Halliburton Co on Monday delivered a higher-than-expected quarterly profit as it found greater success outside its natural gas-engorged home market in the United States. The world's second-largest oilfield services company also said it boosted its share repurchase program by $4.3 billion after buying $1 billion worth of its shares in the second quarter and leaving only $700 million authorised from an existing program set up in 2006.
Chief Executive Dave Lesar said the refreshed $5 billion buyback reflected growing confidence in the outlook as he predicted further profit margin improvement in North America. Analysts at Tudor Pickering Holt said the buybacks would grab as much attention as the results, though Halliburton shares fell 1.1 percent to $45.32 on Monday after a strong run in recent months. "We do not believe the market is yet fully appreciating its solid and growing international footprint," Sterne Agee analyst Stephen Gengaro wrote.
The Houston-based company reported a drop in second-quarter profit to $679 million, or 73 cents per share, from $737 million, or 79 cents per share, a year ago. Analysts expected 72 cents per share, according to Thomson Reuters I/B/E/S. Revenue rose 1 percent to $7.3 billion. "Relative to our primary competitors, we have delivered leading year-over-year international revenue growth for five consecutive quarters," Lesar said in a statement. On Friday, sector leader Schlumberger Ltd posted higher-than-expected earnings on greater international exposure, in stark contrast to US-anchored Baker Hughes Inc.
A collapse in pricing for hydraulic fracturing services has weighed on all players as natural gas drillers have cut back in response to weak gas prices, but US activity is showing signs of recovery. Barclays has seen a 4 percent rise in drilling permits in June in the 30 states it surveys, and the US gas-directed rig count is rising. Analysts worried about a slump in the fourth quarter, when exploration and production budgets start to empty out, though Lesar believes higher oil prices should lead to "budget reloading." He expected profit margin improvement to continue in North America after a 1.2 percentage-point rise to 17.5 percent over the second quarter.
The US gas rig count fell to an 18-year low of 353 in June, even as the count outside North America climbed to its highest in 30 years, according to Baker Hughes data. Halliburton highlighted more activity and sales in Malaysia, China and Angola, while saying that Latin America should bounce back after a disappointing first half.