Halliburton Swings to Loss but Signals Upturn -- Update

By Anne Steele and Alison Sider 

Halliburton Co. swung to a loss in its latest quarter as it booked hefty charges related to its failed tie-up with Baker Hughes Inc.

Still, results came in better than anticipated for the second largest oil-field-services company behind Schlumberger Ltd., and the industry bellwether emphasized that the North American oil industry is poised for a turnaround in the second half of the year.

Halliburton shares fell 1.1% to $44.49 Wednesday morning.

Halliburton reported a loss of $3.21 billion, or $3.73 a share, for the period ended June 30, compared with a year-earlier profit of $54 million, or 6 cents a share. Excluding special items, the company posted an adjusted loss from continuing operations of 14 cents a share. Total revenue slid 35% to $3.84 billion.

Analysts polled by Thomson Reuters had projected an adjusted loss of 19 cents a share on $3.75 billion in revenue.

Halliburton said revenue in its North American operations -- the largest contributor to its top line -- tumbled 43% amid reduced activity throughout the U.S. land sector, particularly pressure pumping services and drilling activity.

But Halliburton Chief Executive Dave Lesar cited a more positive climate for the remainder of the year, saying an emotional threshold was crossed when oil prices hit $50 per barrel during the quarter. Though they've slid some since then to $44.65 Tuesday, oil companies are starting to think about growing rather than just hanging on.

"There's a spring in their step I didn't see earlier in the year," Mr. Lesar said of Halliburton's customers. "In short, they are getting back to business."

The company believes the U.S. rig count bottomed out during the quarter, pointing out that it has improved by 26 over the past several weeks, reflecting operator confidence in stabilizing commodity prices. Mr. Lesar said he expects a "modest uptick" in the rig count during the second half of the year and a more significant ramp up in 2017.

Some of the pain from nearly two years of low oil prices will linger. Oil-field services companies made deep pricing concessions at the depths of the downturn, idling equipment and laying off tens of thousands of workers.

Mr. Lesar cautioned that the exploration and production companies will have to adjust to paying more for work from drillers and frackers if they expect the services providers to stay in business.

"They know in their heart of hearts that service prices have to go up," he said.

In May, Halliburton and Baker Hughes called off their merger, which was once valued at nearly $35 billion, after the companies had faced intense regulatory pressure on several continents. They had struck the deal in 2014, but it had appeared especially troubled since April, when the Justice Department filed a lawsuit to block it.

The company booked $3.52 billion of costs related to terminating the Baker Hughes deal, as well as $423 million of other impairments and charges during the quarter.

Write to Anne Steele at [e-mail] and Alison Sider at [e-mail]

(END) Dow Jones Newswires

July 20, 2016 11:48 ET (15:48 GMT)

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