Halliburton Co. (HAL, Financial) reported on Tuesday an 85% jump in adjusted profit during the first quarter of 2022 and said customer spending in North America should increase due to higher demand.
Executives also believe that spending in North America should leap by 35% in 2022 – a sizeable bump to an earlier forecast of a 25% increase. Halliburton’s Drilling and Evaluation division also saw margins reach 15% for the first time in 12 years.
Halliburton shares were trading around $41.16 just past noon on Tuesday, down 1.15% or 48 cents per share. Regardless, the GF Value Line suggests the stock is significantly overvalued currently based on historical ratios, past financial performance and future earnings projections.
The Houston-based oilfield services company announced net income of $263 million, or 29 cents per diluted share, for the three months ended March 31. This compares to net income for the first quarter of 2021 of $170 million, or 19 cents per diluted share.
Adjusted net income, excluding impairments and other charges and a loss on the early extinguishment of debt, was $314 million, or 35 cents per diluted share, according to a release. Halliburton's total revenue was $4.3 billion, compared to revenue of $3.5 billion in the prior-year quarter.
Reported operating income was $511 million, up from $370 million in the year-ago quarter. Excluding impairments and other charges, adjusted operating income was $533 million.
In a statement, CEO Jeff Miller said he was pleased with Halliburton’s first-quarter results.
“Total company revenue increased 24% and adjusted operating income grew 44% compared to the first quarter of 2021," he said. "Both of our divisions delivered strong margin performance despite weather and supply chain disruptions, with Drilling and Evaluation margin eclipsing 15% in the first quarter for the first time since 2010.”
Bloomberg reported Halliburton's "entire U.S. and Canadian fracking fleet is spoken for and demand for the special type of sand used to penetrate shale wells is so brisk that Texas drillers are importing it from 1,300 miles (2,100 kilometers) away in Wisconsin.”
The oilfield services company’s management sees “significant tightness” across the entire oil and gas value chain in North America, Miller added. Supportive commodity prices and strengthening customer demand against an almost sold-out equipment market are expected to drive expansion in the Completion and Production division's margins. Executives are looking for international business to increase throughout the remainder of the year. First-quarter revenue growth in all international regions together with North America “demonstrates that this multi-year upcycle is well underway.”
North America revenue in the first quarter was $1.9 billion, a 37% increase when compared to a year ago. This increase was primarily driven by increased pressure pumping activity and drilling-related services in North America, land, higher stimulation, artificial lift and drilling-related activity in Canada and higher completion tool sales in the Gulf of Mexico. These increases were partially offset by reduced fluid services in the Gulf of Mexico.
Halliburton recorded a pre-tax charge of $22 million primarily related to the write down of all its assets in Ukraine, including $16 million in receivables, due to the ongoing conflict. This charge was included in "Impairments and other charges" on the company's condensed consolidated statement of operations for the quarter.
