Why Halliburton’s Q2 Earnings Rose Sequentially



Halliburton (HAL) reported its second-quarter earnings on Monday before the markets opened. While the company’s earnings and revenues fell YoY (year-over-year), its earnings rose sequentially. The stock, which is trading close to its 52-week low, rose in pre-market trading. Excluding impairments and other charges, Halliburton’s adjusted EPS for the quarter was $0.35—higher than its EPS of $0.23 in the first quarter. Halliburton recognized $247 million of impairments and other charges during the quarter. The impairment charges mainly included asset impairments and severance costs.

“International revenue increased 6% sequentially, confirming our expectation of high single-digit international growth for all of 2019. Momentum is building internationally and activity improvement should continue into 2020,” noted Jeff Miller, Halliburton’s chairman, president, and CEO.

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Halliburton’s earnings drivers

Halliburton’s Completion and Production segment’s earnings rose 28% sequentially. The Drilling and Evaluation segment’s earnings rose 18% sequentially. Both of the segments’ earnings fell YoY. Weak drilling activity hampered the company’s performance in the last few quarters. Recently, the company’s dismal performance and weaker outlook impacted the stock. Therefore, investors saw sequential growth as a welcome sign, which pushed the stock higher in pre-market trading.

Halliburton’s North America revenues rose 2% sequentially. Higher stimulation, artificial lift, and wireline activity in North America land drove the growth. Also, higher drilling activity in the Gulf of Mexico contributed to the growth.

Halliburton’s international revenues rose 6% sequentially. Higher sales of completion tools, increased cementing, project management, and fluids activity in Africa, CIS (Commonwealth of Independent States), Middle East, and Asia contributed to the growth. A rise in stimulation activity in the Middle East and Asia also added to the growth.

The revenues from Halliburton’s Europe/Africa/CIS region rose 10% sequentially. Higher activity in the North Sea and higher well construction services in Russia mainly drove the growth. At the same time, the Middle East/Asia region’s revenues rose 7%.

Halliburton stock has fallen roughly 18% in 2019. In comparison, Schlumberger has risen 7%. Among the 33 Reuters-surveyed analysts covering Halliburton, 27 recommended a “buy,” while six recommended a “hold.”


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