Halliburton Co. posted a better-than-expected fourth-quarter profit on Jan. 19, buoyed by cost cuts and a recovery in demand for oilfield equipment and services after last year’s industry slump.
The second-biggest services provider has slashed quarterly dividend and reduced its capital spending and workforce to cope with the decline in demand as its clients—oil and gas producers—cut drilling activity amid a fall in crude prices below breakeven levels.
Halliburton generated free cash flow of $1.15 billion in 2020, above the $1 billion it had targeted, thanks to the cost cuts.
Crude prices also ticked up in the last three months of 2020 to average about $45 per barrel, prompting some producers to complete wells.
Revenue from Halliburton’s completion and production business was $1.81 billion in the fourth quarter, 15% higher than in the third quarter, while its’ drilling and evaluation revenue rose 1.9%.
Halliburton CEO Jeff Miller said he expects international activity to bottom in the first quarter of 2021, adding that he was “optimistic about the activity momentum in North America”.
Halliburton, which kicked off fourth-quarter earnings for service providers, said revenue from North America rose 25.8%, while international revenue grew 0.4%. Total revenue of $3.24 billion in the quarter ended Dec. 31 beat analysts’ estimates of $3.21 billion, according to Refinitiv IBES data.
Adjusted net income was 18 cents per share, 3 cents above estimates.
However, the compan’'s profit was down 43.9% and revenue fell 37.6% from the fourth quarter of 2019 as activity levels were still well below a year earlier.
Halliburton shares, which lost about 23% of their value in 2020, were up 2.7% at $21.30 in premarket trading.
Rivals Schlumberger and Baker Hughes are also set to post results later in the week.
Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman, took aim at U.S. shale producers following the OPEC+ meeting on March 4, saying: “‘Drill, baby, drill’ is gone forever.”
Oil rigs rose one to 310 this week, their highest since May, while gas rigs were unchanged at 92.
Wolfcamp Shale producers completed by Chevron and EOG Resources in the Permian Basin plus details on exploratory wells at LLOG Exploration’s Spruance prospect in the Gulf of Mexico top this week’s oil and gas drilling activity highlights from around the world.