Growing Drilling Demand To Drive Halliburton’s 3Q’17 Results
Halliburton (NYSE:HAL), the world’s third largest oilfield services company, is set to post a stellar financial performance for the September quarter 2017 on 23th October 2017((Halliburton To Announce September Quarter 2017 Results, 9th August 2017, www.halliburton.com)). Backed by a growing rig count and strong drilling demand, particularly in the North American markets, the market expects the Houston-based company to report a remarkable jump in its top-line as well as bottom-line, both on an annual and sequential basis. Given the company’s higher exposure to the North American markets compared to its closest competitor, Schlumberger, it is likely to witness a higher improvement in its third quarter results.
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Despite the continued threat of hurricanes and storms in the US, the WTI crude oil prices averaged at around $48 per barrel during the third quarter, largely flat compared to the previous quarter. Consequently, the oil and gas rig count for the region remained strong and continued to drive the global rig count. The US rig count grew almost 77% to 1,150 units at the end of the September quarter compared to the same quarter of last year. However, the drilling demand in the international markets dropped during the quarter, offsetting the impact of strong demand from the North American markets. Yet, the global rig count rose by 31% to 2,081 units compared to the year ago quarter. Accordingly, we expect Halliburton’s third quarter revenues and earnings to experience a sharp improvement, backed by its strong exposure in the North American markets.
During the third quarter, Halliburton entered into a strategic alliance with Microsoft to create a digital transformation in the oil and gas industry. The deal will combine Microsoft’s expertise in cloud and digital transformation with Halliburton’s knowledge in exploration and production (E&P) science, software, and services. As part of this initiative, the company has made DecisionSpace 365 available on Azure, which enables real-time data streaming from IoT edge devices in oilfields and applies deep-learning models to optimize drilling and production to lower costs for customers. This implies that the new technology will allow Halliburton to bring down the costs for its customers while providing better services. This is likely to boost the company’s revenues and earnings going forward.
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