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July 21, 2009

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Weak activity eats into profit

HALLIBURTON said yesterday its second-quarter profit tumbled 48 percent as sluggish exploration and production activity, particularly in North America, crimped results.

But its earnings beat Wall Street forecasts, though the company offered little hope for an uptick in drilling before year's end.

The oilfield services company, which has corporate headquarters in Houston and Dubai, said net income for the April-June period fell to US$262 million, or 29 cents a share. That compared with US$504 million, or 55 cents a share, a year ago. Revenue slipped 22 percent to US$3.5 billion.

One-time items aside, Halliburton said earnings amounted to US$274 million, or 30 cents a share. Analysts polled by Thomson Reuters were expecting earnings of 27 cents a share and revenue of US$3.43 billion.

Halliburton kicked off the earnings period for the oil and gas sector. Most forecasts predict significantly lower year-over-year results for producers and service companies.

In a statement, Halliburton Chairman and CEO Dave Lesar cited natural gas in particular as a drag on earnings and the industry in general. Prices have fallen from double-digit levels a year ago to around US$4 per 1,000 cubic feet of late.

"Due to continued weakness in natural gas demand ... we believe it's unlikely that there will be a meaningful recovery in natural gas prices and, consequently, drilling activity for the remainder of the year," Lesar said.


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