Shares of fracking services provider Halliburton Co. (HAL, Financial) fell as much as 7.6% in premarket trading on Monday after reporting first-quarter financial results.
The Houston-based company, which provides drilling services to the oil and gas industry, posted a $1 billion net loss as well as $1.1 billion in impairment charges related to the coronavirus outbreak. Adjusted earnings of 31 cents per share, however, topped Refinitiv’s estimates of 24 cents. Total revenue decreased 12% from the prior-year quarter to $5 billion.
In a statement, Chairman, President and CEO Jeff Miller said that the company’s quarterly results “demonstrate that the Halliburton team is well prepared to adjust and deliver under any market conditions.”
“We have been through downturns before,” he added. “We know what to do and will execute based on that experience.”
Due to the logistical challenges and travel restrictions related to coronavirus lockdown measures, the company has worked to reduce overhead expenses by approximately $1 billion and is cutting capital expenditures to $800 million. Halliburton has also had to lay off hundreds of employees and furlough thousands of others, while the executive team has announced voluntary pay cuts.
“We believe the actions we take will not only temper the impact of the activity declines on our financial performance, but also ensure that we are in a strong position, financially and structurally, to take advantage of the market’s eventual recovery,” Miller said.
Following the decline in oil prices that was driven by both the effects of the Covid-19 pandemic as well as the oil price war between Saudi Arabia and Russia in March, which Miller said has resulted in a “dual shock” of a steep decrease in global demand and oversupply, Halliburton provided a grim outlook for the North American market.
“Consequently, we expect activity in North America land to sharply decline during the second quarter and remain depressed through year-end, impacting all basins,” Miller said. “Internationally, we believe the activity changes will not be uniform across all markets. OPEC+ production decisions and the duration of pandemic-related demand and activity disruptions will ultimately determine the extent of international spending declines this year.”
On Monday, CNBC also reported that benchmark U.S. crude futures were trading below $12 per barrel.
Following the initial dip, shares of Halliburton recovered to trade around 4.82% higher at $7.95 on Monday. It has a market cap of $6.8 billion. GuruFocus estimates the stock has tumbled around 70% year to date.
Disclosure: No positions.
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