Oilfield services firms SLB, Halliburton post profit gains on global demand
SLB, Halliburton warn of weak North America activity
SLB shares up 3.4%, Halliburton shares down 4.9%
North America activity to trough in H2 2024 - Halliburton CEO
SLB sees strong growth in Middle East, Asia
Adds comments from SLB conference call on paragraphs 3-5, updates shares in paragraph 7
By Arathy Somasekhar and Arunima Kumar
HOUSTON, July 19 (Reuters) -Top U.S. oilfield service firms SLB SLB.N and Halliburton HAL.N posted higher quarterly profits on Friday helped by strong global demand, but warned of softer activity in North America for the second half of this year.
Oilfield service providers have in recent quarters bet on growth overseas, as well as on deepwater projects, to offset weak demand in North America, which has seen a wave of mergers among producers andlukewarm natural gasdemand.
SLB, which gets about 82% of its revenue from international markets, said it expects strong activity particularly in countries like Saudi Arabia and United Arab Emirates, while North America growth would be lower than expected.
"Investments will increasingly be targeted to in the most resilient out of the market, including key international markets such as the Middle East and Asia and in offshore globally," SLB CEO Olivier Le Peuch said.
SLB, the largest oilfield service company, forecast full year growth in adjusted earning before interest, tax, depreciation and amortization between 14% and 15%, with margins at or above 25%.
Halliburton, which has about 42% exposure to North America markets, said itnow expects its full year revenues from the region todecline by 6% to 8% due to lower activity.
SLB shares were up 3.4% as investor preferred its international exposure, while Halliburton shares were down 4.9% after it cautioned of weakness in North America.
"Investor focus on Halliburton will remain on its North American business," said Peter McNally, global sector lead at advising firm Third Bridge. "Customer consolidation and capital discipline have reduced drilling activity, although Halliburton has found ways to manage costs effectively."
For SLB, Third Bridge experts are focusing on international opportunities, where results continue to impress, McNally added.
DOMESTIC VS INTERNATIONAL
Halliburton expects an increase in drilling and completions demand in 2025 after a major wave of consolidations among top U.S. producers and on the back ofan expected recovery in natural gas activity. Delays with liquefied natural gas projects have hurt gas demand and drilling for the fuel.
"I expect that the second half of 2024 will be near the low point of activity levels (in North America) this cycle," Halliburton CEO Jeff Miller said.
SLB reported a 6% drop in North America second-quarter revenue, whileHalliburton's revenue eased 8% from the region.SLB's revenue from its international segment rose 18%, from a year earlier, while Halliburton's grew about 8%.
Halliburton said it expectsthe international business to deliver about 10% revenue growth for the full year.
The company'sprofits rose 16.2% to $709 million, or 80 cents per share, in line with estimates.
SLB, formerly Schlumberger, said net income, excluding credits and charges, rose 19% to $1.2 billion, or 85 cents, in the three months to June 30, beating analystsconsensus estimate by 2 cents, according to LSEG data.
SLB's revenues climbed 13% to $9.1 billion, beating estimates, while Halliburton's rose 0.6% to $5.83 billion, missing consensus views.
Reporting by Arathy Somasekhar in Houston, Arunima Kumar and Sourasis Bose in Bengaluru; editing by Sriraj Kalluvila, Elaine Hardcastle, Hugh Lawson and Marguerita Choy
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