By Geoffrey Smith
Investing.com -- Halliburton (NYSE:HAL) stock slipped in premarket trade on Tuesday on what looked like profit-taking after a hefty rally, as market participants used a strong first quarter report as a cue to take some money off the table.
Halliburton's net profit rose 54% from a year earlier to $263 million, while adjusted earnings per share rose to 35c -- up 89% on the year but down a fraction from the previous quarter. Revenue, meanwhile, rose to $4.28 billion. Both numbers were slightly ahead of forecasts.
Halliburton stock fell 3.9% in response, having doubled since the start of December as a global rally in crude oil prices encouraged production companies across the world to invest more in raising output. While that process was tentative for most of 2021, it has gathered pace since Russia's invasion of Ukraine, which led the West to impose retaliatory sanctions on Moscow. Halliburton itself was forced to take a $22 million charge in the quarter due to writing down its assets in Ukraine. It was less affected than some of its industry peers by the sanctions on Russia, having no active joint ventures in the country.
Russia's invasion and the general global recovery in demand as the pandemic recedes have tightened the global market considerably. The developments have given U.S. producers -- and their lenders -- more confidence to invest. Baker Hughes' North American Rig Count has already risen 14% this year to 548, its highest in over two years. Consultancy East Daley Capital now expects U.S. oil output to rise by an average of 1.29 million barrels a day this year -- 23% more than it expected in December -- to 12.86 million b/d.
As such, Halliburton Chief Executive Jeff Miller was upbeat about the outlook, seeing "significant tightness across the entire oil and gas value chain in North America" along with "supportive commodity prices and strengthening customer demand against an almost sold-out equipment market."
He noted that the operating margin in its key Drilling and Evaluation division had already hit 15% for the first time in 12 years.
"First-quarter revenue growth in all our international regions together with North America demonstrates that this multi-year upcycle is well underway," Miller said.