Updated version 4 - Halliburton expects that the reconstruction of energy infrastructure in the Gulf of Mexico will generate years of sustained demand for oil fields.
Details from the conference call were added in paragraphs 9, 10, and 16; paragraph 4 was updated with share price information.
Pranav Mathur
Reuters, October 20 - Halliburton HAL.N forecasts mid-single-digit revenue growth by 2027, expecting that in the war-affected Middle East, efforts to restore energy production and replenish inventories will support demand for oilfield equipment, even though the North American market will remain sluggish.
CEO Jeff Miller stated on Tuesday that next year’s operating margin will reach about 15%, an increase of approximately 200 basis points from the previous year. This forecast does not assume a recovery in U.S. hydraulic fracturing activity.
Citi analyst Scott Gruber said: “The forecast assumes the North American market is flat and that there will be no recovery in the domestic frac market, which suggests a recovery in the Middle East, and margin improvement as new international contracts ramp up.”
Halliburton’s share price rose by 2.4% after third-quarter profit and revenue both exceeded expectations.
Eight months of U.S.-Iran conflict has disrupted energy operations in the Middle East, not only causing project delays but potentially creating long-term demand for oilfield services.
Consulting firm Rystad Energy predicted in April this year that energy-related infrastructure repair costs could reach $5.8 billion.
“I expect that efforts to restore production, rebuild inventories, and strengthen energy security will drive oilfield services demand growth for several years to come,” Miller said.
Halliburton reported that quarterly revenue in the Middle East and Asia was largely unchanged at $1.41 billion. About a quarter of the company’s total revenue comes from the Middle East.
COO Shannon Slocum said on the earnings call that fourth-quarter revenue from the Middle East is expected to grow both quarter-over-quarter and year-over-year.
Slocum added that outside the Middle East, international operations are expected to grow about 12% this year, and Halliburton also anticipates robust growth in the Venezuelan market.
As momentum builds for a U.S.-backed multi-billion-dollar plan to revive Venezuela’s battered (link) oil industry, oilfield service companies are rehiring workers and deploying more equipment.
In the third quarter, quarterly revenue in Latin America and Europe/Africa grew by 12.6% and 22.7% respectively, partially offsetting the 9% decline in North America due to sluggish U.S. frac activity.
Quarterly total revenue rose 1.8% to $5.7 billion, above analysts’ expectations of $5.6 billion.
According to data compiled by London Stock Exchange Group (LSEG), Halliburton reported adjusted earnings per share of $0.60 in the three months ended September 30, beating the analyst average estimate of $0.58.
The company expects fourth-quarter earnings per share to be in the range of $0.62 to $0.64, compared with analysts’ forecast of $0.64.
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