What Halliburton Earnings Reveal About Oilfield Services Sector

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Halliburton Co. (NYSE: HAL) reported fourth-quarter and full-year 2017 results before markets opened Monday. For the quarter, the oil and gas services company posted adjusted diluted earnings per share (EPS) of $0.53 on revenues of $5.9 billion. In the same period a year ago, the company reported EPS of $0.04 on revenues of $4.02 billion. Fourth-quarter results also compare to consensus estimates for EPS of $0.46 per share and $5.63 billion in revenues.

For the full year, the company posted adjusted EPS of $1.22 on revenues of $20.62 billion in revenue, compared to a net loss of $0.02 on revenues of $15.89 billion in 2016. Analysts were looking for EPS of $1.16 and revenues of $20.31 billion.

On a GAAP basis, Halliburton reported a quarterly loss of $0.92 per share, which includes an impairment charge of $385 related to Venezuelan operations and a noncash deferred tax charge of $882 million. For the full year, the GAAP net loss totaled $0.51 per share.

North American revenues rose 7% sequentially in the third quarter. The company attributed the growth primarily to increased utilization and pricing throughout the United States land sector in the majority of the company’s product service lines, primarily pressure pumping, as well as higher drilling activity and completion tool sales in the Gulf of Mexico. Revenues rose 11% sequentially in the company’s international operations.

CEO and President Jeff Miller said:

2017 was a dynamic year for the oil and gas sector that marked another step on the road to recovery for our industry. I am pleased with the way our team executed on our value proposition, maintained strong service quality, and generated superior results and industry leading returns. … I am optimistic about what I see in 2018. Commodity prices support increasing activity in North America and I am encouraged by the increase in tender activity and the positive discussions we are having with our international customers.

The company did not provide guidance in its earnings release, but first-quarter 2017 consensus estimates call for EPS of $0.46 on revenues of $5.6 billion. For the full 2018 fiscal year, EPS is forecast at $2.23 on revenues of $23.56 billion.

As of the end of December, the U.S. Energy Information Administration (EIA) reported a total of 7,493 drilled but uncompleted wells in the major U.S. shale regions, 156 more than at the end of November. While prices for U.S. crude remain nearer to $65 than $60, services firms like Halliburton are set up to provide more well completions, pressure pumping services and even increased drilling.

Halliburton’s stock closed at $53.01 on Friday, up about 1.2% for the day. Shares traded up about 2.6% in Monday’s premarket session at $54.40. The stock’s 52-week range is $38.18 to $58.78. The consensus 12-month price target was $55.19 before this morning’s report.