Halliburton (HAL) topped earnings estimates early Tuesday as the Houston-based company reported an 88% increase in earnings per share in the second quarter. HAL stock rose as energy and oil stocks were mixed in premarket activity.
estimates: Wall Street was forecasting earnings per share of 45 cents and revenue of $4.7 billion for the energy sector giant.
Results: Halliburton EPS rose 88% to 49 cents. Revenue rose 38% to $5.1 billion in the second quarter.
Halliburton recorded a $344 million pretax charge in the second quarter related to its decision to exit Russia due to sanctions. In the first quarter, the company also recorded a similar charge of $22 million.
“I expect international markets to grow for several years, and I am confident that Halliburton is positioned to benefit from this multi-year upcycle more than ever,” CEO Jeff Miller said in a statement. “We have a leading technology portfolio, the right geographic footprint and new service line opportunities that align perfectly with our strategy to deliver profitable international growth.”
Oil stocks and prices rose sharply on Monday after it was revealed that Saudi Arabia had no plans to increase its oil production above quotas allocated by OPEC+. Against a backdrop of tight oil and gas supplies, rising demand and rising costs in the energy industry, Halliburton opens a week of second quarter reports from the major oilfield service and infrastructure companies.
The reports – from Halliburton, Baker Hughes (BKR) and Schlumberger (SLB) – should give investors clues as to whether oilfield activity points to additional supply and whether oilfield inflation will continue to weigh on industry capex budgets.
Oil stocks rise when prices rise
US crude rose more than 4% early Monday after Saudi Arabian Foreign Minister Prince Faisal bin Farhan Al Saud said oil had not been discussed at Saturday’s US-Arab summit. Partners and members of the expanded organization of petroleum exporting countries, known as OPEC+, would continue to assess and respond to market conditions.
On Friday, West Texas Intermediate crude prices posted a second straight weekly decline, ending below $100 a barrel for the first time since early April. Crude oil futures are down 7.8% from July to Friday but are still up 30% since Dec. 31. Meanwhile, U.S. natural gas rose more than 29% from July through Friday, up nearly 88% year-to-date. Gas prices at the tank were $4.52 on Monday, according to AAA data.
Baker Hughes follows Halliburton on Wednesday and then Schlumberger announces its second-quarter performance on Friday. All three oil stocks were trading significantly higher on Monday.
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For much of the year, oil stocks led the market’s uptrend by long strides. Recent recession fears and worries of another Covid wave in China have somewhat dimmed the glow in energy stocks.
While many companies, including Exxon Mobile (XOM) and rafters (CVX) have reported a sharp increase in capital spending in the first-quarter earnings season, oil and gas companies have shown that they are not ready to expand production operations.
However, the upcoming earnings reports could be a leitmotif for changes in industrial production. According to Baker Hughes, there were 756 active oil rigs in the US last week, four more than the week before. BKR publishes weekly rig numbers every Friday. As of early June, there were 727 active US oil rigs, a 60% increase from last year’s sluggish activity.
HAL closed up 3.6% at 28.88 at Monday’s close. Halliburton is one of the world’s largest suppliers of products and services to the energy industry. The company reports that it has contracts in the Middle East and across the Americas, Europe and Africa.
As with many oil stocks right now, Halliburton’s chart isn’t a pretty picture. HAL collapsed after trying to break out of a handleless cup pattern in June. Stocks triggered that automatic sale ruledipped below both its 10-week and 40-week moving averages in large volume.
Still, Halliburton stock ranks second in the oil and gas field services group. HAL stock has a composite rating of 74. It has a relative strength rating of 78, which measures stock price movement with a score from 1 to 99. The rating shows how a stock’s performance compares to all other stocks in the IBD database over the last 52 weeks. The EPS rating of HAL stock is 78.
BKR rose 1.8% to 27.17 on Monday. Based in Texas, the company provides oilfield services, products, technology and systems to the global oil and natural gas industry. The company operates in several segments and offers products and services for onshore and offshore operations.
Baker Hughes missed analysts’ forecasts with its Q1 results. The company reported a 1% increase in revenue to $4.8 billion. EPS rose 25% to 15 cents.
estimates: Analysts estimate earnings per share at 22 cents on sales of $5.3 billion in the second quarter.
Results: BKR will report on Wednesday before the market opens.
Like Halliburton, BKR has collapsed and is looking for a bottom. It is down 30% from its 52-week high of 39.78. Baker Hughes ranks third in the oil and gas machinery/equipment group. BKR has a Composite Rating of 72 and Relative Strength of 74. His EPS rating is 95.
SLB shares rose 2.57% to 33.13 on Monday. The Houston-based multinational is one of the world’s largest providers of offshore drilling services. It also provides technology for well drilling, production, and oil and gas processing.
estimatesQ2: Analysts expect the company to report 40 cents of earnings per share on revenue of $6.27 billion in the second quarter.
Results: The result should be published on Friday morning.
The company increased its revenue by 14% to $5.9 billion in the first quarter. EPS rose 62% to 34 cents.
The SLB also maintained its forecast for the year as a whole. Schlumberger expects annual revenue growth in the mid-teens and Adjusted EBITDA margins at least 200 basis points higher than in the fourth quarter of 2021. Based on that guidance, SLB initiated a phased return to shareholders with a 40% dividend increase.
Like other oil stocks, Schlumberger has fallen below both its 50-day moving average and its 200-day moving average. Since June 10, SLB’s relative strength line has also fallen. Still, the stock is up 4.8% year over year.
Schlumberger is ranked fourth in the oil and gas field services group and has a composite rating of 65. Its relative strength rating is 62 and its EPS rating is 78.
The oil market, oil stocks
US crude futures fell about 2% to $100 a barrel on Tuesday. The US oil benchmark fell nearly 7% last week and has been bearish since mid-June amid mounting recession concerns and fears that China could reinstate widespread Covid-19 lockdowns.
The price of crude oil has been on an upward trend since the beginning of last year. Prices rose sharply after Russia’s invasion of Ukraine in February, and they avoided buying Russian oil in a global response to the invasion. US oil spot prices briefly touched $130 in March.
US natural gas prices continued a rally slightly above $7 per million UK thermal units. This is the highest price since June.
On Monday, Russia’s Gazprom declared force majeure for gas supplies to Europe, citing “extraordinary” circumstances that would not allow it to meet its supply obligations, according to Reuters. The Nord Stream pipeline is cutting off Russia’s gas supply to Germany, even though demand is already sky-high and supply is tight.
Gazprom’s Nord Stream pipeline, which connects Russia’s gas fields to Europe, is already closed for annual maintenance until July 21.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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