Oilfield Service Providers: Baker Hughes Earnings Miss After Halliburton Sees Long ‘Upcycle’
Baker Hughes (BRK) fell early Wednesday after reporting weaker-than-expected third-quarter results. That came a day after Halliburton (HAL) reported in-line earnings and revenue but predicting a “multi-year upcycle.” Fellow oilfield service provider Schlumberger (SLB) will report on Friday. amid a surge in crude oil prices.
Oil prices have soared over the last month, with U.S. crude rising past $80 per barrel for the first time since 2014. Despite an uptick in demand for oil amid rising Covid-19 vaccinations and declining cases, OPEC+ kept its production increases steady, which added to a looming energy crunch this winter in the U.K. and China.
But analysts don’t expect a big increase in new drilling in the U.S. amid the jump in oil prices as U.S. producers continue to focus on capital discipline.
“Even with higher oil prices, I don’t think we’re going to see another sort of running to the fields and drilling fast,” Chris Midgley, global director of analytics at S&P Global Platts, told reporters during a recent roundtable.
Instead, the focus of larger U.S. producers will be on making sure currently operating wells have increased productivity. Much of the rig count growth will come from smaller players. That could impact oilfield service providers’ Q3 and Q4 results.
Oilfield Service Providers: Baker Hughes Earnings
Estimates: Zacks analysts saw Baker Hughes earnings per share soaring 450% to 22 cents, with revenue up 6% to $5.35 billion.
Results: Baker Hughes earnings rose, but only to 16 cents a share. Revenue came in at $5.09 billion.
Stock: BKR stock fell 2.2% to 26.29 early on the stock market today, signaling a move back into buy range. Baker Hughes stock finally cleared a 25.58 buy point from a cup-with-handle base on Oct. 12. The 5% buy zone runs up to 26.86.
Estimates: FactSet analysts saw third-quarter Halliburton earnings of 28 cents per share. Revenue was seen at $3.89 billion.
Results: Halliburton earnings share rose 154% to 28 cents a share adjusted. Revenue climbed 29.5% to $3.86 billion. Completion and production division revenue rose 35% to $2.13 billion and drilling and evaluation unit sales were up 23% to $1.72 billion.
Free cash flow was $469 million.
“I see a multi-year upcycle unfolding,” CEO Jeff Miller said in Tuesday’s release. “Structural global commodity tightness drives increased demand for our services, both internationally and in North America.”
Stock: HAL stock was little changed early Wednesday after ticking up 0.35% to 26.10 on Tuesday. Halliburton stock is currently in buy range after breaking out of a cup base with a 25.10 entry point, according to MarketSmith analysis. But after running up, especially over the past month, HAL stock could be due for a pullback.
Estimates: FactSet sees Schlumberger earnings jumping 125% to 36 cents a share, with revenue up 13% to $5.9 billion.
Results: Check back before the market opens Friday. Schlumberger typically gives an update on oil industry trends at large as well as an update on what is expected for the sector in the coming quarters.
Stock: Shares slumped nearly 2% early Wednesday after rising 1.1% to 34.54 on Tuesday. Schlumberger stock is forming a cup base with a 36.97 buy point.
Follow Gillian Rich on Twitter for energy news and more.
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