Halliburton expects years-long oilfield demand from Gulf energy infrastructure rebuild (updated)

Halliburton

Tue 11:55

Halliburton forecasts mid-single-digit revenue growth in 2027
Outlook assumes flat North American activity and no recovery in US fracking
CEO sees multi-year demand from restoring production and energy security
Adds details from conference call in paragraphs 9,10 and 16, updates shares in paragraph 4
By Pranav  Mathur
Oct 20 (Reuters) - Halliburton HAL.N forecast mid-single-digit revenue growth in 2027, expecting efforts to restore energy production and rebuild inventories in the war-hit Middle East to support demand for oilfield equipment, even as North America remains subdued.
Operating margins for the coming year will be about 15%, Chief Executive Jeff Miller said on Tuesday, an improvement of around 200 basis points. The forecast does not assume a recovery in US hydraulic fracturing activity.
"This forecast includes a flat North America and no recovery in the domestic frac market, pointing to recovery in the Middle East and better margins post new contract start-ups abroad," said Citibank analyst Scott Gruber.    
Shares were up 2.4% after Halliburton beat third-quarter profit and revenue estimates.
The US-Iran conflict, which is in its eighth month, has disrupted energy operations in the Middle East, delaying projects but potentially creating long-term demand for oilfield services. 
Consultancy Rystad Energy in April projected as much as $58 billion in repair costs for energy-linked infrastructure.
"I expect the work to restore production, rebuild inventories and strengthen energy security will drive multi-year demand growth for oilfield services," Miller said.
Quarterly revenue in the Middle East and Asia was broadly unchanged at $1.41 billion, Halliburton said. The company derives about a quarter of its total revenue from the Middle East.
Revenue from the Middle East is expected to rise sequentially and year-over-year in the fourth quarter, Chief Operating Officer Shannon Slocum said on a post-earnings call.
Outside the Middle East, international business is expected to grow about 12% this year, with Halliburton also anticipating solid growth in Venezuela, Slocum said.
Oilfield service companies are rehiring workers and putting more equipment on the ground, as a US-backed multibillion-dollar plan to revive the country's battered oil industry gathers momentum.

Latin America and Europe/Africa quarterly revenue rose 12.6% and 22.7%, respectively, in the third quarter, helping offset a 9% decline in North America due to weaker US pressure pumping activity.
Total quarterly revenue rose 1.8% to $5.7 billion, topping analysts' estimates of $5.6 billion.


Halliburton posted adjusted earnings of 60 cents per share for the three months ended September 30, beating analysts' average estimate of 58 cents, according to data compiled by LSEG.
The company expects fourth-quarter profit between 62 cents and 64 cents, compared with analysts' estimates of 64 cents.

Halliburton's Q3 regional revenue performance https://tmsnrt.rs/4i4fmjZ
Halliburton's Q3 revenue by business segment https://tmsnrt.rs/4BmUgXc
 (Reporting by Pranav Mathur in Bengaluru, additional reporting by Anushree Mukherjee; Editing by Sriraj Kalluvila)
 ((Pranav.Mathur@thomsonreuters.com;))