Halliburton Co. CEO Jeff Miller during the second quarter conference call expressed cautious optimism for a rebound during 2025 in North American exploration and production (E&P).
“I expect that the second half of 2024 will be near the low point of activity levels this cycle, and while it's too early to give specific guidance for 2025 in North America, I expect activity to be directionally higher than the second half of 2024,” Miller said during a call to discuss the oilfield services firm’s results
Miller said he expects an uptick in activity as E&P firms complete recently announced acquisitions and establish development plans. “Second, some of the merged assets will be divested to smaller operators who will put them to work,” he said. “Finally, I expect some recovery in natural gas activity.”
NGI’s Henry Hub daily spot price averaged $2.195/MMBtu on Monday (July 22), versus $2.605 a year ago.
This year’s gas price slump has been steeper than anticipated, Miller said. The gas market “actually took a leg down…I didn't think it would come up, but I didn't really expect it to take a leg down either, so it's not flat.”
Merger and acquisition activity “takes some time to digest and so that has an impact on activity broadly, and clearly efficiencies.”
Despite the recent slowdown, the Houston oilfield services giant remains committed to its North American focus.
“Six years ago, when we set our strategy to maximize value in North America, I understood it may take a market like we see today, where North America activity declined by over 200 rigs in the last 18 months, to demonstrate the margin resilience and earnings power of our strategy,” said Miller. “We are committed to our strategy to maximize value in North America, because it delivers shareholder value, and it is the right strategy for this market.”
Internationally, meanwhile, “we see strong demand for Halliburton services, high activity levels and equipment tightness across all major basins,” the CEO said. “We expect our international business to deliver about 10% revenue growth for the full year.”
He added, “we see a lot of projects that are either just now being tendered or activity going into next year, and in some cases that – it takes a while to get the international up and going, and so probably the activity that picks up to send us will be where it's sort of [national oil company]-driven, which would look in some cases like, obviously the Middle East…
“I’m still excited about Latin America and what’s possible there, and so…I feel really confident both in Halliburton’s outlook for ‘25 and the industry’s.”
International Growth
International revenue rose 8% year/year to $3.4 billion during 2Q2024, led by a 10% increase from Latin America. The period marked the 12th straight quarter of year/year growth in the international business, Miller highlighted.
North America revenue fell 8% year/year alongside a 12% drop in the rig count over the same period, Miller said. North America revenue declined 3% sequentially to $2.5 billion.
“This decline was primarily driven by decreased pressure pumping services in U.S. land and decreased completion tool sales and testing services in the Gulf of Mexico,” said CFO Eric Carre, who joined Miller on the call.
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“Partially offsetting these declines were increased drilling-related services in Canada and U.S. land, higher wireline activity in U.S. land and the Gulf of Mexico, improved pressure pumping services in Canada, and increased cementing activity in the Gulf of Mexico,” management said.
International revenue rose 3% sequentially, including growth of 4% from the Europe-Africa region and 5% from the Middle East. The Europe-Africa increase “was primarily driven by higher well construction activity and improved wireline activity in Norway, along with increased completion tool sales and higher stimulation activity in West Africa,” Carre said.
Latin America revenue was sequentially flat at $1.1 billion. “Improved activity across multiple product service lines in Argentina and the Caribbean, higher pressure pumping services in Mexico, and increased drilling-related services in Brazil were offset by lower drilling-related services, decreased project management activity, and decreased software sales in Mexico and lower completion tool sales in the Caribbean,” the company said.
Halliburton reported net income of $709 million (80 cents/share) for the second quarter, versus profits of $610 million (68 cents) in the same period last year. Revenue totaled $5.83 billion, from $5.8 billion a year earlier.
