Halliburton Sees Mexico Leading Latin America Drilling Recovery

Latin America’s oil drilling slump may be drawing to a close, according to the world’s second-largest service provider.

Halliburton Co. (HAL) expects “high single-digit” sales growth in the region this quarter as a pickup in Mexico counters Brazil’s slowdown, Chief Financial Officer Mark A. McCollum said on a conference call after the Houston-based company posted better-than-expected results for the first quarter.

Project wins in Mexico, where the government plans to break a 76-year state monopoly on oil production, are setting up the company for a stronger second half after Latin American revenue and operating income declined 9 percent and 8 percent, respectively, from the year-ago quarter. Margins probably will be “modestly” higher in the second quarter, McCollum said.

“We expect a more meaningful step-up in revenues and margins in the second half of the year which should bring full-year revenue and margins in line with 2013,” he said.

The number of rigs in the region declined 7.1 percent to 406 in the first quarter from a year ago, according to Baker Hughes (BHI) Latin America Oil And Gas Rotary Rig Count Data.

In Brazil, Halliburton had 24 rigs in the first quarter and estimates activity to remain little changed for the remainder of 2014 and into 2015. Argentina’s shale development helped offset the first quarter’s regional decline.

In Venezuela, the company’s receivable position was little changed after an improvement in payments at the end of the fourth quarter, McCollum said.

“That was driven probably more by an expansion of our operations in Venezuela versus a lack of payment -- it still is slower than what we would like it to be,” he said. “We take a long-term view on Venezuela. We continue to be constructive about that market and think it can work for us.”

To contact the reporter on this story: Pietro D. Pitts in Caracas at ppitts2@bloomberg.net

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net Steven Frank

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