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Why Did Halliburton’s Fiscal 1Q16 Revenue Fall?

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Halliburton’s fiscal 1Q16 revenue

Halliburton Company (HAL) released its fiscal 1Q16 operational update on April 22. The company recorded total revenues of $4.2 billion in fiscal 1Q16, down 40% from the ~$7.1 billion recorded in fiscal 1Q15. Halliburton’s revenues for the latest quarter fell mostly due to a fall in US rig counts, a slowdown in North American drilling operations, and pricing pressure on HAL’s products and service.

Compared to fiscal 4Q15, Halliburton’s revenues fell 17%. In comparison, fiscal 4Q15 revenue for Forum Energy Technologies (FET), HAL’s smaller-market-cap peer, fell 55% year-over-year.

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Halliburton’s CEO on rigs, production, and upstream capex

Halliburton’s management thinks upstream energy companies will reduce capital spending, which could lead to production declines in 2H16. Dave Lesar, HAL’s chair and CEO, commented in the fiscal 1Q16 press release, “Our customers have taken defensive actions to solidify their finances including significant reductions to headcount and capital spend. While these were necessary actions, it clearly will result in production declines in the back half of 2016. But even when operators feel better about the markets, they will still face issues of balance sheet repair and we believe they will be cautious in adding rigs back.” HAL is 0.19% of the SPDR S&P 500 ETF (SPY).

Why Did Halliburton postpone the conference call?

Halliburton postponed its fiscal 1Q16 earnings conference call to May 3, originally scheduled for April 25. This change relates to an extension of the pending merger with Baker Hughes (BHI). The companies sought regulatory approval for no later than April 30, 2016. After April 30, BHI and HAL may continue to seek relevant regulatory approvals, sell assets to qualify for regulatory approval, or terminate the merger agreement. Read Market Realist’s Why the U.S. Department of Justice is Fighting the BHI-HAL Merger to know why.

Next in this series, we’ll discuss HAL’s growth drivers.

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