Halliburton’s 3Q’16 Earnings To See Improvement On The Back Of Increased Global Rig Count

by Trefis Team
Halliburton Company
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As the earnings season sets in, the market expects Halliburton (NYSE:HAL), the world’s second largest oilfield services company, to report improvement in its revenue as well as profitability on a sequential basis, backed by the recovery in commodity prices and rig count over the third quarter. While the pricing pressure in the market is likely to continue in the remaining half of 2016, the Houston-based company believes that the industry’s worst downturn is finally subsiding and the commodity markets are progressing towards the path of recovery.



Despite volatility in the market, commodity prices continued to remain resilient in the last three months. While crude oil prices did not show much improvement, natural gas prices jumped close to 35% during the quarter. This recovery, coupled with the unexpected improvement in commodity prices in the second quarter, resulted in a notable rise in the global rig count (oil and gas). While the demand for rigs in the North American and Middle East markets picked up during the third quarter, weakness in the Latin American and European markets continued to be a drag on the overall rig count.HAL-Q&A-3Q16-2

Even though the rig count improved during the September quarter, it will not have an immediate impact on the oilfield contractor’s 3Q’16 margins. However, given Halliburton’s significant presence in the North American markets, the increased rig demand in the region will augment the company’s future recovery, assuming a sustained recovery in commodity prices over the next couple of quarters.

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