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(Bloomberg) – For the first time in seven years, Halliburton Co., the largest provider of hydraulic fracturing services, is expanding in both U.S. and overseas markets as spending picks up in the global energy industry .
“The economy feels closed at over 2%, so the growth in demand is there,” CEO Jeff Miller said in an interview with Bloomberg TV on Tuesday. Drillers “are going to need a lot of services as we meet the global demand for oil and gas.”
Exploration clients are profitable at current oil prices in the $ 60 to $ 70 range, he said. As a result, their spending could increase by double-digit percentages over the next two years.
The Houston-based entrepreneur rose 5.8% on Tuesday after reporting better-than-expected second-quarter results. The bullish outlook for the world’s third-largest oil services provider follows comments last month from rival Schlumberger, who said the global economic recovery would trigger an energy industry “supercycle” that should lead to margins wider.
This represents a dramatic rebound for the sector, which was wiped out last year by the pandemic and forced to lay off tens of thousands of workers. The three biggest companies – Halliburton, Schlumberger and Baker Hughes Inc. – all report profits this week and are expected to increase profits by at least 20% from the first three months of the year, according to an average of analyst estimates. . compiled by Bloomberg.
In a conference call with analysts and investors earlier Tuesday, Halliburton executives said:
North American oil production could increase by about 500,000 barrels per day next year. Corporate margins are expected to return to 2014 levels by 2023. US private explorers will continue to lead growth opportunistically as state-owned companies balance growth and returns
Oil service providers have not seen three consecutive quarters of equity appreciation since the days of crude at $ 100 a barrel in 2014. Now, as drilling accelerates around the world, the index Philadelphia Oil Services shows this.
Halliburton reported second quarter earnings per share excluding one-time items of 26 cents, beating the 23-cent average of analysts’ estimates, while revenue of $ 3.7 billion was below the average of 3, $ 75 billion. Halliburton announced its largest quarterly sales in North America since the pandemic began last year.
Miller, who cut costs by more than $ 1 billion during the recession, reaffirmed a prospect of double-digit year-over-year growth in international orders in the second half of this year.
Shares rose 5.1% to $ 20.34 at 11:12 am in New York City, marking the best performance among oil stocks in the S&P 500 index. After four consecutive annual losses that have seen the company’s market value reduced by more than half, the title now has 16 recommendations of “buy” among analysts, against six “conservations” and three “sales”.
Among its larger peers, Halliburton is the most dependent in North America, where it generates about 40% of sales. Hydraulic fracturing in the United States is expected to grow 7% in the current quarter before erasing those gains by the last three months of the year, according to Goldman Sachs. Explorers are expected to increase spending by 20% next year, the bank said last week in a note to investors.
Exploration and production spending is widely seen as an indicator of future crude production, as budgets cover everything from drilling new holes in the ground to hydraulic fracturing and completing wells for oil. flows.
With the tight supply of various petroleum equipment, Halliburton said he was finally able to demand higher prices for his work – beyond the cost of supply chain inflation – In some pockets of the market.
“We are trading up, not down,” Miller said on the conference call. “It’s sort of a different dialogue than the one we’ve had.”
(Updates with CEO commentary in second paragraph.)
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