Houston-based oil and gas servicing giant Halliburton reported better than expected third quarter earnings Tuesday before the market. HAL followed up last quarters ‘biggest since 2018 numbers’ by more than doubling the figure from a year earlier with revenue up 6% from the previous quarter. HAL stock was trading up 1.05% on the news. Improved North American and international markets for drilling, completion, and production with $HAL’s aggressive approach to cutting costs flowed through. Peers Schlumberger and Baker Hughes also posted strong results last week.
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
$0.60 Beat $0.56 EPS Forecast and $5.40 Bil Beat $5.33 Billion Forecast in Revenue
“Structural demand for more oil and gas supply will provide strong tailwinds for our business,” Chief Executive Officer Jeff Miller
Halliburton Q3 22 Earnings Highlights
- Revenue $5.4B (est $5.33B)
- Adj EPS $0.60 (est $0.56)
- North America revenue rose 9% from the second quarter to $2.6 billion
- Operating margin of 16%, increased 393 basis points year-over-year over adjusted operating margin.
- Cash flow from operating activities of $753 million and free cash flow of $543 million.
- International revenue rose 3% sequentially to $2.7 billion
- Retired $1.2 billion in debt so far this year and paid down $2.4 billion in debt since 2020.
- Board in discussions on increasing returns to shareholders.
Market Reaction
- $HAL 34.94 +0.36 (+1.04%) Pre-market, +8.72 (+33.26%) on the year
- 52wk High 43.99 52wk Low 20.66
Russia Update
Halliburton said results across its business divisions were negatively impacted by the wind-down and sale 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.
“Our strong second quarter performance demonstrates that our strategy is working well,” said CEO Jeff Miller in the news release. “I expect the international markets will experience multiple years of growth, and I am confident that Halliburton is positioned to benefit more from this multi-year upcycle than ever before.”
Production highlights
Completion and Production
- Completion and Production revenue in the third quarter of 2022 was $3.1 billion, an increase of $225 million, or 8%, when compared to the second quarter of 2022, while operating income was $583 million, an increase of $84 million, or 17%.
- These results were driven by increased pressure pumping services primarily in North America land, and increased completion tool sales in Middle East/Asia.
Drilling and Evaluation
- Drilling and Evaluation revenue in the third quarter of 2022 was $2.2 billion, an increase of $58 million, or 3%, when compared to the second quarter of 2022, while operating income was $325 million, an increase of $39 million, or 14%.
- These results were due to improved drilling-related services in the Western Hemisphere and Middle East/Asia and increased project management activity and wireline services internationally. These improvements were partially offset by decreased drilling services in Norway, and decreased wireline services in the Gulf of Mexico.
Both divisional results were negatively impacted by the wind down and sale of our Russian operations.
Outlook
Halliburton Chief Executive Jeff Miller said in a statement:
- “Looking forward, we see activity increasing around the world – from the smallest to the largest countries and producers,”
- “In North America, I see continued revenue growth — the inbounds for calendar slots are stronger than I have ever seen at this point in the year,”
Halliburton international business has expanded 21% 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.
Overall fracking costs are expected to climb 27% this year, according to Kimberlite International Oilfield Research. Which gives an indication of what oilfield-service providers can earn in equipment supplies to bolster the prices they can charge.
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
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