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Halliburton Withstands Low Oil Price to Beat Q3 Earnings

Major oilfield services provider, Halliburton CompanyHAL reported better-than-expected third-quarter 2015 earnings, in spite of low oil prices , owing to improved stimulation works in Argentina. However, decreased activity levels that include drilling and logging in North America partially dampened the results.

Earnings per share from continuing operations came in at 31 cents, surpassing the Zacks Consensus Estimate of 27 cents. However, the bottom line fell considerably from third-quarter 2014 earnings of $1.19.

Halliburton Company - Earnings Surprise | FindTheBest

After Schlumberger Ltd SLB , Halliburton is as the second member of the 'big 4 oil service companies' to post above-consensus earnings. Baker Hughes and Weatherford International Ltd. WFT - the other members - are both expected to release earnings results on Oct 21.

Revenues of $5,582 million failed to surpass the Zacks Consensus Estimate of $5,671 million. Moreover, the top line reflected a 35.9% year-over-year decline.

During the quarter, North America accounted for approximately 44.6% of Halliburton's total revenues and only 1.4% of its operating income.

Segmental Performance

Completion & Production: Revenues at Halliburton's Completion and Production segment came in at $3.2 billion, down 40.9% year over year and 7.1% sequentially. Lower prices of product service lines in the U.S and decreased pressure pumping works in Latin America hurt the results.

The segment's operating income came in at $163 million, exhibiting an 84.8% year-over-year plunge. Moreover, profits decreased 48% from the second quarter thanks mainly to decreased activity levels in North America and lower cementing works in Mexico. This was, nevertheless, partially offset by increased stimulation works in Argentina.

Drilling & Evaluation: Revenues at Halliburton's Drilling & Evaluation business came in at $2.4 billion, 27.4% lower than the third-quarter 2014 level. The segment's revenues also fell 3.8% sequentially. Lower North American drilling and logging works primarily hurt the results.

Moreover, the segment's operating income fell 11.1% from the year-ago quarter to $401 million. The profit was almost unchanged from the prior quarter. Lower logging operations in the U.S. land market impacted the results negatively.

Balance Sheet

Halliburton's capital expenditure in the third quarter totaled $525 million. As of Sep 30, 2015, the company had approximately $2.3 billion in cash and cash equivalents and $7.2 billion in long-term debt, representing a debt-to-capitalization ratio of 33.8%.

Zacks Rank

Halliburton currently carries a Zacks Rank #5 (Strong Sell), implying that the stock will significantly underperform the broader U.S. equity market over the next one to three months.

Meanwhile, one can consider a better-ranked player in the energy sector like NuStar Energy LP NS . The stock sports a Zacks Rank #1 (Strong Buy).

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HALLIBURTON CO (HAL): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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