Halliburton (HAL 0.85%), a leading oilfield services company, reported its earnings for the third quarter of 2024 on Nov. 7. For the period, revenue totaled $5.7 billion, which was below the analyst estimate of $5.83 billion. The report showed a stabilization in revenue growth despite some significant operational challenges such as cyber incidents and adverse weather conditions.
The company recorded a net earnings per share (EPS) of $0.65, which also fell short of the $0.753 forecast. Overall, the quarter was marked by technological advancements and strong international market performances, but the sequential decline in key segments and regions suggested caution moving forward.
| Metric | Q3 2024 | Analyst Estimate | Q3 2023 | Year-over-Year Change |
|---|---|---|---|---|
| Diluted Earnings Per Share (EPS) | $0.65 | $0.753 | $0.79 | -17.8% |
| Revenue (billions) | $5.697 | $5.83 | $5.804 | -1.8% |
| Completion and Production Revenue (billions) | $3.299 | N/A | $3.487 | -5.4% |
| Drilling and Evaluation Revenue (billions) | $2.398 | N/A | $2.317 | -1.3% |
Source: Analyst estimates for the quarter provided by FactSet.
Understanding Halliburton
Halliburton is a vital player in the oilfield services sector, providing solutions and technologies for the energy industry worldwide. The company operates in over 70 countries, offering a wide range of services, including exploring, developing, and producing oil and natural gas. Halliburton’s operations are divided into two main segments: Completion and Production and Drilling and Evaluation.
Recently, the company has concentrated on harnessing technological advancements to optimize its business operations and enhance its service offerings. The focus on technological innovation, like digital and automation solutions, is crucial for maintaining competitive positioning and operational efficiency.
Successful growth strategies include expanding in international markets and leveraging technology to streamline processes and reduce costs.
Quarterly Highlights
During the third quarter of 2024, notable shifts occurred both financially and operationally. Halliburton's Completion and Production segment reported revenue of $3.3 billion, marking a 3% sequential decline. The segment faced challenges with reduced pressure pumping services in U.S. land, impacting sales. Operating income fell by 7% sequentially, amounting to $669 million.
The Drilling and Evaluation segment remained stable, with revenue of $2.4 billion. Operating income increased slightly to $406 million. This growth was supported by increased drilling-related services in Latin America and boosted wireline activity in Asia, while offsets came from reduced services in Europe and North America. A cyberattack and Gulf of Mexico storms notably impacted Halliburton's operational continuity, causing a $0.02 EPS hit.
Region-wise, North America saw a 4% decrease sequentially in revenue to $2.4 billion, influenced by reduced pressure pumping activities and storm disruptions. On the international front, revenue remained steady at $3.3 billion. The Middle East/Asia region witnessed a 3% revenue increase, spurred by enhanced pressure pumping operations in Saudi Arabia.
The period also saw a $116 million pre-tax impairment charge related to severance costs and cybersecurity-related expenses. Halliburton initiated a $200 million stock repurchase plan, emphasizing its commitment to shareholder returns. The company faced capital expenditures of $28 million for the migration to SAP S4, indicating strategic investments in digital infrastructure.
Looking Ahead
Looking ahead, Halliburton’s management remains optimistic, projecting strong free cash flow and sustained shareholder returns for the upcoming quarter. The company's international business growth and technological advancements are anticipated to contribute to long-term value creation despite potential geopolitical risks, regulatory changes, and energy market dynamics.
Investors should continue to monitor developments in Halliburton's digital technology initiatives and international market expansion as these areas are pivotal for future growth. Additionally, any updates on operational challenges, such as weather disruptions and cybersecurity risks, should be watched closely. Through strategic investments and a dedication to innovation, Halliburton aims to solidify its position in the oilfield services industry.
