(S&P Global) Halliburton is looking to expand its international market presence while maintaining a leaner North American business, President and CEO Jeffrey Miller said during a third quarter earnings call Oct. 19.
Miller said the company’s international operations, which drove two-thirds of the company’s revenues for two consecutive quarters, remain the No. 1 priority for the oilfield services provider.
The company reported third-quarter revenue of $2.98 billion, down from $3.19 billion in the previous quarter. Results were partially driven by continuing rig count declines across multiple regions.
However, the diversity of the company’s international business shielded it from larger losses, the CEO said.
“Our current strengths and new capabilities in the international markets are critical to our future success. The international short-cycle producers have an opportunity to regain market share as a result of declining US oil production,” the CEO said.
Miller said as the international market nears the bottom, prudent capital spending by oilfield services companies results in limited excess equipment, which leads to a tighter market, even if global activity fails to improve. He said Halliburton is well-positioned to take advantage of international investment in oil and gas as a supply shortage emerges when demand begins to improve.
In North America, Halliburton is operating as a leaner company after completing its $1 billion structural cost-reduction plan, which included a 50% reduction in both its structural headcount and real estate footprints in North America.
Consolidation, attrition, and rationalization create tightness that contributes to growth opportunities in the North American land market, the CEO said.
“We have seen a steady flow of consolidation announcements from operators as well as service companies,” Miller said. “As I see it, the US shale industry will continue to slim down and as a result, emerge healthier in a relatively more sustainable growth environment in the future, and this plays to Halliburton’s strength and our disciplined strategy.”
While more consolidation is needed, Miller expects improved margins and free cash flow in North America in the fourth quarter. Completions activity and year-end completion tool sales support a 10% increase in revenue and sequentially flat margins in the North American land market, Miller said.
Halliburton is “charting a fundamentally different course,” Miller said, through investment in digital technology and its Halliburton Labs initiative, which opens its lab facilities, technical expertise and business network to early-stage companies focused on advancing clean energy.
However, the company remains committed to its oil and gas operations.
“Let me be really clear, we are an oilfield services company,” the CEO said. The world will need oil and gas for “a very long time,” he said.
