2nd UPDATE:Halliburton Profit Soars As North American Ops Recover

19th Jul 2010 17:40

(Updates with comments from conference call, share price information) By Jason Womack Of DOW JONES NEWSWIRES HOUSTON (Dow Jones)--Halliburton Co.'s (HAL) second-quarter earnings rose 83% as the oilfield-services company reported stronger revenue and sequential growth in North American and international markets. The better-than-expected results signal that a recovery is underway for the oilfield services industry, which was stung last year by sharply lower commodity prices and a rapid contraction in drilling activity. However, Halliburton's - and the industry's - outlook remains marred by a temporary federal oil and gas drilling ban in the U.S. Gulf of Mexico and the expected tightening of regulations there. Halliburton is the first major oil service company to report earnings; Schlumberger (SLB), the world's largest oilfield services provider, will report earnings on Friday. Chief Executive David Lesar said in a conference call that Halliburton has begun moving some of its Gulf workers to other regions and has deployed some equipment abroad, although it plans to maintain its infrastructure in the Gulf for when activity picks up again. The drilling ban, enacted in the wake of the Deepwater Horizon oil spill, is expected to cut earnings by 5 cents to 8 cents per quarter for the rest of the year, the company said. The drilling suspension "will usher in a new regulatory climate and have a profound impact on how future deepwater drilling is performed," Lesar said. He noted that oil companies in offshore regions outside of the U.S. are also reexamining their offshore drilling practices, leading to some short-term project delays. Halliburton, which performed cementing and other services at the well that became the source of the spill, said that all of its work was performed in accordance with BP PLC (BP, BP.LN), which leased the Deepwater Horizon rig. Lesar said that its contract with the U.K.-based oil giant indemnifies it against the billions of dollars in claims that have haunted BP. Halliburton reported a second-quarter profit of $480 million, or 53 cents a share, up from $262 million, or 29 cents a share, a year earlier. Revenue increased 26% to $4.39 billion, up 17% sequentially. Analysts polled by Thomson Reuters most recently forecast earnings of 37 cents on revenue of $4.09 billion. Shares of Halliburton recently traded 5.13% higher at $28.92 apiece. Halliburton set a "high bar for others to keep up with," analysts with Tudor Pickering Holt & Co. wrote in a report to clients on Monday, noting that the oilfield services provider "delivered big." Halliburton's North American revenue grew 68% from a year earlier and 24% from the first quarter, while the rig count, a key indicator oilfield services activity increased 13%. The segment's operating income nearly sextupled year-to-year and was up 90% on-quarter as equipment utilization surpassed peak 2008 levels. Halliburton posted higher revenue as activity increased in onshore shale gas and oil fields, which require specialized equipment and drilling techniques to develop. The company said activity may moderate in coming quarters because of weak natural gas prices. International results reflected the anticipated seasonal recovery of markets in the Eastern Hemisphere and improved activity in Latin America. International revenue climbed 11% from the previous quarter. -By Jason Womack, Dow Jones Newswires; 713-547-9201; [email protected] (Tess Stynes contributed to this story) (END) Dow Jones Newswires July 19, 2010 12:40 ET (16:40 GMT)