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Halliburton Q4 net down 26% on soft North America business

BY ALISON SIDER AND BEN FOX RUBIN

HOUSTON -- Halliburton Co.' s fourth-quarter earnings shrank 26% but beat analysts' expectations as growth in the oilfield-services company' s international activity helped offset weakness in North America.

Halliburton reported a profit of $669 million, or 72 cents a share, down from $906 million, or 98 cents a share, a year earlier. Earnings from continuing operations were 63 cents, down from 98 cents. Revenue improved 3.2% to $7.29 billion.

Analysts polled by Thomson Reuters most recently projected earnings from continuing operations of 60 cents a share on revenue of $7.06 billion. Halliburton shares were up close to 5% Friday morning at $39.65.

Halliburton is the top seller in North America of hydraulic-fracturing services, a process that consists of injecting a mix of water, chemicals and sand at high pressure into deeply buried oil-and-gas-bearing shale rock formations to crack them open.

Oilfield-services companies saw their margins in North America squeezed last year as they contended with a shift toward working in higher-cost oil-rich areas and declining demand for natural-gas drilling that kept prices for their work low. Many of their customers, exploration and production companies, pulled back on activity during the fourth quarter so as not to exhaust their budgets for the year.

Last week, rivals Schlumberger Ltd. and Baker Hughes Inc. said their fourth-quarter earnings fell amid the slowdown in North American onshore activity.

In a statement, Halliburton Chief Executive Dave Lesar cited an "unusually high post-Thanksgiving decline in activity levels" in North America and remaining stock of high-priced guar gum, a material used in hydraulic fracturing that surged in price last year due to a shortage. Halliburton' s revenue in North America fell 5% from the third quarter and operating income fell 22%.

Halliburton and other services companies have said they expect more rigs to return to work from fourth-quarter lows, but they say the full-year count in 2013 will likely remain somewhat lower than in 2012.

But oilfield-services companies were able to turn to international markets as sources of drilling activity with strong margins in the fourth quarter. Halliburton grew its business in countries such as Mexico and Saudi Arabia during the fourth quarter.

Simmons analysts wrote in a client note that Halliburton' s international revenue growth from the third to the fourth quarter was the best of its peers and the best for the company since 2006.

"Halliburton reported the fastest international top line growth among the three largest diversified [services companies] for both the fourth quarter and for all of 2012" and the company' s margins in those regiosn were well above expectations, Barclays analyst James West wrote in a research note.

Dow Jones Newswires

01/25/2013

 

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