Key Takeaways From Halliburton’s Q3 Results
Halliburton (NYSE:HAL) published its Q3 2018 results on Monday, beating market expectations on revenue and earnings, driven by a stronger performance in the international market. However, the company’s performance in its bread-and-butter North American market weakened, due to lower activity in the Permian basin and headwinds in the fracking market, causing the company to provide a lower than expected EPS guidance of $0.37 to $0.40 for Q4 2018. Below, we take a look at some of the key factors that impacted the company’s results over the quarter and what lies ahead for Halliburton.
We have created an interactive dashboard analysis which outlines our expectations of Halliburton over 2018. You can modify the drivers to arrive at your own price estimate for the company.
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While Halliburton’s revenues in the North American market grew by 18% year-over-year to $3.74 billion, they declined by about 2% sequentially, amid lower pricing for stimulation services such as hydraulic fracturing in the United States. While major oilfield services providers have been ramping up their pressure pumping capacity this year, demand growth has taken a hit due to a lack of pipeline capacity to transport oil from the Permian basin, which is one of the most important oil and gas basins in the United States. Halliburton also indicated that many of its customers had exhausted their budgets, hurting activity. However, the company said that this was partly offset by offset by increased activity in the production chemicals and artificial lift product lines. Halliburton has indicated that the U.S land market should bottom out in Q4, as producers begin working with new budgets over 2019 while also working through a large number of drilled-but-uncompleted wells. Moreover, offtake capacity in the Permian is poised to improve, with new pipelines poised to come online in late 2019.
International Market Updates
Halliburton’s international business continued to expand, with all its major geographic markets posting growth. Performance in Latin America was particularly strong, with revenues growing by 9% sequentially, driven by increased drilling-related services and higher stimulation activity in Mexico. The outlook for the international market remains positive, considering the relatively strong oil prices and a possibility that more investment in exploration and production activity will be required as oil from Iran and Venezuela leaves the market.
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