Halliburton 3Q profit falls on drilling slowdown
NEW YORK -- Halliburton Co. said Wednesday its third-quarter net income fell 12 percent as drilling activity declined and costs rose in its core North American business.
The Houston energy services company earned $602 million, or 65 cents per share, down from $683 million, or 74 cents per share, a year ago. Revenue rose 9 percent to $7.11 billion. That was the smallest year-over-year revenue growth since the first quarter of 2010.
The results fell short of Wall Street expectations, according to a poll by FactSet.
Halliburton is a major provider of hydraulic fracturing, or "fracking," services that unlock oil and natural gas from underground shale deposits. That technology helped boost natural gas production in the U.S. by about 20 percent between 2007 and 2011, according to data from the Energy Department. Halliburton's revenue rose more than 60 percent in that same period.
But the boom in production has squashed prices. Natural gas prices were down 29 percent in the latest quarter compared with a year ago as U.S. supplies remained high. As of Sept. 28, the nation's supply of natural gas stood at 3.6553 trillion cubic feet, up 8 percent from a year earlier. Halliburton said the natural gas rig count on land in North America dropped by 18 percent in the third quarter as companies slowed production.
Halliburton has a bigger chunk of its business in North America than its peers, so it's feeling a bigger pinch as customers pull back or turn their focus to drilling for oil. The number of on-land oil rigs rose 3 percent in North America during the summer quarter as oil prices rose 9 percent. But that wasn't sufficient to offset the decline in natural gas drilling.
Overall, revenue fell 5 percent in North America. Dave Lesar, the company's chairman and chief executive, said Halliburton expects "the next couple of quarters to be pretty bumpy" in North America.
Costs rose due to higher prices for materials used in fracking, and disruptions in production caused by Hurricane Isaac.
The picture was brighter overseas. The company's international revenue rose 2 percent despite a 2 percent decrease in rigs, due to strength in Latin America, the Middle East and Asia.
Halliburton shares rose 76 cents to close at $35.32 Wednesday.