Oilfield services provider Halliburton's on Monday reported a sharp increase in quarterly revenue, but its shares fell by more than 6 percent as investors eyed growing pipeline constraints in the Permian Basin.
Halliburton said some of its customers are reducing activity and lowering their rig count as production in the west Texas and New Mexico outpaces takeaway capacity. The bottlenecks have pushed the price of regional crude to a steep discount to benchmark U.S. oil and are threatening to dampen demand for oilfield services and equipment.
The company's revenue rose 24 percent year-on-year to $6.15 billion in the second quarter, surpassing analysts expectations of $6.11 billion, according to Thomson Reuters I/B/E/S.
Still, investors focused on concerns that activity in the Permian will slow in the coming months.
Halliburton's shares were trading at $42.19, off roughly 6.6 percent on Monday morning.
Societe Generale analyst Edward Muztafago said Halliburton's second quarter was less about the earnings number and more about worries around transportation constraints in the Permian Basin.
Chief Executive Jeff Miller said third-quarter results would likely mirror those of the second quarter but was upbeat about the company's position in North America.
"I'm not naive to the math around the off-take issue," Miller said on an earnings conference call, adding that not all customers will respond in the same manner to the constraints. He said the bottlenecks would subside in 2019.