Halliburton oilfield services corporate offices is seen in Houston, Tex., on April 6, 2012.Richard Carson/Reuters
Halliburton Co. sought to convince investors on Monday that weak pricing that has undermined oil field services providers over four years was on the verge of turning a corner.
Better-than-expected revenue in North America, along with the company’s claim that prices were bottoming out, initially drove shares in the oil field services giant almost 5 per cent higher after it published first-quarter results.
But analysts and investors were unconvinced by a postearnings conference call with management, which gave little hard evidence and left doubts over future pricing at a time when oil producers have been cutting investments.
Shares of Halliburton were flat in midday trade.
“I don’t think there was anything in there to get people off the sidelines,” said Jennifer Rowland, an analyst at brokerage Edward Jones, arguing the company’s comments fell short of what was needed to shift sentiment around the industry.
“We are still kind of in the hope phase that the second half is going to look better,” she said.
Halliburton and larger rival Schlumberger NV have been struggling with a tightening of spending by U.S. oil producers in response to shareholder pressure for greater returns after a period of heavy investment in shale.
The Houston-based company, known globally for its investment in postwar Iraq, posted an 11-per-cent rise in international revenue on the back of gains in Mexico, Argentina and the Middle East, areas where Schlumberger also reported gains last week.
However, in contrast to its larger rival, Halliburton said activity in its largest market – North America – was modestly higher, adding that it expects demand for its services to progress modestly for the next couple of quarters.
“We believe the worst in the pricing deterioration is now behind us,” Halliburton chief executive Jeff Miller said.
Schlumberger last week posted a 3-per-cent fall in revenue from North America, blaming softer pricing and lower activity for its hydraulic fracking and drilling businesses.
Halliburton’s revenue from the region fell 7 per cent to US$3.3-billion in the three months ended Mar. 31, but came in above the US$3.13-billion that five analysts had estimated on average, according to IBES data from Refinitiv.
As expected, Mr. Miller also forecast further falls – a 6-per-cent to 10-per-cent decline in spending by oil producers in North America in 2019 – lower than the 10-per-cent fall forecast by Schlumberger.
The company said it expects second quarter margins to rise 50 to 150 basis points from the first in both its drilling and evaluation units, as well as in its completion and production business (100 basis points equal one percentage point).
Revenue at the drilling and evaluation business is expected to rise low single digits sequentially, while it is expected to expand mid-single digits in completion and production.
The company also reiterated its expectation of high single-digit growth for 2019 in international markets.
On an adjusted basis, it earned 23 US cents a share, edging past an average estimate of 22 US cents. Revenue of US$5.74-billion also beat a consensus of US$5.53-billion.