By Arathy Somasekhar and Arunima Kumar
HOUSTON (Reuters) -Top U.S. oilfield service firms SLB and Halliburton (NYSE:HAL) posted higher quarterly profits on Friday helped by strong global demand, but warned of softer activity in North America for the second half of this year.
Oilfield service providers have in recent quarters bet on growth overseas, as well as on deepwater projects, to offset weak demand in North America, which has seen a wave of mergers among producers and lukewarm natural gas demand.
SLB, which gets about 82% of its revenue from international markets, said it expects strong activity particularly in countries like Saudi Arabia and United Arab Emirates, while North America growth would be lower than expected.
"Investments will increasingly be targeted to in the most resilient out of the market, including key international markets such as the Middle East and Asia and in offshore globally," SLB CEO Olivier Le Peuch said.
SLB, the largest oilfield service company, forecast full year growth in adjusted earning before interest, tax, depreciation and amortization between 14% and 15%, with margins at or above 25%.
Halliburton, which has about 42% exposure to North America markets, said it now expects its full year revenues from the region to decline by 6% to 8% due to lower activity.
SLB shares were up 3.4% as investor preferred its international exposure, while Halliburton shares were down 4.9% after it cautioned of weakness in North America.
"Investor focus on Halliburton will remain on its North American business," said Peter McNally, global sector lead at advising firm Third Bridge. "Customer consolidation and capital discipline have reduced drilling activity, although Halliburton has found ways to manage costs effectively."
For SLB, Third Bridge experts are focusing on international opportunities, where results continue to impress, McNally added.
DOMESTIC VS INTERNATIONAL
Halliburton expects an increase in drilling and completions demand in 2025 after a major wave of consolidations among top U.S. producers and on the back of an expected recovery in natural gas activity. Delays with liquefied natural gas projects have hurt gas demand and drilling for the fuel.
"I expect that the second half of 2024 will be near the low point of activity levels (in North America) this cycle," Halliburton CEO Jeff Miller said.
SLB reported a 6% drop in North America second-quarter revenue, while Halliburton's revenue eased 8% from the region. SLB's revenue from its international segment rose 18%, from a year earlier, while Halliburton's grew about 8%.
Halliburton said it expects the international business to deliver about 10% revenue growth for the full year.
The company's profits rose 16.2% to $709 million, or 80 cents per share, in line with estimates.
SLB, formerly Schlumberger (NYSE:SLB), said net income, excluding credits and charges, rose 19% to $1.2 billion, or 85 cents, in the three months to June 30, beating analysts consensus estimate by 2 cents, according to LSEG data.
SLB's revenues climbed 13% to $9.1 billion, beating estimates, while Halliburton's rose 0.6% to $5.83 billion, missing consensus views.