HOUSTON: Halliburton Co sees early signs of a resurgence in North American oilfields as the Iran war disrupts Middle East production and drives up prices.
The Houston-based company has a nearly-full second-quarter schedule in North America as demand heats up from small and mid-sized oil firms, which tend to respond faster to rising prices, chief operating officer, Shannon Slocum, said during a call with analysts.
The next step, he said, would be companies adding drilling rigs.
“In North America, I see clear signs that we are in the early innings of a recovery,” Halliburton chief executive officer Jeff Miller said in the company’s first quarter earnings statement.
The comments from Halliburton, the world’s biggest provider of fracking services, are the latest indication that shale drillers are heeding US President Donald Trump’s call to increase production as prices teeter above US$90 a barrel.
It comes even as the companies’ investors have urged them to practice restraint.
Halliburton is the first major oil contractor to report results since the start of the war, which has all but cut off the flow of oil and natural gas from the Persian Gulf.
That’s been a blow to service providers counting on the Middle East for growth as shale fields in the United States mature.
The company’s first quarter results beat the expectation of analysts as sales growth in Latin America and elsewhere outpaced disruptions from the US-Israeli war on Iran.
Halliburton’s Latin America revenue grew 22% compared to a year ago, driven in part by operations in Ecuador, the Caribbean, Brazil and Argentina.
The region is expected to lead gains in Halliburton’s international revenue outside of the Middle East this year, Slocum said during the call.
Nonetheless, the Iran war dealt a blow to Halliburton’s drilling and evaluation divisions, reducing net income by about two to three US cents per diluted share.
Impacts could range from seven to nine cents per share for the second quarter, chief financial officer Eric Carre said.
The company’s shares rose as much as 5.5%, the most in more than three months, on Tuesday in New York before paring some gains.
Halliburton “posted a solid beat across the board” that was “driven by international strength that more than offset continued North America softness”, James West, an analyst at Melius Research, wrote in a note to clients.
Halliburton generated about 26% of its revenue last year from the Middle East and Asia.
SLB, the world’s largest oilfield contractor, relies on the regions for about a third of its sales and will report results tomorrow.
While the Iran war poses challenges for oil contractors in the short-term, Halliburton and its rivals may benefit in the long run once the conflict ends and nations rebuild their damaged energy infrastructure. — Bloomberg
