Halliburton reports higher costs due to the Iran War as its first-quarter profits exceed estimates
U.S. oilfield service provider Halliburton warned that disruptions due to the Iran War and the closure of the Strait of Hormuz would reduce current-quarter earnings by 7 to 9 cents per share, after exceeding first-quarter profit estimates.
The?Strait of Hormuz' is a major global energy chokepoint. On Tuesday, the company reported that rerouting had increased logistics costs and the conflict has also raised raw material prices.
Halliburton launched its global oilfield services provider results amid investor attention on potential gains from repairs to the infrastructure in the area, which Rystad Energy estimated could be worth up to $58 billion.
Halliburton's Middle East presence and service capabilities have been maintained throughout the years, allowing it to?benefit from a recovery if conditions permit, according to Melius Research analyst James West.
According to LSEG data, the company reported adjusted earnings per share of 55 cents for the first three months of this year, exceeding analysts' expectations by 50 cents. Earnings were reduced by?about 2 or 3 cents a share due to the conflict.
Middle East revenues fell 12.7%, to $1.32 Billion. This was due to lower activity in Saudi Arabia as well as reduced drilling services in Qatar.
Halliburton's shares rose 4% during morning trading.
SLB, a larger rival, which is set to announce results on Friday has reported a loss of 6-9 cents per share after the industry?bellwether stopped travel and demobilized its operations in the Middle East.
INTERNATIONAL STRONGERNESS OFFSETS FOR THE MIDDLE ESTATE
The weak performance in the Middle East has been partially offset by better performances?elsewhere. International revenue is now at $3.3 billion. This was driven by a 22% increase in Latin America and a 11% increase in Europe and Africa.
In a press release, CEO Jeff Miller stated that "our performance in international markets around the world exceeded disruptions caused by the Middle East conflict."
Halliburton anticipates revenue growth of mid-to high single-digits in Latin America for the entire year.
Miller stated that the revenue in North America fell 4.5%, to $2.14 Billion. However, Miller also said they were still in the early innings of a recovery.
Barclays analysts wrote in a report that they were "increasingly bullish" on the recovery of North America as the back-end of the oil price curve has risen to over $80.
(source: Reuters)
