Halliburton Profit Rises 54% on North American Oil Spending

Halliburton Co. (HAL), the world’s second- largest oilfield-services provider, said second-quarter profit increased 54 percent as higher crude prices led to more spending on exploration and production in North America.

Net income rose to $739 million, or 80 cents a share, from $480 million, or 53 cents, a year earlier, Houston-based Halliburton said in a statement today. Excluding costs from job cuts, the company earned 7 cents a share more than the average of 35 analysts’ estimates compiled by Bloomberg. Sales climbed 35 percent to $5.94 billion.

Oil and natural-gas companies are expected to spend $122 billion in the U.S. this year on exploration and production, 22 percent more than last year, James Crandell and Omar Nokta, analysts at Dahlman Rose & Co., wrote in a June 7 note to investors. The average number of active U.S. oil and gas rigs rose to 1,826 in the second quarter, up 21 percent from 1,506 a year ago, according to Baker Hughes Inc.

“North America across the board was stronger than we expected,” said John Lawrence, an analyst at Tudor Pickering Holt & Co. in Houston whose firm rates the shares a “buy” and owns none. “They checked every box -- execution, the rig count was stronger, pricing was probably better than we thought.”

Sales in North America, Halliburton’s largest region, rose 63 percent to $3.45 billion from $2.11 billion a year earlier. Lawrence said his firm was expecting regional sales to grow to $3.28 billion.

North American Margin

Halliburton’s North American margin will expand at a slower pace in the current quarter compared with the prior one, partly because of increased costs, Chief Financial Officer Mark McCollum said on a conference call today.

A “gradual” increase in international margin is expected in the second half, Chairman and Chief Executive Officer Dave Lesar said on the call.

Oil prices rose 31 percent to average $102.34 a barrel on the New York Mercantile Exchange in the second quarter, up from $78.05 a year ago.

Halliburton gained 4 cents to $53.12 at 4 p.m. in New York Stock Exchange composite trading. The shares, which have 35 buy and three hold ratings from analysts, have increased 30 percent this year.

Schlumberger Ltd. (SLB), the largest oilfield-services provider, is scheduled to report earnings on July 22.

To contact the reporter on this story: David Wethe in Houston at dwethe@bloomberg.net.

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

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