Halliburton’s 1Q’16 Earnings Plunge As Drilling Activity Remains Low, Particularly In North America

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Halliburton

As expected, Halliburton (NYSE:HAL), the world’s second largest oilfield services company, reported a weak set of March quarter 2016 numbers last week, due to depressed commodity prices during the quarter. The 30% drop in crude oil and natural gas prices in 1Q’16, led to a 40% decline in the Houston-based company’s revenue on a year-on-year basis. The majority of this fall is attributable to the North American markets, where the company experienced almost a 50% slide in revenue and booked minor losses. International markets, although more resilient than the North American markets, also witnessed weakness in their profitability.

Further, the deteriorating conditions of the commodity markets have forced the company to reduce the infrastructure that it had maintained in anticipation of the pending Baker Hughes acquisition. Also, in order to weather the current downturn, Halliburton reduced its workforce by 6,000 in the last three months. Overall, the company has cut down its workforce by almost one-third since 2014, when the oil slump started.

HAL-Q&A-1Q16

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Since Halliburton has a deadline of 30th April 2016 to obtain the necessary clearances pertaining to its deal with Baker Hughes, its first quarter conference call has been postponed to 3rd May 2016.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Halliburton Company

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