Halliburton vows extra price cuts as shale demand dwindles, shares rise

(Reuters) – Halliburton Co on Monday promised extra price cuts after reporting a bigger-than-expected drop in quarterly income because the oilfield companies seems to counter weak demand from North American shale producers, sending its shares up about 7%.

FILE PHOTO: Oil manufacturing tools is seen in a Halliburton yard in Williston, North Dakota, U.S., April 30, 2016. REUTERS/Andrew Cullen/File Picture

The most important hydraulic fracking companies supplier, which earlier this month minimize 650 jobs in North America, mentioned it will take steps over the subsequent few quarters that may result in $300 million in annualized price financial savings.

Oilfield service suppliers are battling lowered spending by oil and gasoline producers as traders push for increased buybacks and dividends somewhat than development in a weak oil value setting.

Bigger rival Schlumberger NV mentioned on Friday it had recorded a $1.58 billion goodwill impairment cost associated to its strain pumping enterprise in North America.

“HAL is taking prices out extra aggressively than the Avenue forecast, which it expects to result in sturdy This fall working margin enchancment within the Drilling & Analysis segments regardless of falling income,” mentioned Anish Kapadia, founding father of London-based oil and gasoline consultancy agency AKap Power.

Halliburton warned of additional exercise declines in North America, with fourth-quarter income for its hydraulic fracturing enterprise declining by low double digits and margins by 125 foundation factors to 175 foundation factors.

“Suggestions from our clients lead us to imagine that the rig depend and completions exercise could also be decrease than the fourth quarter of final 12 months,” Chief Government Officer Jeff Miller advised analysts throughout a post-earnings name.

Halliburton mentioned its income from North America, which accounts for greater than half of the corporate’s whole, fell 21% within the third quarter. Income from completion and manufacturing fell 16% within the three months ended Sept. 30.

The corporate additionally idled extra tools within the third quarter than the primary six months of the 12 months, Miller mentioned.

Evercore ISI analyst James West mentioned Halliburton was “exhibiting management by strolling away from unprofitable or low return work.”

Web revenue attributable to Halliburton fell to $295 million, or 34 cents per share, within the three months ended Sept. 30, from $435 million, or 50 cents per share, a 12 months earlier.

Analysts had on common estimated 34 cents per share, in keeping with Refinitiv IBES information.

Income fell to $5.55 billion, under analysts’ common estimate of $5.80 billion.

Halliburton’s shares had been final up 5.9% at $19.52. The inventory additionally pulled rivals increased, with Schlumberger gaining 2.4%.

Reporting by Shariq Khan and Taru Jain in Bengaluru; Modifying by Sriraj Kalluvila

Our Requirements:The Thomson Reuters Belief Rules.

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