Halliburton (HAL) Q3 earnings preview: Factors that can influence results

Halliburton Company (NYSE: HAL) has been striving to overcome the slowdown in exploration and production activities in the US energy sector by tapping into the international market. The oilfield services company is expected to unveil its third-quarter financial results on October 21 at 6:45 am ET.

Indicating that the performance would be unimpressive, analysts’ expect September-quarter earnings to decline 32% year-on-year to $0.34 per share. The estimate for revenues is $5.82 billion. The outlook was revised down many times in the past two months.

On the revenue front, the weakness in Completion and Production activities is likely to persist, though it will be partially offset by the stable performance of the Drilling and Evaluation segment.

Overseas Market

Currently, Halliburton is focusing on its international activities with an expanded portfolio amid continued weakness in North American operations. Of late, there has been an uptick in pipeline services and wireline activity outside the US, especially in Europe. However, that might not help much as the major exploration and production companies keep postponing their investments and conserve cash flow for returning to shareholders.

The company is poised to bear the brunt of the resultant decline in the demand for various services, mainly those related to offshore activities, field development and exploration of alternative sources.

Dip in Rig Count

Making the overall situation unfavorable, there has been a marked decline in oil rigs in the US. The fluctuations in oil price thus far this year might have impacted rig activity in the to-be-reported quarter. It might take quite some for the demand for oilfield services to regain momentum, and one of main reasons is the abundance of non-completed wells, which were drilled when oil price was at the peak and left unfinished.

Past Performance

In the June-quarter, the Duncan, Oklahoma-based firm reported earnings of $0.35 per share, which was down 14% from last year but above the consensus estimate. Dragging down the bottom-line, revenues dipped 3% to $5.9 billion and missed the Street view.

Shares of Halliburton slipped to a ten-year low this week and traded below the $20-mark, continuing the downturn that started more than a year ago. The company’s market value nearly halved in the past twelve months and dropped 36% since the beginning of the year.

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