UPDATE 3-Halliburton profit beats as company cuts cost; shares surge

(Reuters) – Halliburton Co (HAL.N) on Monday beat analysts’ estimates for second-quarter profit as its Completions and Production unit outperformed expectations, pushing its shares up 6.8 percent in early trading.

FILE PHOTO: Halliburton’s campus in Houston, Texas, U.S. May 18, 2017. REUTERS/Daniel Kramer

The Houston, Texas-based company is a leading provider of hydraulic fracturing services in North America, a segment of the oilfield services business that has been hard-hit by an abundance of equipment, making it difficult to raise prices.

Halliburton’s Chief Executive Jeff Miller on Monday said the pressure pumping market remains oversupplied, but that the firm continued to stack equipment during the quarter and will continue to do so going forward. The company has also taken steps to cut cost by reorganizing its North American business segment.

Halliburton shares, which have declined nearly 18.2% this year, were up 6.8% in early trading to $23.22, putting it on track for the largest single-day gain since late 2016.

Revenues for its Completion and Production unit were up 4% sequentially to $3.8 billion and the company was able to improve margins in that segment by cutting cost and maximizing equipment usage, Miller said.

Despite the improvements, he also warned investors that third quarter activity would decline as producer customers continue to focus on reducing spending.

“We expect that activity in North America will be slightly down in the third quarter. We anticipate the slowdown to be more pronounced in the gassier basins due to persisting lower gas prices,” Miller said on the second-quarter conference call.

Halliburton saw a boost in international activity, with revenues from international markets jumping more than 12% to $2.60 billion, while revenue from North America fell 13.2% to $3.33 billion.

Revenue from the Middle East and Asia, the biggest contributors to its international business, rose 9.1% to $1.21 billion.

“Momentum is building internationally and activity improvement should continue into 2020,” Miller said.

Rival Schlumberger NV (SLB.N) on Friday posted a higher-than-expected second-quarter revenue and an increase in profit on demand from markets outside North America.

Net profit attributable to Halliburton fell to $75 million, or 9 cents per share, in the quarter ended June 30, from $511 million, or 58 cents per share, a year earlier.

It took pre-tax impairments and other charges of $247 million.

Excluding one-time items, the company earned 35 cents per share, beating Wall Street average estimate of 30 cents per share, according to IBES data from Refinitiv.

Revenue fell 3.5% to $5.93 billion and missed estimates of $5.97 billion.

Reporting by Nishara Karuvalli Pathikkal and Arathy S Nair in Bengaluru; Editing by Arun Koyyur and Nick Zieminski

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