Halliburton (HAL) reported fourth-quarter 2009 net income of $243 million (EPS of $0.27), down 48% from $468 million (EPS of $0.87) in the same period a year ago. The company’s results excluded a one-time charge of $10 million. Analysts’ estimates had an average EPS of $0.27.
Revenue for the quarter totaled $3.7 billion, down nearly 25% from fourth quarter 2008 revenue of $4.9 billion. On Friday, competitor Schlumberger (SLB) announced fourth-quarter revenue of $5.7 billion, down 16% from the year ago quarter total of $6.7 billion.
Halliburton’s operating income fell from a fourth-quarter 2008 total of $1.16 billion to $428 million in the fourth quarter, down a whopping 63%. For the year, Halliburton’s revenue fell 20% compared with 2008, and year-over-year operating income was down a total of 50%. Operating income at Schlumberger was off about 43% year-over-year, and revenue fell about 16%.
The oilfield service business was dragged down by a very poor early half of 2009. Rig counts have begun to climb again in North America, and both Halliburton and Schlumberger saw modest improvements to results from the third quarter of 2009.
The global economic outlook for 2010 looks to be the primary influence on oilfield service companies. More upstream spending is possible both in shale gas and ultra-deepwater, but the biggest investment is not likely until the second half of the year.
Halliburton’s North American revenue increase for the fourth quarter came from “robust activity in unconventional [natural gas] basins.” The company said that it increased market share, operating margins and realized better prices in the fourth quarter. All in all, Halliburton thinks a recovery in natural gas demand could result from increasing industrial demand and draw-downs in storage to bring natural gas levels more in line with historical averages.
Schlumberger, in contrast, says that it believes that natural gas markets “remain generally oversupplied.” The company believes LNG flows will continue to increase as new capacity is added in 2010, and that “decline rates of unconventional gas production have the potential to limit the current increase in the North American gas drilling rig count.”
For Halliburton, the North American natural gas glass is half full; for Schlumberger, it is half empty.
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