[Editor's note: This story was updated at 2:11 p.m. CDT Oct. 21.]
Halliburton Co. on Oct. 21 promised more cost cuts after reporting a bigger-than-expected drop in quarterly revenue as the oilfield services looks to counter weak demand from North American shale producers, sending its shares up about 7%.
The biggest hydraulic fracking services provider, which earlier this month cut 650 jobs in North America, said it would take steps over the next few quarters that will lead to $300 million in annualized cost savings.
Oilfield service providers are struggling with reduced spending by oil and gas producers as investors push for higher buybacks and dividends rather than growth in a weak oil price environment.
Larger rival Schlumberger Ltd. said Oct. 18 it had recorded a $1.58 billion goodwill impairment charge related to its pressure pumping business in North America.
"[Halliburton] is taking costs out more aggressively than the Street forecast, which it expects to lead to strong [fourth-quarter] operating margin improvement in the Drilling & Evaluation segments despite falling revenue," said Anish Kapadia, founder of London-based oil and gas consultancy firm AKap Energy.
Halliburton warned of further activity declines in North America, with fourth-quarter revenue for its hydraulic fracturing business declining by low double digits and margins by 125 basis points to 175 basis points.
"Feedback from our customers lead us to believe that the rig count and completions activity may be lower than the fourth quarter of last year," CEO Jeff Miller told analysts during a post-earnings call.
Halliburton said its revenue from North America, which accounts for more than half of the company's total, fell 21% in the third quarter. Revenue from completion and production fell 16% in the three months ended Sept. 30.
The company also idled more equipment in the third quarter than the first six months of the year, Miller said.
Evercore ISI analyst James West said Halliburton was "showing leadership by walking away from unprofitable or low return work."
Net profit attributable to Halliburton fell to $295 million, or 34 cents per share, in the three months ended Sept. 30, from $435 million, or 50 cents per share, a year earlier.
Analysts had on average estimated 34 cents per share, according to Refinitiv IBES data.
Revenue fell to $5.55 billion, below analysts' average estimate of $5.80 billion.
Halliburton's shares were last up 5.9% at $19.52. The stock also pulled rivals higher, with Schlumberger gaining 2.4%.