Houston-based oil and gas servicing giant Halliburton reported better than expected second quarter earnings Wednesday before the market. HAL posted net income of $610 million, adjusted net income per share of 77 cents, ahead of consensus 75 cents. Despite lower natural gas and oil prices HAL and fellow top oilfield services peers SLB and Baker Hughes (BKR) have been generating free cash flow well above analyst expectations.
Revenue grew 14.3% to $5.8 billion year on year but slightly under expectations. Q2 North America revenue fell 2% Q/Q to $2.7B, driven primarily by decreased stimulation activity in U.S. land drilling. Q2 International revenue increased 7% Q/Q to $3.1B, led by a 9% improvement in Latin America.
The Baker Hughes oil rig count benefiting oil service companies have falling with the decreased activity in North America and the world with lower prices and OPEC+ production cuts. 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 Wednesday
Halliburton Q2 23 Earnings Highlights
- Net income $610M, or $0.68/share, from $117M, or $0.12/share, in the year-earlier quarter,
- Revenues rose 14% from the previous year to $5.8B.
- Completion and Production revenue rose 2% Q/Q to $3.5B
- Drilling and Evaluation revenue rose 2% to $2.3B,
- Q2 North America revenue fell 2% Q/Q to $2.7B,
- Private drillers now account for just 52% of U.S. rigs, down from 62% at the peak last year, according to a recent Goldman Sachs report citing data from Enverus.
- Q2 International revenue increased 7% Q/Q to $3.1B, led by a 9% improvement in Latin America to $994M,
- Generated $798M of free cash flow in Q2
- $248M of share repurchases in the quarter.
HAL: Stock Market Reaction
- $37.01 -1.1 (2.89%) Close July 19, 2023
- $37.01 +7.55 (25.63%) past year
- $37.01 -7.95(17.68%) past 5 years
- 52wk High $43.01
- 52wk Low $23.00
Production highlights
Completion and Production
- Completion and Production operating income was $707 million, up significantly from the year-ago level of $499 million and ahead of projected $693.4 million.
- The division’s performance was buoyed by improving completion tool sales, strength in overseas cementing job and pipeline services, higher stimulation activity and well intervention services in the Gulf of Mexico, along with robust artificial lift activity in North America.
Drilling and Evaluation
- Drilling and Evaluation revenue improved from $286 million in the second quarter of 2022 to $376 million in the corresponding period of 2023. The division also managed to narrowly beat our estimate of $368.2 million.
- This was primarily due to a pickup in fluid services, plus drilling-associated services in the Western Hemisphere and Saudi Arabia.
Geographic Regions
North America
North American revenues rose 11.1% year over year to $2.7 billion, which also exceeded projections of $42.7 million.
International
International revenue from Halliburton’s international operations were up 17.1% from the year-ago period to $3.1 billion but fell short of estimates by $48.9 million.
Balance Sheet
- Halliburton reported second-quarter capital expenditure of $303 million, slightly higher than projection of $298.4 million.
- As of Jun 30, 2023, the company had approximately $2.1 billion in cash/cash equivalents and $7.9 billion in long-term debt, representing a debt-to-capitalization ratio of 47.6.
- HAL also bought back $248 million worth its stock during the April-June period.
- The company generated $1.1 billion of cash flow from operations in the second quarter, leading to free cash flow of $798 million.
Outlook
Halliburton Chief Executive Jeff Miller said in a statement:
Halliburton Chief Executive Jeff Miller said the company expects to see its customers’ spending grow by a high-teens percentage for the international market and around 10% for North America this year.
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, WSJ
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