Halliburton Co. is making the most out of a boom in North American oil and natural gas drilling. Its profit rose 54 percent in the second quarter, and revenue set a company record for the period.
The Houston oil services company on Monday kicked off earnings season for the industry by reporting net income of $739 million, or 80 cents per share, for the three months ended June 30. That compares with $480 million, or 53 cents per share, for the same part of 2010. Revenue increased 35.2 percent to $5.94 billion.
Oil prices hit three-year highs in May and oil companies scoured the planet for untapped fields. Many focused on North America's vast underground rock formations, which are rich in oil and gas. Halliburton specializes in tapping those formations, and the surge in activity has boosted its financial results so far this year.
CEO Dave Lesar said there's more demand for Halliburton's services than the company can provide, and "we expect this imbalance to continue going forward."
Argus Research analyst Phil Weiss said Halliburton has become such a dominant player in North America that it has been able to combine its most sought-after services with others in revenue-boosting package deals. The company can rely on that strategy with so many companies clamoring for its services.
"There's still so many wells that haven't been completed," Weiss said.
Altogether, Halliburton's North American operations accounted for 58 percent of the company's overall revenue, up from 48 percent a year ago. Operating income more than doubled in North America to $997 million for the quarter. That offset a 32 percent drop in income for the company's international business.
Petroleum companies are mostly targeting deposits that are especially rich in oil, hoping to cash in on oil prices that jumped 31 percent during the quarter. And, Lesar said, natural gas drilling remains "relatively resilient" in North America _ even with little change in the price _ as utilities increasingly switch from coal to cleaner-burning natural gas.
Offshore drilling in the Gulf of Mexico also picked up from April to June after being shut down last year due to the oil spill off the Louisiana coast.
Halliburton said its overseas business was slowed down in the quarter by project delays in Iraq, higher costs in Africa, a sluggish market in the United Kingdom and Algeria, and a shutdown in drilling activity in Libya.
Excluding employee-separation costs, net income for the latest quarter was 81 cents per share. The results beat Wall Street earnings expectations of 73 cents per share on revenue of $5.64 billion, according to FactSet. Shares fell 35 cents to $52.73 in afternoon trading on a day when the stocks of most major energy companies were falling.
Chris Kahn can be reached at http://www.twitter.com/ChrisKahnAP.