Oilfield services company Halliburton reported strong first-quarter earnings, exceeding analyst expectations, on the back of robust international demand. The company, however, anticipates flat growth in its North American business due to weak drilling activity.
International Markets Drive Growth
Halliburton’s CEO, Jeff Miller, highlighted the positive outlook for the international market. “The international market remains tight for equipment and personnel,” he said, “and therefore we expect to see margin expansion over last year.” Miller projects international revenue to climb into the low double-digit percentages for 2024.
The company’s first-quarter results support this optimism. International revenue rose 12% year-over-year to $3.3 billion, driven by a 21% surge in Latin America. This growth contrasts with North American revenue, which dipped 8% year-over-year to $2.5 billion.
North American Headwinds: Low Gas Prices Curtail Activity
The decline in North American revenue stems from depressed natural gas prices, which have fallen to near three-and-a-half-year lows. This has prompted U.S. gas producers to cut back on operations, dampening demand for drilling services.
“While we expect an eventual recovery in natural gas activity driven by demand from LNG expansions,” Miller said, “our 2024 plan does not anticipate this recovery.” Consequently, Halliburton expects flat revenue and margins in its North American business for the full year.
Despite the challenges in North America, Halliburton delivered a positive overall performance. The company’s adjusted profit of 76 cents per share for the first quarter surpassed analyst estimates by 2 cents. Total quarterly revenue of $5.8 billion also exceeded expectations of $5.67 billion.
Looking Ahead: International Strength Key to Growth
Halliburton’s future growth hinges on the continued strength of its international business. The company’s experience aligns with the broader industry trend, as its competitor, SLB, also reported a rise in profits driven by robust drilling activity in the Middle East and Africa.
Halliburton’s stock price remained relatively unchanged in morning trading, dipping less than 1% to $38.53. Investors will be closely monitoring the company’s ability to capitalize on international opportunities and navigate the headwinds in the North American market.
Source: Reuters
