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Where Halliburton Stands ahead of 2Q15 Earnings

(Continued from Prior Part)

Halliburton’s growth by territory

We’ll compare Halliburton’s (HAL) revenue growth within the company’s various territories in this part of the series.

In 1Q15, Halliburton operations in North America and in the rest of the world registered significant revenue declines. The drop was particularly harsh in the North American market, where revenue fell by 25%. In its international markets, the company registered a 20% revenue fall. Halliburton operates in the Middle East and Asia, in Europe, Africa, and the CIS (Commonwealth of Independent States), and in Latin America.


Before 1Q15, Halliburton witnessed fairly steady growth across all its operations. In the past nine quarters, quarter-over-quarter revenue growth was the highest in 2Q14, when the company reported 11% and 10% growth in North America and international operations, respectively.

North America nose-dives, international operations resilient

The energy price slump triggered cutbacks by upstream energy companies in terms of exploration and production spending. This severely affected OFS (oilfield services) companies’ revenues. Approximately 34% of US rigs went offline between January and March. This resulted in lower North American revenues for Halliburton.

Lower oil prices also affected Halliburton’s international operations, particularly as a result of reduced drilling activity in Malaysia, Australia, Angola, and the Norwegian sector of the North Sea. Currency devaluations and sanctions against Russia also led to weaker international results for HAL in 1Q15. However, this was partially offset by higher integrated project activity in Saudi Arabia, Iraq, and India.

In 1Q15, Baker Hughes’ (BHI) revenue decreased by 20% compared to 1Q14, while Nabors Industries’ (NBR) revenues decreased by 11% during the same period. Oil States International (OII) saw a 6.4% revenue fall in 1Q15 over the same quarter a year ago.

HAL makes up 2.2% of the iShares U.S. Energy ETF (IYE) and 0.19% of the SPDR S&P 500 ETF Trust (SPY).

What to look for in Halliburton’s 2Q15 numbers

The Middle East and Asia, particularly Saudi Arabia, remain the bright spots in Halliburton’s portfolio. Because OPEC (Organization of the Petroleum Exporting Countries) is maintaining production levels, drilling activity is expected to stay strong.

North American rig activity is likely to stay soft in 2Q15, leading to continued weakness in both of Halliburton’s operating segments. In Latin America, recent data show some rig count gains, which might improve Halliburton’s revenue and operating income in the next quarter. Europe and Africa are likely to remain fragile.

Next, we’ll discuss Halliburton’s operating income by segment.

Continue to Next Part

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