Halliburton's stock erases year-to-date gains after revenue falls short of estimates

By Ciara Linnane

Oil-services giant's profit matches consensus, but revenue hit by softness in North America

Halliburton Co.'s stock fell more than 4% Friday to erase its gains for the year to date, after the oil-services provider posted second-quarter earnings showing profit that matched the consensus forecast but revenue that fell short on weakness in North America.

The Houston-based company (HAL) had net income of $709 million, or 80 cents a share, for the quarter - up from $610 million, or 68 cents a share, in the year-earlier period. Revenue climbed to $5.833 billion from $5.798 billion a year ago.

The FactSet consensus was for EPS of 80 cents and revenue of $5.947 billion.

"In our international markets we see strong demand for Halliburton's services, high activity levels, and equipment tightness across all major basins," Chief Executive Jeff Miller said in prepared remarks.

By segment, completion and production revenue was flat compared to the first quarter at $3.4 billion, but was below the year-earlier period when it came to $3.5 billion.

Drilling and evaluation revenue totaled $2.4 billion, flat compared with the first quarter and ahead of the year-earlier period's $2.3 billion.

By geography, North America revenue fell 3% to $2.5 billion, weighed down by a decline in pressure-pumping services in its U.S. land business and lower activity in the Gulf of Mexico. International revenue was up 3% at $3.4 billion.

Europe and Africa revenue rose 4% sequentially to $757 million, while Middle East-Asia revenue was up 5% sequentially to $1.5 billion, primarily due to higher activity in the Middle East across multiple product lines and higher fluid services in Asia.

Latin America revenue was flat from the first quarter at $1.1 billion.

Halliburton is now expecting the international business to deliver revenue growth of about 10% for the full year, while the North American business is expected to see revenue fall by 6% to 8%, Miller told analysts on the company's earnings call.

"I expect that the second half of 2024 will be near the low point of activity levels this cycle, and while it's too early to give specific guidance for 2025 in North America, I expect activity to be directionally higher than the second half of 2024," he said, according to a FactSet transcript.

Miller is expecting an increase in activity once exploration and production companies complete acquisitions and establish new development plans. The executive is expecting some of the merged assets to be divested to smaller companies, who will put them to work.

"Finally, I expect some recovery in natural-gas activity," he said.

One area expected to boost demand for natural gas is artificial intelligence, as technology companies rush to build new data centers to meet demand. Miller said he's excited about the prospects for Haliburton's industry, "and we've got a pretty good seat at that and get to watch it really closely."

Haliburton's stock was up 0.8% this year through Thursday's close, with Friday's decline sending it down 3.5% year to date. The S&P 500 has gained 15.3% this year as of Friday afternoon.

-Ciara Linnane

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07-19-24 1315ET

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