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Halliburton Beats Estimates Despite Weaker U.S. Demand

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Halliburton (NYSE:HAL) reported on Monday a net income of US$435 million, or US$0.50 per diluted share, for the third quarter of 2018, up from the third quarter of 2017, but down from the second quarter as demand in the North American market softened.

Still, Halliburton slightly exceeded the US$0.49 earnings per share consensus estimate for Q3 2018 of The Wall Street Journal.

In the second quarter, the income was US$0.58 per diluted share, but the slowdown in completions in North American fracking dragged Q3 income lower compared to Q2, as Halliburton warned earlier this year. 

A slowdown in activity in North America due to budget constraints and takeaway issues would impact Halliburton’s Q3 earnings by between US$0.08 to US$0.10 per share, CEO Jeff Miller warned last month.

In the Q3 earnings release today, Miller confirmed the lower demand for completion services in North America, noting that the issues were “temporary”, and he also confirmed that the international business is recovering and posting revenue growth.

“In North America, a combination of offtake capacity constraints and our customers’ budget exhaustion led to less demand than expected for completion services. I believe that these are temporary issues, and that the catalysts for improving demand for services are clearly visible: supportive commodity pricing, expanding offtake capacity, building well inventory, and reloaded customer budgets,” Miller said in today’s statement.

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“Our international business continues to show signs of a steady recovery, with revenue increasing 5% sequentially, and every international region growing this quarter,” the chief executive noted.

North America revenue in Q3 was US$3.7 billion, down 2 percent sequentially, primarily driven by lower pricing for stimulation services in the United States land sector and reduced drilling fluids activity. International revenue, however, rose 5 percent quarter-on-quarter to US$2.4 billion.

While Halliburton said that the North American issues were only temporary, its competitor Schlumberger issued a grimmer warning on Friday that “while the current Permian takeaway constraints in North America should be addressed within the next 12 to 18 months, a series of reservoir- and production-related challenges is emerging in the US shale basins that could dampen the most optimistic production growth projections.”

By Tsvetana Paraskova for Oilprice.com

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