Halliburton (HAL), the world’s second-biggest oilfield-services provider, is one of the most storied names in the history of U.S. industrial companies. Its services encompass all elements of drilling, including pressure pumping and integrated project management.
With energy prices rising, Halliburton’s services will be in demand more than ever. Extracting oil and gas from wells is getting more complicated as producers tap deeper and more remote locations, playing to Halliburton’s strength.
And it has been able to deploy all of its offerings. The company’s integrated service package now totals about 40 percent of its revenue, according to Morningstar’s calculations.
Halliburton’s profit soared almost 2½ times in the first quarter to $511 million from $206 million a year earlier. Revenue jumped 40 percent to $5.3 billion. Strength in North America and Latin America allowed the company to overcome a $46 million charge on its Libya operations amid the country’s civil war.
Operating profit nearly tripled in North America, to $732 million from $230 million a year earlier. Meanwhile, profit jumped 65 percent in Latin America to $76 million. Profits in the rest of the world slipped.
“There is clearly room for revenue and operating income to grow as we get further into 2011,” Halliburton CEO Dave Lesar told a conference call after the earnings report.
"Going forward, I feel even more confident about the prospects of our North America business in 2011 and beyond. We believe there is upside for both revenue and margins as we respond to the continued increases in service intensity."
Shale play ahead
The trend of oil companies seeking to extract petroleum from shale in the United States should benefit Halliburton. That’s because shale production is more complicated and equipment-intensive than traditional production environments. Halliburton has plenty of experience with U.S. natural gas shale production.
After the earnings report, analysts at Credit Suisse, Citigroup and Goldman Sachs raised their target for Halliburton’s stock price — to $62 for Credit Suisse, $61 for Citi and $63 for Goldman, a 32 percent increase from recent trading action.
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