Halliburton Profit Better Than Expected On Cost Cuts

That decline was due to lower oil-field service activities levels around the world, with the company’s North American business the hardest hit. Oppenheimer reissued an “outperform” rating and set a $48.00 price objective (down from $55.00) on shares of Halliburton Company in a research report on Thursday, October 1st.

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Dave Lesar, CEO of oil services giant Halliburton, said that the road to recovery for the energy industry will be abysmal this year.

“Halliburton delivered a considerably better-than-expected operational result, with margins markedly outpacing our expectations while revenues aligned with our estimate”, said Bill Herbert, an analyst at Simmons & Co.

Excluding a $192 million impairment charge and costs related to the pending merger, Halliburton earned 31 cents per share in the fourth quarter, beating analysts’ average estimate of 24 cents, according to Thomson Reuters I/B/E/S. Baker Hughes acquisition-related costs totaled $79 million (9 cents/share), versus sequential costs of $62 million (7 cents).

Despite these setbacks, the company officials remained confident (or at least did a passable job of faking it) in the quarterly report, issuing sanguine statements that the whole thing would come off according to plan. However, the company filed no Worker Adjustment and Retraining Notification notices with that state of Colorado during the fourth quarter that would indicate a large number of layoffs locally.

Halliburton posted a 42% loss in Q4 2015 in its total revenue year-on-year that the company said is a result from the impact of reduced commodity prices creating widespread pricing pressure and activity reductions on a global basis. Revenue for 2015 was down 28 per cent at $23.6 billion. The company also recorded Baker Hughes acquisition-related costs of $0.09 per share in the quarter. In fact, operating margins in North America actually improved by 160 basis points. The review has entered the second phase and Halliburton remains clear to propose remedies, which should satisfy any concerns over the competition in the industry.

Revenue dropped by 42% year-over-year to $5.08 billion for the quarter ended December 31, while analysts had estimated for revenue of $5.11 billion. The 52-week high of Halliburton Company is $50.2 and the 52-week low is $27.64.

No. 1 Schlumberger last Friday reported its revenues slipped 39% during 4Q2015, and it had trimmed the workforce by another 10,000 (see Shale Daily, Jan. 22). Eagle Asset Management boosted its position in shares of Halliburton Company by 88.9% in the third quarter.

Besides North America, Halliburton is seeing certain difficulties in Latin America, where national oil companies are under severe stress amid lower prices, macro-economic uncertainties, and political unrest. On the hand, Halliburton’s revenue declined 13% sequentially.

Cost-reduction efforts and a spike in completion tool sales in the Gulf of Mexico in the year-end drove the earnings beat. In fact, Halliburton is still looking to close on its purchase of rival Baker Hughes, saying it is ready to sell off more assets to close the merger.

A look at the outlookDespite some pockets of improvement and resilience, Halliburton expects 2016 to be a challenging year, especially in light of the weakening oil price through the first few weeks of the year.