Weak earnings flog oil-service firms. Lower exploration spending played part
By NELSON ANTOSH
Houston Chronicle, July 23
Three of the major energy service companies were clobbered Thursday by
shrunken profits as the result of low oil prices earlier in the year.
Halliburton, Schlumberger and Smith International all suffered from falling oil
and gas exploration spending.
Dallas-based Halliburton, whose energy services group is the largest in the Oil
Patch, saw its second-quarter profits drop from $243 million, or 55 cents per
share, a year ago to $83 million, or 19 cents, in the second quarter.
Revenues of $3.67 billion declined from $4.58 billion a year earlier.
Energy services, Halliburton's largest segment, took a 29 percent decline in
revenues to $1.681 billion. The United States market was hardest hit with the
rotary rig count, which in April reached an all-time low.
While the energy group's revenues held up better than general market
indicators, such as the rig count, "there was intensive price competition for the
smaller amount of available business," the company said in a written
statement.
As a result, the energy service group's operating income plunged to $49
million in the second quarter, from $304 million a year earlier.
Companywide, the fall was buffered somewhat by Halliburton's engineering
companies, particularly Houston-based Brown & Root, whose business
dropped only 5 percent. A slowdown in forest products, mining,
manufacturing and fertilizer was partially offset by growth in contracts for
government operations, maintenance and logistics.
Schlumberger Ltd., the second-largest oil-field services company, Thursday
reported that its profit dropped to about one-third of what it was a year
earlier, $127 million vs. $388 million.
On a fully diluted basis, this was 23 cents per share against 69 cents for the
New York and Paris-based company. Total revenues, which include meters
for water, gas and electricity, declined 29 percent to $2.17 billion from $3.08
billion.
Oil-field revenues decreased in all major geographic regions and across all
services, Schlumberger said. But the big layoffs are over, said Simone Crook,
in charge of investor relations.
The latest report is in contrast to the first quarter, when it took a $121 million
severance charge to cover the layoffs of some 4,400 workers, she said.
Smith International of Houston said Thursday it had a second-quarter net loss
of $3 million, or 6 cents per share, which like Schlumberger was worse than
the forecasts of analysts.
A year earlier, it reported a net loss of $7.5 million, or 16 cents, but that was
after a $37.2 million restructuring and merger charge.
Smith International's second-quarter revenues were $389.7 million, down 30
percent from $557.7 million a year earlier.
Much of this year's loss was attributed to delays in closing a drilling fluids joint
venture with Schlumberger, which increased its interest costs. That transaction
has now been completed.
The bottom of the slump has passed, said Smith's chairman and chief
executive, Doug Rock. "We believe we saw this downturn's low point in the
second quarter." The company predicts a modest recovery during the second
half of this year. |
