Oilfield Service Providers: Halliburton Earnings In Line, But HAL Sees Long ‘Upcycle’ As Crude Prices Soar
Halliburton (HAL) stock fell Tuesday after earnings and revenue were roughly in line, but the company sees a “multi-year upcycle.” Fellow oilfield service providers Schlumberger (SLB) and Baker Hughes (BRK) will also report quarterly results this week amid a surge in crude oil prices.
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Oil prices have soared over the last month, with U.S. crude rising past $80 per barrel for the first time since 2014. Despite an uptick in demand for oil amid rising Covid-19 vaccinations and declining cases, OPEC+ kept its production increases steady, which added to a looming energy crunch this winter in the U.K. and China.
But analysts don’t expect a big increase in new drilling in the U.S. amid the jump in oil prices as U.S. producers continue to focus on capital discipline.
“Even with higher oil prices, I don’t think we’re going to see another sort of running to the fields and drilling fast,” Chris Midgley, global director of analytics at S&P Global Platts, told reporters during a recent roundtable.
Instead, the focus of larger U.S. producers will be on making sure currently operating wells have increased productivity. Much of the rig count growth will come from smaller players. That could impact oilfield service providers’ Q3 and Q4 results.
Oilfield Service Providers: Halliburton Earnings
Estimates: FactSet analysts saw third-quarter Halliburton earnings of 28 cents per share. Revenue was seen at $3.89 billion.
Results: Halliburton earnings share rose 154% to 28 cents a share adjusted. Revenue climbed 29.5% to $3.86 billion. Completion and production division revenue rose 35% to $2.13 billion and drilling and evaluation unit sales were up 23% to $1.72 billion.
Free cash flow was $469 million.
“I see a multi-year upcycle unfolding,” CEO Jeff Miller said in the release. “Structural global commodity tightness drives increased demand for our services, both internationally and in North America.”
Stock: Shares dipped 0.2% to 25.95 in premarket trading on the stock market today.
Halliburton stock is currently in buy range after breaking out of a cup base with a 25.10 entry point, according to MarketSmith analysis. But after running up, especially over the past month, HAL stock could be due for a pullback.
Baker Hughes Earnings
Estimates: Zacks analysts see Baker Hughes earnings per share soaring 450% to 22 cents, with revenue up 6% to $5.35 billion.
Results: Check back Wednesday morning.
Stock: BKR stock rose 0.6% in early trading Tuesday. Shares closed up 0.3% to 26.96 on Monday, just out of range. Baker Hughes stock finally cleared a 25.58 buy point from a cup-with-handle base on Oct. 12. The 5% buy zone runs up to 26.86.
Schlumberger Earnings
Estimates: FactSet sees Schlumberger earnings jumping 125% to 36 cents a share, with revenue up 13% to $5.9 billion.
Results: Check back before the market opens Friday. Schlumberger typically gives an update on oil industry trends at large as well as an update on what is expected for the sector in the coming quarters.
Stock: Shares rose 1.2% to 34.58 early Tuesday. Schlumberger stock is forming a cup base with a 36.97 buy point.
Follow Gillian Rich on Twitter for energy news and more.
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