Ticker Symbol: HAL
Shares in oil services and drilling provider Halliburton are up almost 2% in the morning trading session after the company posted strong earnings in its second-quarter earnings report. Shares are up over 27.5% on a year-to-date basis, handily outperforming the 19% drop in the S&P 500. The quarterly results were also the best since 2018 as West Texas Crude Oil is up 33.5% for the year, while Brent Crude is up 34.1%.
The company reported adjusted earnings per share of 49¢ for the second quarter, ahead of the 45¢ expected by analysts. Revenue also topped estimates, rising by 37% year over year to $4.7 billion. Completion and production revenue was up to $2.91 billion, up 42% and ahead of the estimate for $2.71 billion. Drilling and evaluation revenue was up 30% to $2.16 billion, also ahead of forecasts of $2 billion.
Geographically, all regions except Europe and Africa beat expectations. Europe was a laggard due to the company’s exit from Russia with Halliburton recorded a pre-tax charge of $344 million related to the exit from the country. Revenue in North America was up the most, rising 55% year over year as oil exploration and production companies such as Exxon and Chevron step up drilling in the shale regions to take advantage of elevated global oil and gas prices.
The company also said that is gearing up for a prolonged period of oilfield expansion and growth. It sees drilling outside of its North American operations accelerating even more. The company also said that it has almost sold out all its gear in the U.S. Management reported an operating income of $718 million, crushing expectations of $663 million. Drilling and evaluation operating income was up 63% years over year to $286 million. The results in that division helped Halliburton report its highest quarterly earnings in four years.
Russia’s invasion of Ukraine has thrown world commodity markets into turmoil, with surging energy prices benefitting the largest producers globally. Halliburton is the largest fracking services company in the world. Energy is also currently the top performing sector in the S&P 500 Index for the year, up 27%. The Houston-based company said that it expects its business in the U.S. and Canada to remain robust for the foreseeable future.
Chief Executive Officer Jeff Miller also disclosed on the earnings call that the company expects significantly more growth to come from its Middle East operations, and production companies in the region are just in the early innings of ramping up activity. The company is also seeing pricing power in its services business as a tight market allows firms such as Halliburton and Baker Hughes to charge producers such as Occidental and EOG more for their expertise.
This content is provided for general information purposes only and is not to be taken as investment advice nor as a recommendation for any security, investment strategy or investment account.
