Halliburton expected to report dip in 3Q profit

Amid mixed demand for drilling, Halliburton Co. expected to post lower 2Q earnings

Associated Press

HOUSTON (AP) -- Halliburton Co., which helps other companies drill for oil and natural gas, is expected to show a smaller profit when it reports second-quarter results before the stock market opens on Monday.

Low prices for natural gas in the U.S. have hurt demand for drilling services in gas fields, but stubbornly high oil prices have helped keep oil rigs busy β€” especially those that are probing for oil offshore and in North Dakota and Texas.

WHAT TO WATCH FOR: Two other oilfield-services companies, Schlumberger and Baker Hughes, reported mixed results on Friday. Schlumberger's net income jumped nearly 50 percent; Baker Hughes' profit fell 45 percent.

Halliburton and Baker Hughes are more closely tied than Schlumberger to operations in the United States, which are roughly flat to down because of weak natural gas prices. Last week, land-drilling operator Nabors Industries Inc., which is dependent on gas exploration, said that second-quarter profit would fall short of Wall Street expectations because of weakness in rig services and other businesses.

Halliburton investors will want to hear the company's comments about demand. Executives said after the company's first-quarter report that customer activity in North America was picking up. They said margins were likely to keep rising during 2013 and that prices might increase.

The company could also provide an update on claims stemming from the 2010 Gulf of Mexico oil spill. Halliburton has offered cash payments on installments and stock to settle many claims. Halliburton provided well-cementing services for the BP PLC drilling rig that exploded in April 2010, killing 11 workers and causing a massive oil spill.

Halliburton shares rose 3.2 percent in the second quarter and β€” fueled by a strong first quarter β€” were up 32.1 percent for the year through Friday's close at $45.83.

WHY IT MATTERS: Halliburton's results and commentary should provide more indications about the strength of oil and gas exploration in the U.S., which helps reduce dependence on foreign oil, some of which comes from politically unstable countries.

WHAT'S EXPECTED: Analysts surveyed by FactSet expect Halliburton to earn 72 cents per share excluding special items, which in the first quarter included charges related to the Gulf explosion. If the analysts are right, it would mean a decrease from Halliburton's adjusted profit of 80 cents per share in the second quarter of 2012, which excluded discontinued operations. Wall Street estimates the company's revenue was $7.26 billion in the recent quarter.

LAST YEAR'S QUARTER: Halliburton earned $737 million, or 79 cents per share, on revenue of $7.23 billion.

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