Halliburton Guidance Expected to Shed Light On Oil Price Worries -- Earnings Preview

   By Alison Sider 
 

Halliburton (HAL) is scheduled to announce its third-quarter earnings before the market opens Monday morning. Here's what you need to know:

EARNINGS FORECAST: Net income of $1.10 a share is the consensus estimate of analysts surveyed by Thomson Reuters, compared with 79 cents per share last year. The company hasn't provided guidance for the third quarter but has said it expected revenue growth in the Eastern hemisphere, Latin America and North America.

REVENUE FORECAST: Revenue of $8.5 billion is forecast, compared with $7.47 billion a year ago.

WHAT TO WATCH:

--FALLING OIL PRICES: Expect questions about the potential impact of falling oil prices. Halliburton's stock has dropped by more than 20% in the last month amid worries that falling crude prices will cause the company's customers, exploration and production companies, to curb spending. Analysts say that it's too soon to panic, adding that most shale formations are still economic even with oil prices hovering at around $80 per barrel.

--FRACKING STRENGTH: After a rough couple of years, the market for hydraulic fracturing services is making a comeback. Activity in shale formations like the Permian Basin in west Texas is booming; the horizontal rig count there is 23% higher than this time last year. That's good news for Halliburton, which is the leading provider of hydraulic fracturing services in North America. For years, the supply of equipment to do this work has outpaced demand, squeezing margins for oilfield services companies. That, too, is turning around. Halliburton said last quarter it expected more activity in North America, and last week chief competitor Schlumberger Ltd. said the region helped drive better than expected results in the quarter.

--INTERNATIONAL ISSUES: Sanctions in Russia, unrest in the Kurdish region of Iraq and civil strife in Libya have all disrupted oil exploration and production activity, meaning less work for Halliburton abroad. Last month CFO Mark McCollum said that the combined impact of issues in all three of these countries would likely shave about 2 cents from third quarter earnings.

Subscribe to WSJ: http://online.wsj.com?mod=djnwires