Halliburton’s revenues from North America increased by 24% during the first quarter. Revenue from North America increased to $2.23 billion compared to a figure of $1.79 that was recorded in 2016. Land revenue for Halliburton also increased by close to 30% in quarter four. Combined revenue for the whole group increased to $4.28 billion, a 1.9% rise. The increase was attributed to rising activity in well construction and pressure pumping.
“North America activity increased rapidly, but not without growing pains, while activity in the rest of the world declined due to typical seasonal pressures that were exacerbated by current cyclical headwinds,” Halliburton’s president Jeff Miller said.
With an adjusted profit coming in at 4 cents a share, this was better than what analysts had estimated – 3 cents a share. The lower estimates were partly as a result of warnings that Halliburton sent out in March saying it was projecting weak demand and higher costs in the non-North American markets it was operating in. That there would be positive results was evident since last month when pressure pumping capacity doubled and the number of hires having been increased.
According to Miller, future prospects are overwhelmingly positive due to increased investment by customers who are looking to meet their production targets. Halliburton’s reactivation program is also underway and this is going to enable the company get better rates for the services it offers. Various estimates have shown that this could be 25% higher.
Miller added that quarter one results had demonstrated that market share was not being gained at the expense of pricing and therefore normalized margins would soon become a reality. Halliburton’s president also revealed that the management of the company was planning to make more investments that would ensure that the market share that had been earned was maintained. This will result in a bigger business base once normalized margins resumed.
Throughout the first quarter there was improvement in incremental margins for North America. This was despite seasonal Gulf of Mexico declines, reactivation costs, and transitory inflation costs.
In 2017’s second half, Halliburton expects moderation in the pace of activity especially in the event that gas and oil production accelerated in North America resulting in pricing pressures. Miller is however confident that the equipment Halliburton would be introducing into the market would meet with sufficient demand. The president Halliburton, however, ruled out going out of its way to meet the rising demand of newbuild equipment until it made economic sense.