DALLAS – Halliburton Co. boosted third-quarter net income by 17 per cent on strong revenue from its international operations, which offset sluggish growth in North America.
Halliburton helps energy producers drill for oil and gas, and it’s still seeing too much capacity for pressure-pumping services in North America as oilfield-service companies fight for a bigger share of the shale oil and gas boom. That’s driving down prices for contractors like Halliburton.
“We anticipate pricing pressure will continue as contracts renew during the next quarter or so,” Chairman and CEO Dave Lesar said on a conference call with analysts. “Accordingly, we are already working on adjusting our cost structure,” which he said would include job reductions.
Company officials told analysts that as they learn to operate more efficiently, they found they had too many people for the available work. That doesn’t foreshadow a longer slowdown in the business, they said, and they didn’t give job-cut figures. Halliburton took $38 million to cover severance payments and write down asset values in the quarter.
Houston-based Halliburton also said operations in Colorado continued to be affected by last month’s flooding.
The stock fell $1.10, or 2.1 per cent, to $51.37 in midday trading. The shares began the day up 51 per cent in 2013.
For the three months ended Sept. 30, the Houston-based company earned $706 million, or 79 cents per share. Its earnings were $707 million excluding discontinued operations. A year earlier it earned $602 million, or 65 cents per share.
Excluding restructuring charges, the company earned 83 cents per share from continuing operations, a penny more than analysts expected, according to a survey by FactSet.
Revenue rose 5 per cent to $7.47 billion, led by improvement in international operations including Russia, the North Sea and Angola.
In North America, the company’s largest region, revenue declined 2 per cent as the U.S. land rig count was flat and there was — according to Halliburton — about 20 per cent too much service capacity.
Total revenue was below Wall Street’s consensus forecast of $7.50 billion.
Lesar said that fourth-quarter revenue and margins in Latin America will be hurt by curtailed activity in Mexico, but he said the company still has a positive outlook for the region.
The company expects profit margins to improve in North America next year as activity expands in the Gulf of Mexico and Halliburton benefits from initiatives that it calls “Battle Red” and “Frac of the Future” — the latter is a reference to hydraulic fracturing or “fracking.” That’s the process in which chemicals and water are pumped underground at high pressure to break open rock formations and release oil and gas. It has spurred a boom in U.S. production.