Oil field services and equipment firm Halliburton reported above-forecast Q1 financials Tuesday. The firm is the latest to post target-topping reports, after SLB, formerly known as Schlumberger, and Baker Hughes announced financials last week. Baker Hughes stock, SLB and HAL dropped lower Tuesday.
Going into 2023, Baker Hughes, SLB and Halliburton all projected strong oil demand and tight supplies for the foreseeable future. The companies all provide a broad array of oilfield support services and technologies. Each oilfield services leader also pointed to myriad international growth opportunities, especially in the Middle East.
U.S. crude oil futures on Tuesday was around $78 per barrel. Oil had dipped as low as $66.74 in March. Earlier in April, U.S. oil futures hit a five-month high of $83.5 per barrel after OPEC+ announced a surprise oil production cut.
Halliburton Earnings
Estimates: The Street expected the company's EPS skyrocketing 91% to 67 cents in Q1 with sales increasing 28% to $5.49 billion.
Results: Halliburton reported earnings ballooning 106% to 72 cents per share. Revenue grew 33% to $5.68 billion in Q1.
Halliburton stock fell 3.5% Tuesday during market trade.
Revenue from "completion and production" in the first quarter increased 45% to $3.4 billion. Halliburton said this growth was driven by increased pressure pumping services and global completion tool sales. Meanwhile, the company's "drilling and evaluation" revenue advanced 17% to $2.3 billion, primarily due to an increase in drilling-related services globally.
Halliburton said both business division were "negatively impacted" in Q1 from the sale of the company's Russia operations during 2022.
The company's sales in the Middle East and Asia totaled $1.3 billion, an increase of 30% compared to last year. Halliburton reported this growth was primarily due to multiple product service lines in Saudi Arabia and "increased project management activity across the region."
North America revenue in the first quarter grew 44% to $2.8 billion. HAL said this revenue gain came from pricing gains along with increased well construction services.
CEO Jeff Miller said in a statement Tuesday that the outlook for 2023 and beyond is "strong."
"We hear it from our customers, and we see it in our first-quarter results. Our customers are clearly motivated to produce more oil and gas and service capacity is tight," Miller said.
Analysts expect Halliburton 2023 earnings growing 40% to $3.00 per share, according to FactSet. Full-year revenue is predicted to increase 15% to $23.47 billion.
HAL saw Q4 earnings and revenue increase 100%, to 72 cents and $5.58 billion, respectively. It reported 2022 EPS of $2.15, up 99% compared to 2021. Full-year sales shot up 33% to $20.3 billion.
SLB Earnings
Estimates: Analysts projected SLB earnings would grow 76% to 60 cents per share in Q1. Wall Street forecast sales increasing 24% to $7.44 billion.
Results: EPS soared 85% to 63 cents. Revenue ramped up 30% to $7.74 billion. Well construction and production systems revenue increased 36% and 38%, respectively. Pretax income for those units surged 73% and 80%.
SLB and Baker Hughes stock both dropped 2.5% and 3%, respectively, Tuesday.
International revenue, which is 77% of SLB's total, increased 29%. North American revenue gained 32%.
"Revenue growth surpassed rig count growth both in North America and internationally," said SLB CEO Olivier le Peuch in a statement, "representing the highest year-on-year quarterly growth in more than a decade."
Le Puech said pricing trends were positive as customers worked to adjust contracts in order to offset inflation, and as service capacity continues to tighten across international markets.
"There is broader recognition of the positive long-term demand outlook for oil and gas and the potential for a stronger demand rebound in the second half of the year," Le Peuch added.
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"Recent OPEC+ decisions continue to keep commodity prices at supportive levels — providing operators increased confidence to execute their projects," he said.
SLB expects a record level of upstream investment in the Middle East throughout 2023. The company said it already has a combination of oil and gas offshore development plans in place throughout the region.
Baker Hughes Stock: Earnings
Estimates: Wall Street expected Baker Hughes earnings per share of 26 cents, growing 73% compared to last year. Analysts also forecast revenue increasing 14% to $5.52 billion.
Results: Baker Hughes reported EPS jumped 86% to 28 cents while revenue increased 18% to $5.72 billion.
BKR reported $1.34 billion in revenue from operations in the Middle East and Asia, a 23% increase from last year. North America revenue was second with $992 million in Q1.
"We were pleased with our first quarter results and remain optimistic on the outlook for 2023," CEO Lorenzo Simonelli said in a statement Wednesday.
Baker Hughes, on Jan. 23, missed fourth-quarter earnings and sales targets, with revenue growing 8% to $5.9 billion in Q4. Earnings increased 52% to 38 cents per share. However, BKR also painted a bright picture for the 2023 oil market.
Baker Hughes executives also reported a record backlog of $25 billion, aided by increased liquefied natural gas (LNG) equipment orders at the end of year.
In 2022, orders increased 24% to $26.7 billion. Full-year revenue edged up 3% to $21.16 billion— the first advance in three years for the company. Revenue from the company's oilfield services segment increased 10% compared to 2021. Full-year EPS shot up 43% to 90 cents per share.
At the end of January, Baker Hughes forecast 2023 revenue between $24 billion-$26 billion and adjusted EBITDA between $3.6 billion and $3.8 billion.
BKR shares rank fourth in the Oil&Gas-Machinery/Equipment industry group. Baker Hughes stock has an 82 Composite Rating out of 99. The stock has an 81 Relative Strength Rating, an exclusive IBD Stock Checkup gauge for share-price movement. The EPS rating is 39.
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