Halliburton Co. posted a surprise small profit for the third quarter after a year of losses during a
protracted energy downturn.
Executives for the oil-field services provider said Halliburton was able to eke out a $6 million profit because its
U.S. energy company customers started to return to drilling this summer as crude prices marched back toward $50 a
Dave Lesar, chief executive of the Houston-based company, said he was pleased with the results "given
the devastation our industry has faced over the last two years."
"Our customers are smart and they see 2017 as getting better," he said.
Over all for the quarter ending in September, Halliburton posted a profit of $6 million, or a penny a share, compared
with a year-earlier loss of $54 million, or 6 cents a share. Total revenue plunged 31% to $3.83 billion. Analysts polled
by Thomson Reuters had projected a loss of 6 cents a share on $3.9 billion in revenue.
Shares in the company, which are up 38% so far this year, rose 5% to $49.48 in midday trading in New York.
While North American business is generally improving, the company said international drilling efforts are still
stymied. The rig count outside of the U.S. is expected to bottom out during the first half of next year, Halliburton
President Jeff Miller told investors and analysts Wednesday on a conference call.
The third quarter was particularly bad for energy companies operating in Mexico, Venezuela, Australia and Indonesia,
Mr. Miller said, citing a 15-year low for the rig count in Latin America.
It was also the first period during which Halliburton has been relieved of hefty charges related to its failed tie-up
with rival Baker Hughes Inc., another Houston-based oil-field services company. That merger, initially
valued at $35 billion when it was first proposed in 2014, failed last May amid intense global regulatory scrutiny.
When oil was trading around $100—double what it is today—significant inefficiencies were covered up across
the industry, executives said. For instance, demand for labor and equipment was so great that truck drivers hauling oil-
field equipment regularly made six-figure salaries, and rates to rent drilling rigs skyrocketed.
But two years of plunging then languishing oil prices forced Halliburton to slash the price tags of its goods and
services to energy companies. Now Halliburton wants to claw back some of those price concessions.
Despite its failed merger attempt, Halliburton has the largest market share of any oil-field services company in the
U.S., a position it is willing to cede in favor of getting paid the higher prices it needs to operate profitably.
Negotiating higher prices for its services is like being in a "barroom brawl" with customers, Mr. Miller said.
But he argued that Halliburton has been able to help shale drillers boost output from wells using fewer chemicals,
which is making fields across the Permian Basin in West Texas economic at lower oil prices. Even American oil companies
that don't hold leases in core areas considered to have the best geology and prospects for oil are finding more.
"Our job is to help extend the definition of core," he said.
North America results—which have dragged lately amid energy-market volatility—improved in the third
quarter, but sustained meaningful recovery depends on oil prices staying over $50. The business, which is the
contributor to Halliburton's top line, rose 9% sequentially, and operating results improved by $58 million, representing
"This is a step in the right direction as we work to regain profitability in North America," Mr. Lesar said.
In all, revenue in North American operations was down 33% from a year ago.
Last quarter Halliburton predicted a U.S. oil patch turnaround was on the horizon, but Wednesday executives sounded a
note of caution that the fourth quarter could slow down due to holiday and seasonal weather-related downtime before
activity picks back up in early 2017.
"We remain cautious around fourth quarter customer activity," Mr. Lesar said. "However, it does not change our view
that things are getting better for us and our customers."
Anne Steele contributed to this article.
Write to Lynn Cook at email@example.com
(END) Dow Jones Newswires
Copyright (c) 2016 Dow Jones & Company, Inc.
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