Oilfield service provider Halliburton reported significantly better-than-expected Q2 results despite its connection with the Gulf of Mexico oil spill. This was helped by the strength and sustainability of the all-important North American onshore activity levels where it operates its market-share-leading pressure-pumping business.
Net income for the second quarter of 2010 was US$480 million. This compares to net income for the first quarter of 2010 of $206 million. Consolidated revenue in the second quarter of 2010 was $4.4 billion, compared to $3.8 billion in the first quarter of 2010. All product service lines and geographic regions experienced sequential revenue growth from the first quarter, driven by strong demand in the United States and seasonal activity improvements internationally.
Consolidated operating income was $762 million in the second quarter of 2010, compared to $449 million in the first quarter of 2010. All product service lines contributed to this increase, with production enhancement exhibiting especially strong sequential growth followed by completion tools, cementing, and directional drilling.
“I am very pleased with our second quarter results. Total revenue grew 17% and operating income grew 70% sequentially, driven by increased activity in the unconventional natural gas and oil basins in North America. In addition, our international results reflect the anticipated seasonal recovery of markets in the eastern hemisphere and improved activity in Latin America. Overall, second quarter operating margins improved by over 500 basis points to 17%,” said Halliburton president and CEO, Dave Lesar.
“The tragic incident that occurred in the Gulf of Mexico and the subsequent suspension of deepwater drilling, we believe, will usher in a new regulatory climate and will have a profound impact on how deepwater drilling is performed.”
But Lesar acknowledged that the oil spill will eventually have a knock-on effect on its profits for the rest of this year.
“We are taking appropriate actions to mitigate the impact of the reduced activity in our Gulf of Mexico business, including redeploying our people and equipment to other areas of stable or increasing activity. Despite these moves, we estimate that the deepwater drilling suspension will negatively impact our earnings by $0.05-$0.08 per quarter for the remainder of 2010,” he said.
“The events in the Gulf of Mexico have not stifled our enthusiasm for increased deepwater activity in the coming years. Deepwater will continue to serve as an important source of hydrocarbons necessary to meet future energy demand. “Contributions from the service sector can play a valuable role in developing new technological innovations and best practices to help customers operate safely and efficiently in these challenging conditions and will generate a corresponding increase in service intensity,” Lesar concluded.
