Halliburton
Co. (NYSE: HAL) reported Q2 earnings per share (EPS) of $0.91 on Monday with
the stock closing for the day at $71.00 representing a 40% appreciation in
value since the start of 2014. EPS was below our estimate of $0.95 but matched
analyst expectations of $0.91 with overall results for the quarter meeting
expectations. Total revenue grew to a record $8.1 billion with revenue from
North America rising 11 percent in Q2 from Q1. Overall demand for oil field
services grew significantly during Q2 in North America with the expectation of
improved margins for the remainder of 2014. The average number of active rigs
on land in the U.S. grew to 1,781 further supporting HAL’s growth. HAL’s
limited exposure to current U.S. sanctions on Russia, are expected to have a
limited impact on earnings going forward according to Chief Operating Officer
Jeff Miller on the call.
There
were some issues involving revenue timing for Latin America in Q2, which
lowered earnings but is expected to normalize over the second half of the year.
International earnings were modest with little unexpected results. HAL had
acquired Neftex Petroleum Consultants in Q2, which is expected to improve
subsurface modeling and improve multiple facets of HAL’s core competencies.
It was also announced that the company
would be increasing its stock buyback authorization to $6 billion from $5
billion and that it would be promoting Jeff Miller from chief operating officer
to president at the start of next month. Overall HAL has exceeded our
expectations and is positioned well in its industry to continue to grow. While
the HAL model has yet to be updated with earnings we are expecting to increase
our price target citing a strong outlook in the oilfield services industry.
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