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Will the Rig Count Affect Halliburton in 2Q17?

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US rig count

From March 31, 2017, until the week ending July 7, 2017, the US rig count rose 16% to 952. The increased US rig count could raise Halliburton’s (HAL) 2Q17 revenues and operating income, though the price of crude oil has dropped 13% since March 31, 2017.

The US rig count has risen ~116% in the past year as of July 7, 2017. In September 2014, the US rig count reached a multiyear high. Since then, it has dropped 51%.

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Revenue by geography

In 1Q17, Halliburton’s revenue share from North America rose to 52%, compared with 45% in 4Q16. During the same period, HAL’s total revenues increased 6%.

In 1Q17, Halliburton generated 48% of its revenues from international operations. From March 2017 to June 2017, the international rig count rose ~2%. Halliburton’s 2Q17 revenues and earnings could likely benefit from the higher international rig count.

Comparison with peers

Nabors Industries’ (NBR) 1Q17 revenues rose 4% over 4Q16, while Basic Energy Services’ (BAS) revenues rose 17%, and Superior Energy Services’ (SPN) revenues rose 13% from 4Q16 to 1Q17.

HAL makes up only 0.15% of the iShares Russell 3000 ETF (IWV), but IWV has risen 14% in the past year, compared with the 5% fall in HAL stock.

You can read more about how the large-cap oilfield equipment and services companies like Weatherford International (WFT) and National Oilwell Varco (NOV) are expected to fare in 2Q17 in Market Realist’s Wall Street’s 2Q17 Picks: Best and Worst Oilfield Services Stocks.

Continue to the next part of this series for a look at what HAL’s implied volatility means for its stock price.

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