Rising international sales boosted Halliburton Co.’s net income 17 percent in the third quarter to $706 million as the oil-field services sector profits from a surge in Eastern Hemisphere activity, the company said Monday.
Revenues in Europe and Africa “continue to deliver top tier growth” in the third quarter, said David Lesar, chief executive for Halliburton, one of the world’s largest oil-field services companies. In North America, sales dipped and are expected to decline in the fourth quarter on seasonal slowdowns, he said during an investor call Monday morning.
The Houston-based company’s total revenue rose 5.1 percent over last year’s July-September period to $7.5 billion, driven mostly by an increase in completion and production-related sales, which increased by $208 million over the third quarter 2012.
Operations in Russia, the North Sea, and Angola stood out in the quarter as Halliburton gained more contracts for drilling, evaluation and other work, including deals with Statoil in the North Sea, said Jeffrey Miller, chief operating officer for Halliburton.
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The company’s North America third-quarter revenue edged down 2 percent to $3.9 billion, but sales in Europe and Africa climbed 19 percent to $1.3 billion.
In the Middle East and Asia, sales increased 15 percent to $1.2 billion. Saudi Arabian drilling increases offset profit declines in Iraq and activity slowdowns in Australia and Malaysia, Lesar said.
Analysts with Tudor, Pickering, Holt & Co. wrote that Halliburton’s sales in Europe and Africa were “much better than expected,” but results were affected by unexpected operational declines in the Middle East and Asia.
The company made an undisclosed number of layoffs in the third quarter that resulted in $38 million in severance charges and asset write offs. The layoffs took place mostly in North America and were “geared around our efficiency drive,” and the company’s confidence it could do more back-office work with fewer employees, Lasar said.
Halliburton is “increasingly optimistic” for its North American operations in 2014, as activities continue to improve despite flooding in Colorado that has set the company back, Miller said. The company will focus on its cost structure to make earnings gains in North America, he said.
Barclays projects that exploration and production spending, a key earnings indicator for oil-field services companies, will jump the most in the Middle East and Africa this year — 19 percent and 11 percent increases, respectively — while spending growth is slowing in North America to 2 percent in 2013. Last week, Schlumberger and Baker Hughes, two oil-field services giants with large shares in international markets, reported higher profits on increased drilling activity in the Eastern Hemisphere.
Based on discussions with customers, Lesar said he’d be surprised if oil and gas producers’ international spending did not rise 10 percent next year. Though its early to say, Halliburton’s own capital expenditures in 2014 would probably not increase significantly, Lesar said.
“As we look ahead, we’re pretty excited about the growth trajectory, but we’re driving hard on efficiencies, which will allow us to be more disciplined on how much capital we put in the market,” he said.