Oil services giant Halliburton (HAL) is trading higher following first quarter results this morning.
Adjusted earnings per share were $0.04, unchanged from a year ago. First quarter revenue rose 2% year-over-year and 6% quarter-over-quarter.
Completion and Production revenue in the first quarter of 2017 was $2.6 billion, an increase of $336 million, or 15%, from the fourth quarter of 2016, while operating income was $147 million, an increase of $62 million, or 73%. These improvements were primarily due to improved pressure pumping pricing and utilization in the United States land market, partially offset by a decline of completion tool sales in the Gulf of Mexico. International revenue was negatively impacted by the seasonal decline in year-end completion tool sales across the Eastern Hemisphere, and partially offset by increased activity in the Middle East and Latin America.
Drilling and Evaluation revenue in the first quarter of 2017 was $1.7 billion, a decrease of $78 million, or 4%, from the fourth quarter of 2016, while operating income was $122 million, a decrease of $126 million, or 51%. These reductions resulted primarily from lower software sales across all regions, as well as lower pricing and decreased fluid sales in the Middle East. The decreases were partially offset by improved fluid sales and project management activity in Mexico.
"North America activity increased rapidly during the first quarter, which was highlighted by our U.S. land revenue growth of nearly 30%, outperforming the sequential average U.S. land rig count growth of 27%. In the international markets, activity declines due to seasonality were exacerbated by the current cyclical headwinds."
"First quarter revenue in North America increased 24% sequentially, significantly outperforming our largest peer [Schlumberger]. This result was primarily driven by increased activity in our pressure pumping and well construction product service lines. The first quarter is best described as one of change, but I love the opportunity that is developing in North America because our strategy is designed to take advantage of that opportunity."
"Eastern Hemisphere revenue declined by 12% sequentially, due to seasonality, reduced activity and pricing pressure. While we believe that the first quarter represents the bottom in the Eastern Hemisphere rig count, the full year average for 2017 will likely be only marginally higher than the full year average for 2016."
On the call, management was upbeat about the second quarter, calling for growth to outpace the rig count and improved pricing/margins.
Halliburton has a ~$41 billion market cap and trades at ~15x EV/EBITDA, roughly in-line with rival Schlumberger (SLB), whose market cap is ~$104 billion.