Halliburton Co. (HAL) on Monday reported a $1 billion loss in the first quarter, lowered its spending plan for the year, and forecast a bleak outlook for its North American business as oilfield providers struggle with a collapse in oil prices. Shares were down 8.8% in U.S. pre-market trading.
The company incurred a $1 billion net loss in the first three months of the year after reporting a profit of $152 million during the same period last year. Total revenue in the first quarter declined 12% to $5 billion from a year ago as oil prices plunged more than 60% this year.
Revenue from Halliburton’s North America activities fell 25% in the first quarter to $2.5 billion compared with the year-ago period. The decline was mainly due to reduced activity and pricing in North America land, primarily associated with pressure pumping, well construction, and completion tool sales. Against this, international revenue rose 5% in the first three months of this year versus the same period last year.
“Our industry is facing the dual shock of a massive drop in global oil demand coupled with a resulting oversupply,” said Jeff Miller, Chairman, President and CEO at Halliburton. “Consequently, we expect activity in North America land to sharply decline during the second quarter and remain depressed through year-end, impacting all basins.”
Miller disclosed that the company is implementing a number of measures to reduce overhead and other costs by about $1 billion, lower capital expenditures to $800 million, and improve working capital.
In a move to adjust its cost structure to current market conditions, Halliburton recorded $1.1 billion in impairment charges.
Wall Street analysts take a more bearish stance on Halliburton stock as 14 say Hold and 2 say Buy adding up to a Hold consensus rating. The $7.96 average price target implies a cautious 7% upside potential for the shares in the coming 12 months. (See Halliburton stock analysis on TipRanks).
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