Archer Ltd. (ARCHER) climbed the most in more than three years in Oslo after Halliburton Co. beat earnings estimates and as investors bet the Norwegian oilfield-services provider will succeed in strengthening its balance sheet.
Archer, based in Hamilton, Bermuda, gained as much as 18 percent, the most since Jan. 8, 2010. More than 1.8 million shares have been traded so far today, more than three-times the three-month daily average volume.
Halliburton, the world’s second-largest oilfield-services provider, reported fourth-quarter profit that beat estimates as customers around the world increased spending at the end of the year. Excluding discontinued operations, the Houston-based company earned 63 cents a share, 2 cents more than the average of 33 analyst estimates compiled by Bloomberg.
Archer, which is scheduled to announce its fourth quarter results on Feb. 28, may benefit as oil and gas producers increase spending globally. Explorers and producers are expected to boost spending 5.5 percent to a record $645 billion this year, Dahlman Rose & Co. analyst Jim Crandell wrote in a note earlier this month.
Halliburton (HAL) indicated that margins in its North American business have probably declined as much as they’re going to, “which would be very important for Archer,” RS Platou Markets AS analyst Turner Holm said by phone today.
Investors are also betting that Archer will be successful in strengthening its balance sheet, either through an equity issue or by selling assets, he said.
Archer is in talks with banks and shareholders after it breached covenants on its credit facilities, it said on Dec. 3.
“If there’s an equity issue, it would fix the financial problems for the company,” said Holm. “Then you’ll have a company that’s hugely levered into an uptick in the North American services cycle that looks like it’s probably bottoming right now.”
Archer traded 13 percent higher at 6.37 kroner as of 3:10 p.m. in Oslo, curbing its loss in the last 12 months to 54 percent and giving it a market value of 2.3 billion kroner ($423.5 million.) Bets on a decline in Archer’s share price dropped from more than 2 percent of shares outstanding in late November to 1.1 percent as of Jan. 24, according to short interest data compiled by research firm Markit.
Archer is expected to report earnings before interest, tax, depreciation and amortization of $51.9 million for the fourth quarter, according to the average of 10 analyst estimates compiled by Bloomberg. That compares with $81.9 million a year earlier.
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