Earnings Preview: Halliburton Company (NYSE: HAL): Third Quarter 2010
Tuesday, October 05, 2010 1:59 PM

Halliburton Company (NYSE: HAL), the world's second-largest oilfield contractor, is scheduled to release third quarter earnings before the opening bell on Monday, October 18, 2010. Analysts, on average, expect the company to report earnings of 54 cents per share on revenue of $4.58 billion. In the year-ago quarter, the company reported earnings of 29 cents per share on revenue of $3.59 billion.

Halliburton Company provides various products and services to the energy industry for the exploration, development, and production of oil and natural gas worldwide. It operates in two segments, Completion and Production, and Drilling and Evaluation. The company has operations in more than 70 different countries.

In the preceding second quarter, the Houston, Texas-based company's net income was $480 million or 53 cents a share, from $262 million or 29 cents a share in the prior-year quarter. Income from continuing operations totaled $474 million or 52 cents per share in the latest quarter. Revenue grew 26% to $4.39 billion from $3.49 billion in the same quarter last year. Analysts, on average, expected the company to report earnings of 37 cents per share on revenue of $4.09 billion. The company's second quarter results benefited from increased activity in the unconventional oil and gas shale plays in North America, aided by anticipated seasonal recovery of markets in the eastern hemisphere and improved activity in Latin America.

Looking ahead, the company expects North America land rig count growth may moderate as activity in the dry gas basins may slow due to weak natural gas fundamentals, which should be partially offset by the continued growth of oil- and liquids- rich reservoirs.

At its last earnings call, Halliburton said that the Gulf of Mexico oil leak will "usher in a new regulatory climate." Halliburton's Gulf of Mexico region business represented approximately 6% of its total revenues for the first half of 2010. Roughly 65% of its Gulf of Mexico region business relates to deepwater. Late in July, the company estimated that the massive oil spill accident in the Gulf of Mexico and the subsequent deepwater drilling suspension will reduce its earnings by 5 to 8 cents per quarter for the remainder of 2010.

However, Halliburton CFO Mark McCollum recently said that the the impact of the drill ban will likely be at the low end of its previously forecasted range of $0.05 to $0.08 per share. According to industry experts, North American activity levels are showing signs of strength and sustainability. The company is well positioned to benefit from a jump in drilling activity in the U.S. 

Among other developments, Halliburton recently completed the acquisition of Boots & Coots, Inc., creating the industry's premier intervention services and pressure control product service line.

In terms of stock performance, shares of the company have gained more than 10% since the beginning of the year.

Disclosure: Author doesn't own any of the stocks discussed here.



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