Drilling services provider Halliburton Company (HAL) reported earnings for the first quarter that met analysts’ estimates while missed on revenue expectations. The company posted a 34% increase in revenue to $5.7 billion. The increase in revenue was the result of strong market conditions in North America, Halliburton’s most relying market. Profit for the quarter swung to the positive territory compared to a loss a year ago, reporting net income of $46 million or $0.05 per share. Adjusting for special items, earnings per share came in at $0.41.
“Our Completions and Production division was negatively impacted by delays in sand delivery, due to weather related rail interruptions during the quarter, but achieved a strong March exit with margins in the mid-upper teens. Our Drilling and Evaluations division had strong year over year revenue growth of 15% while operating income grew 54%” said Jeff Miller, President and CEO.
Halliburton made good progress in North America in the first quarter with revenue jumping 57.6% to $3.51 billion. As has been the case through the year, the company has been relying much on its revenue from North America, which makes more than 50% of its revenue. The significant increase in revenue in this region was driven by increased activity in most of Halliburton’s product service lines in the US land sector.
Europe/Africa/CIS and Middle East regions also reported higher revenues with increases of 18.5% and 7% respectively. However, Latin America turned negative for the quarter with revenue dipping 1.3% year-over-year. The company has curbed its operations in Latin America in the recent past due to reduced count of fracturing stage in Argentina and scaled down activity in Brazil.
As the company has been reporting double digit increases in its North America region over the last four quarters and is becoming more reliant on this region, it doesn’t bode well for Halliburton’s growth in the coming quarters. The company has to look for growth opportunities in other regions as well to reduce its reliance on North America.
Halliburton shares fell 1.6% in the pre-market trading post the earnings release.