Oil services giant Halliburton today posted a better-than-expected fourth-quarter profit, buoyed by cost cuts and a recovery in demand for oilfield equipment and services after last year’s industry slump.
However, the company’s profit was down 43.9 per cent and revenue fell 37.6 per cent from the fourth quarter of 2019 as activity levels were still well below a year earlier.
The second-biggest services provider has slashed quarterly dividend and reduced its capital spending and workforce to cope with the decline in demand as its clients – oil and gas producers – cut drilling activity amid a fall in crude prices below breakeven levels.
Halliburton generated free cash flow of $1.15bn (£840m) in 2020, above the $1bn it had targeted, thanks to the cost cuts.
Crude prices also ticked up in the last three months of 2020 to average about $45 per barrel, prompting some producers to complete wells.
Revenue from Halliburton’s completion and production business was $1.81bn in the fourth quarter, 15 per cent higher than in the third quarter, while its drilling and evaluation revenue rose 1.9 per cent.
Halliburton boss Jeff Miller said he expects international activity to bottom in the first quarter of 2021, adding that he was “optimistic about the activity momentum in North America.”
Halliburton, which kicked off fourth-quarter earnings for service providers, said revenue from North America rose 25.8 per cent, while international revenue grew 0.4 per cent.
Total revenue of $3.24bn in the quarter to 31 December beat analysts’ estimates of $3.21bn, according to Refinitiv IBES data.
Adjusted net income was 18 cents per share, 3 cents above estimates.