By Alison Sider
Halliburton (HAL) is scheduled to announce its third-quarter
earnings before the market opens Monday morning. Here's what you
need to know:
EARNINGS FORECAST: Net income of $1.10 a share is the consensus
estimate of analysts surveyed by Thomson Reuters, compared with 79
cents per share last year. The company hasn't provided guidance for
the third quarter but has said it expected revenue growth in the
Eastern hemisphere, Latin America and North America.
REVENUE FORECAST: Revenue of $8.5 billion is forecast, compared
with $7.47 billion a year ago.
WHAT TO WATCH:
--FALLING OIL PRICES: Expect questions about the potential
impact of falling oil prices. Halliburton's stock has dropped by
more than 20% in the last month amid worries that falling crude
prices will cause the company's customers, exploration and
production companies, to curb spending. Analysts say that it's too
soon to panic, adding that most shale formations are still economic
even with oil prices hovering at around $80 per barrel.
--FRACKING STRENGTH: After a rough couple of years, the market
for hydraulic fracturing services is making a comeback. Activity in
shale formations like the Permian Basin in west Texas is booming;
the horizontal rig count there is 23% higher than this time last
year. That's good news for Halliburton, which is the leading
provider of hydraulic fracturing services in North America. For
years, the supply of equipment to do this work has outpaced demand,
squeezing margins for oilfield services companies. That, too, is
turning around. Halliburton said last quarter it expected more
activity in North America, and last week chief competitor
Schlumberger Ltd. said the region helped drive better than expected
results in the quarter.
--INTERNATIONAL ISSUES: Sanctions in Russia, unrest in the
Kurdish region of Iraq and civil strife in Libya have all disrupted
oil exploration and production activity, meaning less work for
Halliburton abroad. Last month CFO Mark McCollum said that the
combined impact of issues in all three of these countries would
likely shave about 2 cents from third quarter earnings.
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