S. Gulf, winning service
contracts for eight of the 18 deepwater wells that have been permitted since
U.S. regulators lifted a ban on such drilling in February. The ban was enacted
in response to last year's Deepwater Horizon explosion, which killed 11 workers
and touched off the worst offshore oil spill in
U.S.
history. Halliburton provided cementing services for the well the Deepwater
Horizon was drilling for BP PLC (BP, BP.LN).
Lesar cautioned, however, that the pace of new drilling permits has slowed and
once the current backlog of work is complete, the
Gulf
of Mexico
recovery could stall in the second half of the
year.
Internationally, where recovery from recession has come more slowly for service
companies than in
North America
, margins improved slightly.
"We are now seeing evidence that the international pricing is
stabilizing," Lesar said. "We believe that steady volume increases
should be a precursor for overall international pricing to improve toward the
end of the year."
Delays in
Iraq
weighed on results, though Lesar said he expects profitability in the Middle
Eastern country by the fourth quarter.
"We believe that
Iraq
will
be one of the fastest-growing countries internationally in the coming years and
that we will benefit significantly as a result of a first-mover strategy,"
he said.
Lesar also said that while Halliburton is spending heavily in sub-Saharan
Africa
to
establish operations in countries including
Mozambique
,
Tanzania
and
Uganda
, the
efforts should "position us for many years of profitable operations going
forward," Lesar said.
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