Oilfield services giant hints at weak drilling demand in North American market

OilPrice.com reported on July 19, 2023 that two of the world's top three oilfield service providers - Halliburton and Baker Hughes - reported their profits for the second quarter of the year on July 19, beating the market consensus, but the two oil services giants both signaled weak demand for shale drilling in the North American market.

Strong international business at both companies offset the weak North American results, statistics show.

Halliburton reported second-quarter adjusted net income of $691 million, or $0.77 per diluted share, beating Wall Street Journal analysts' expectations of $0.75 per share. Earnings also increased by more than 50% compared to last year's second quarter.

Halliburton, the world's largest provider of hydraulic fracturing services, reported a 14% year-over-year increase in total revenue to $5.8 billion in the second quarter. However, compared to the first quarter, revenue from its North American operations fell 2% to $2.7 billion.

Halliburton said, "This decline was primarily due to a decrease in U.S. onshore production enhancement activity, partially offset by an increase in U.S. onshore mechanical oil recovery activity, as well as an increase in activity on multiple product service lines in the Gulf of Mexico."

According to data released by Baker Hughes, the total number of rigs in service in the U.S. fell to 675 last week, down 81 from a year ago. The current number of rigs in service in the U.S. is 400 fewer than the number of rigs in service prior to the outbreak.

Shares of Halliburton fell 2% at the open after the earnings report.

Baker Hughes, another U.S. oilfield services giant, also beat analysts' expectations for second-quarter earnings, but it also signaled weak demand for drilling in the North American market.

Lorenzo Simonelli, chairman and chief executive of Baker Hughes, said, "Weakness in the North American market is expected to be offset by strong international and offshore markets."

Schlumberger, the world's largest oilfield services provider, will report its second-quarter earnings on Friday, July 21, before the local market opens.