For Halliburton, China Better Option to Offset Weakness in North America

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Halliburton, currently one of the world’s largest oilfield services companies with operations in more than 80 countries has announced income from continuing operations for the second quarter of 2013; it is $677 million, or $0.73 per diluted share. However, the interesting part of the announcement is that whereas the Middle-East and Asia operations generated profits, its North America was a weak nudge.Now, Halliburton seems to be banking on its Asia operations. In comparison to its revenue from the North American operations where it earned $3.8 billion, the Middle/East and Asia unit generated 19.9% growth to $1.27 billion. The announcement claims that the Europe/Africa/CIS region generated 12.4% sales growth to $1.3 billion for the organization.

Like North America, the Latin America too disappointed the company as it had to pay higher costs in Brazil and had to carry out lower drilling activities in Mexico, Ecuador, and Colombia to generate $944 million. Major blow in North America came when Halliburton had to pay $637 million for the Macondo accident in the Gulf of Mexico in 2010.

The company chairman, president and CEO Dave Lesar was pleased as he admitted that the second quarter results where the company revenue of $7.3 billion was a record quarter for Halliburton. Interestingly, whereas Wall Street Analysts had estimated the revenue at $7.25 billion, the company’s revenue went higher to record $7.32 billion.

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Eastern Hemisphere is Key Revenue Generator

The release from Halliburton reveals that the region has delivered year-over-year international revenue growth for five consecutive quarters. The CEO expected that the Eastern Hemisphere will continue to improve, year-over-year, with full year revenue growth.

He also expects that margins will continue to improve over the next two quarters where the average will be much higher for the full year. However, it is its Middle-East and Asia operations which are the fastest growing market for the company as it registered improved revenue of 12% and operating income 17% sequentially.

The company registered revenue growth in Asia led by improved sales in China and higher stimulation, wireline, and fluids activity in Malaysia.

CIS/Africa/Europe Also Did Well

Another significant income generator is Europe/Africa/CIS where revenue and operating income increased 9% and 33%, respectively when compared to the Q1. The CEO attributes the growth in the region to seasonal recovery of activity levels in Russia and the North Sea as well as higher drilling and completions activity in Angola.