Booming oil means record 2Q sales for Halliburton

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Associated Press
Published: Tuesday July 22, 2008

HOUSTON (AP) -- Halliburton Co. said Tuesday its second-quarter profit fell about 67 percent from a year ago, when the company recorded a nearly $1 billion gain from the separation of former subsidiary KBR Inc., but the oilfield services provider announced record revenues.

Income from continuing operations met Wall Street forecasts, and the company said it continued to expand its business globally.

Halliburton, which has corporate offices in Houston and Dubai, said earnings for the April-June period were $507 million, or 55 cents a share. That compares with year-ago profit of $1.53 billion, or $1.62 a share, which included a $933 million gain from the KBR separation.

Income from continuing operations totaled $623 million, or 68 cents a share, in the latest quarter - in line with expectations of Wall Street analysts surveyed by Thomson Financial. Those forecasts typically exclude one-time items.

Revenue rose to a record $4.48 billion from $3.73 billion a year ago, beating Wall Street's $4.25 billion average estimate.

"I'm very pleased with our results for the second quarter as we continue to show healthy expansion of our business on a worldwide basis," said Halliburton chairman and chief executive Dave Lesar, who moved his office to Dubai last year to be closer to important markets in the Middle East and Asia.

The strategy appears to be paying off.

Halliburton said revenue outside North America grew 26 percent year-over-year, exceeding its 20 percent growth target. In particular, Eastern Hemisphere revenue rose 23 percent, led by increased business in Norway, Saudi Arabia, Angola and Oman.

North American sales rose 7 percent from a year ago, despite a seasonal slowdown in Canada. In the United States, inflated costs for fuel and materials were a drag on results, the company said.

Last week, Halliburton's larger competitor, Schlumberger Ltd., said its second-quarter profit jumped nearly 13 percent because of an active world market for oil and natural gas, as producers scramble to take advantage of high commodity prices.

A busy oilfield bodes well for outfits such as Schlumberger and Halliburton, which provide technology, equipment and other services to help oil and gas companies find and tap new sources of fossil fuels.

Indeed, the company said operating income at its drilling and evaluation arm rose 38 percent to $480 million in the most-recent quarter, the beneficiary of increased drilling worldwide.

Looking ahead, Lesar predicted no let up in activity as many North American customers expand their drilling and well-completion budgets.

"This strengthens last quarter's expectation that the next leg up in this extended cycle is near, and we anticipate the strategies we've employed will allow us to continue performing at a high level," he said.

For the first six months of the year, Halliburton said its net income amounted to $1.09 billion, or $1.20 a share, down from $2.08 billion, or $2.12 a share, in the first half of 2007. Revenue rose to $8.5 billion from $7.2 billion.

Halliburton, once led by Vice President Dick Cheney, split from KBR, the military contractor and engineering company, in April 2007. Halliburton has said the separation allows it to focus solely on its oilfield services work.

Shares slipped 8 cents to $48.83 in premarket trading.