Will Strong Pressure Pumping Demand Drive Halliburton’s Q2?
Halliburton (NYSE:HAL) is expected to publish its Q2 2018 results on Monday, July 23, reporting on a quarter that is likely to see the company’s results pick up, driven by strong drilling demand and pricing in the North American onshore markets. Below, we take a look at some of the key trends that could drive the company’s results during the quarter.
We have created an interactive dashboard analysis which outlines our expectations for Halliburton over 2018. You can modify the drivers to arrive at your own estimates for the company’s EPS.
North American Drilling Activity Should Remain Strong
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Over Q1 2018, Halliburton’s revenues from North America – which is its single largest geographic market – grew by 46% year-over-year to $3.8 billion, driven primarily by U.S. land activity. This market is likely to remain strong in Q2, driven by continued investments in unconventional operations such as shale and tight oils, which entail smaller capital investments for operators in a relatively volatile oil market, while giving them some flexibility to scale up production quickly as oil prices improve. The North American rig count grew to 1212 units at the end of Q2, up from 1129 in the year-ago period. Pressure pumping, which is one of Halliburton’s biggest product lines, could be a key driver of the company’s performance, as the market is expected to remain tight due to higher service intensity and degradation of existing equipment. The company estimates that roughly 50% of the announced horsepower in the pressure pumping would be replacing existing equipment on the field.
That said, Halliburton’s performance in international markets could be more mixed. The Europe/Africa/CIS division could see higher activity, driven by the North Sea and Russia, while the Middle East/Asia division could also see some improvement, driven by continued drilling and stimulation activity. However, the company’s Latin American operations could underperform, due to activity declines in Venezuela.
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