North America E&P has begun to recover, Halliburton says

Wednesday, October 19, 2016

North America has begun to recover from the oil industry's most severe downturn in decades, which should bode well for other markets in 2017.

That was the main message from Halliburton's top executives during a conference call with analysts on Wednesday to discuss the company's third-quarter results.

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The US-based oilfield services giant reported net income of US$6mn for the period, compared to a loss of US$54mn in 3Q15.

"I never thought I would be so satisfied by barely making a profit," CEO Dave Lesar said, citing that the North America rig count grew sequentially for the first time in seven quarters.

Internationally, the light at the end of the tunnel is farther away.

Halliburton's Latin America revenue fell by 44% to US$415mn, while operating income in the region dropped by 90% to US$11mn. CFO Mark McCollum attributed the decline to reduced activity levels in Mexico, Venezuela and Argentina.

The region's active drilling rig count stood at 189 as of September, down from 321 in September 2015, according to data from Baker Hughes.

However, Halliburton President Jeff Miller pointed out that international activity typically lags North America by six to nine months.

Lesar said that Halliburton expects the international rig count to bottom out during the first half of 2017, and that continued tightening of global oil supply and demand should drive commodity prices upward, stimulating upstream activity.

Lesar said that a sustained oil price above US$50/b will be necessary to drive the recovery. The Brent crude oil benchmark has fluctuated in the US$43-53/b range during the second half of 2016.