Halliburton’s profit nearly doubles as soaring oil prices boost drilling activity

Attendees attend a presentation at Halliburton’s booth at the World Petroleum Congress in Houston, Texas, U.S., December 7, 2021. Picture taken December 7, 2021. REUTERS/Liz Hampton/File Photo

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April 19 (Reuters) – Oil services company Halliburton Co (HAL.N) posted an 85% jump in first-quarter adjusted profit on Tuesday as higher crude prices boosted demand for its services and equipment.

Crude futures hit their highest level in more than a decade in the quarter after a series of Western sanctions against Russia disrupted oil sales from the world’s second-largest exporter. US West Texas Intermediate is currently trading around $105.34 a barrel while Brent futures are at $110.25 a barrel.

Rising prices encouraged oil and gas producers to boost drilling activity, bringing the number of U.S. rigs to 673 at the end of the first quarter, up nearly 15% from the fourth quarter of 2021, according to data from Baker Hughes.

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Halliburton said margins for its Drilling and Evaluation division exceeded 15% in the first quarter for the first time since 2010, despite weather and supply chain disruptions. The company foresees a continuation of supply chain issues that have plagued the industry since demand rebounded following coronavirus-related lockdowns.

“We are seeing significant strain across the North American oil and gas value chain,” chief executive Jeff Miller said in a statement.

“Supporting raw material prices and strengthening customer demand in the face of a nearly depleted equipment market should drive the expansion of margins in the Completion and Production division,” he said, adding that he expected the company’s international business to expand throughout the year.

The shares were down about 2.9% in premarket trading at $40.43 apiece, beating early declines from rival companies and oil markets, with analysts pointing to lower margins in the Completions and Production unit. ‘Halliburton and negative free cash flow of $183 million.

“We call today’s first-quarter online print a slight negative relative to Street’s high expectations,” analysts at Tudor, Pickering, Holt & Co wrote in a note.

The company also recorded a pretax charge of $22 million in the quarter for the impairment of its assets in Ukraine due to the ongoing conflict.

Adjusted net income for the Houston, Texas-based company was $314 million, or 35 cents per share, for the quarter through March 31, compared with $170 million, or 19 cents per share, a year ago. year. Analysts had expected earnings of 34 cents per share for the first quarter, according to Refinitiv IBES.

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Reporting by Rithika Krishna in Bengaluru and Liz Hampton in Denver; Editing by Devika Syamnath, Mark Porter and Chizu Nomiyama

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