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Halliburton Profit Jumps 26% on Surge in US Drilling

Monday, 17 Oct 2011 09:51 AM

Halliburton's profit jumped 26 percent in the third-quarter as oil and gas drillers expanded their operations in North America.

The Houston oil services company on Monday reported earnings of $683 million, or 74 cents per share, for the three months ended Sept. 30. That compares with $544 million, or 60 cents per share for the same period in 2010.

Income from continuing operations was 94 cents per share. Revenue grew 40.4 percent to $6.55 billion in the period.

Analysts, who tend to base estimates on continuing operations, were expecting earnings of 91 cents per share on revenue of $6.35 billion, according to FactSet.

Halliburton Co., which provides cementing, pressure pumping, and myriad other services, is the first big company in the oil sector to report third-quarter results. Its results show that the oil industry was undeterred by a 12.5 percent drop in oil prices from the second to third quarter.

The drop may have unsettled oil investors, but the industry is pressing forward, CEO Dave Lesar said.

"I continue to believe in the long-term prospects for our business," Lesar said in a statement.

Halliburton said the industry is aggressively tapping oil and natural gas deposits in the U.S., particularly the rich underground shale deposits like the Eagle Ford region of Texas, the Bakken region in North Dakota and Montana.

With more money flowing in internationally, banks appear onboard as well, Lesar said, making sure the sector is flush with cash to carry out new projects.

Three sizeable acquisitions over the past days also point to an active energy industry.

Norwegian oil company Statoil ASA announced Monday that it would buy Brigham Exploration Co. of Austin, Texas for $4.4 billion in cash, giving it control of fields in North Dakota. Less than three hours later AmeriGas announced it would spend $2.9 billion for the propane operations of Energy Transfer Partners.

On Sunday, Kinder Morgan said it would buy El Paso Corp. for $20.7 billion in a deal that would create America's largest natural gas pipeline operator.

Exploration and production companies are active as well, and Halliburton said that rig activity grew 6 percent in North America, leading to a 13 percent growth in revenue in the period. Internationally, rig activity increased 2 percent, and revenue grew 7 percent in the quarter.

The company said costs increased for materials, logistics and labor in North America, and project delays in Iraq and the Libyan rebellion slowed down its international operation.

Halliburton's completion and production business increased profits 75.4 percent to $1.07 billion while its drilling and evaluation business boosted profits 36.2 percent to $369 million.

Halliburton still may be forced to pay millions or billions of dollars as part of its role in last year's Gulf of Mexico oil spill. Halliburton, which was hired to do cement work on the well, has shared the blame for the disaster with well owner BP and rig owner Transocean. Halliburton has denied that it is at fault, but analysts say it may pay BP anyway to clear itself from any future legal claims.

"My suspicion is that this is something they talk about occasionally with BP," Argus Research analyst Phil Weiss said.

BP already has accepted a $75 million settlement from contractor Weatherford International Inc. and a $1 billion settlement with MOEX Offshore 2007 LLC, which owned 10 percent of the well. Another stake holder in the well, Anadarko Petroleum Corp., agreed to pay BP $4 billion.

Schlumberger Ltd. is expected to release its financial results on Friday while Baker Hughes Inc. will post its results on Nov. 1.

Shares of Halliburton slipped 1 percent before the market opened.

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Halliburton's profit jumped 26 percent in the third-quarter as oil and gas drillers expanded their operations in North America.The Houston oil services company on Monday reported earnings of $683 million, or 74 cents per share, for the three months ended Sept. 30. That...
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