Houston-based oil and gas servicing giant Halliburton reported better than expected first quarter earnings Tuesday before the market. HAL posted net income of $651 million, or 72 cents a share, ahead of consensus 67 cents. Revenue grew 32.5% to $5.68 billion as completion and production revenue jumped 45% to $3.4 billion and drilling and evaluation revenue increased 17% to $2.3 billion. It wasn’t long ago oil services companies were debt laden and loss making, free cash flow continues to surge.
HAL followed up top oilfield services peers SLB and Baker Hughes reporting earlier who also topped Wall Street estimates for first-quarter profit last week. The energy crisis from Russia’s invasion of Ukraine continued to boost drilling activity, costs however remained elevated which ate into margins.
The Baker Hughes oil rig count benefiting oil service companies have been recovering since falling off the cliff with the decreased activity in North America and the world since the Covid pandemic and then the Russian invasion of Ukraine. Halliburton serves the upstream oil and gas industry throughout the lifecycle extraction to completion of the energy source.
Halliburton Company NYSE: HAL Reported Before Open Tuesday
“Our customers are clearly motivated to produce more oil and gas and service capacity is tight,” CEO Jeff Miller said in a statement.,” Chief Executive Officer Jeff Miller
Halliburton Q1 23 Earnings Highlights
- Net income $651 million, or 72 cents per share, compared with $263 million, or 29 cents per share, a year earlier. The FactSet consensus for earnings per share was 67 cents.
- Revenue grew 32.5% to $5.68 billion, above the FactSet consensus $5.50 billion
- Completion and production revenue jumped 45% to $3.4 billion
- Drilling and evaluation revenue increased 17% to $2.3 billion.
- Operating margin of 17.2%, increased 530 basis points year-over-year
HAL: Stock Market Reaction
- $32.00 ▲ +0.28 (+0.88%) Close April 27, 2023 (updated)
- $32.00 ▼ -3.94 (-10.96%) past year
- $32.00 ▼ -20.19 (-38.69%) past 5 years
- 52wk High $43.99
- 52wk Low $23.30
Production highlights
Completion and Production
- Completion and Production revenue in the first quarter of 2023 was $3.4 billion, an increase of $1.1 billion, or 45%, when compared to the first quarter of 2022, while operating income was $666 million, an increase of $370 million, or 125%.
- These results were driven by increased pressure pumping services and completion tool sales globally and improved artificial lift services in North America land and Kuwait.
Drilling and Evaluation
- Drilling and Evaluation revenue in the first quarter of 2023 was $2.3 billion, an increase of $337 million, or 17%, when compared to the first quarter of 2022, while operating income was $369 million, an increase of $75 million, or 26%.
- These results were primarily due to an increase in drilling-related services, along with improved wireline and testing services globally. This increase was partially offset by lower software sales in Mexico.
Geographic Regions
North America
North America revenue in the first quarter of 2023 was $2.8 billion, a 44% increase when compared to the first quarter of 2022. This increase was primarily driven by improved stimulation activity and pricing gains, in addition to higher well construction services, artificial lift activity, and wireline services in North America land, as well as improved activity in the U.S. Gulf of Mexico across multiple product service lines.
International
International revenue in the first quarter of 2023 was $2.9 billion, a 23% increase when compared to the first quarter of 2022.
Latin America revenue in the first quarter of 2023 was $915 million, an increase of 40% year over year, due primarily to increased well construction services and stimulation activity in Mexico and Argentina, higher completion tool sales across the region, and improved project management activity in Mexico. This increase was partially offset by lower software sales in Mexico.
Europe/Africa revenue in the first quarter of 2023 was $662 million, a decrease of 2% year over year, primarily resulting from our exit from Russia, along with decreased activity across multiple product services lines in Norway. This decrease was offset in part by increased well construction services in Africa.
Middle East/Asia revenue in the first quarter of 2023 was $1.3 billion, an increase of 30% year over year, primarily due to improved activity across multiple product service lines in Saudi Arabia, higher completion tool sales, improved well construction services, and increased project management activity across the region. Partially offsetting this increase was lower stimulation activity in Oman and Kuwait.
Russia Update
Halliburton wound down and sold of its Russia operations in the third quarter to its local management team. That unit now operates under the name BurService LLC, independent of Halliburton.
For the nine months ended Sept. 30, HAL recorded $366 million in charges and impairments, largely due to the sale of its Russia assets, and the impairment of assets in Ukraine.
Both divisional results were negatively impacted in the first quarter of 2023 when compared to the first quarter of 2022, resulting from the sale of our Russian operations during 2022
Outlook
Halliburton Chief Executive Jeff Miller said in a statement:
Our strong execution culture, differentiated technology portfolio, and collaborative approach with customers – drive margin improvements and growth across our business. I am confident that we will execute our strategic priorities and deliver shareholder returns. I expect the execution of our strategy will deliver significant and growing free cash flow generation for Halliburton,” concluded Miller.
Halliburton international business has expanded from a year earlier, even after selling its Russian operations. The company expects the Middle East to drive drilling growth, led by Saudi Arabia with meaningful increases in the United Arab Emirates, Qatar, and Kuwait.
Halliburton Peer’s Earnings
About Halliburton
Founded in 1919, Halliburton is one of the world’s largest providers of products and services to the energy industry. With more than 40,000 employees, representing 130 nationalities in more than 70 countries, the company helps its customers maximize value throughout the lifecycle of the reservoir – from locating hydrocarbons and managing geological data, to drilling and formation evaluation, well construction and completion, and optimizing production throughout the life of the asset. Visit the company’s website at www.halliburton.com.
Source: HAL
Live From The Pit
From The TradersCommunity News Desk