Oil field services stocks rise on Halliburton Weatherford earnings

Halliburton Co.’s better-than-expected quarterly financial results and mostly upbeat outlook for oil and gas industry, despite what it called “unprecedented volatility” in commodity markets, helped lift bruised oil services stocks Monday.

Shares rose for Halliburton, Schlumberger, Baker Hughes, Weatherford International and others amid a broader market rally also fueled by talk of a second stimulus package to boost the sagging U.S. economy.

The gains were good news for a sector that has seen stock prices for its biggest names plummet by more than 50 percent in recent months amid falling oil prices, a global economic slowdown and fears the situation will get worse before it gets better.

“I think investors are realizing that the sky is not falling for oil field services like Halliburton,” said Brian Youngberg, industry analyst with Edward Jones in St. Louis.

“Yes, 2009 is going to be a little bit tougher, no question about it. But markets cycle. As investment drops off for a little bit, prices rebound and then investment picks back up,” he said.

In trading Monday, Halliburton closed up 13.9 percent at $20.80; Schlumberger rose 11.5 percent to $55.74; Baker Hughes rose 13.9 percent to $38.80; BJ Services rose 4.48 percent to $13.52; Weatherford International rose 15.45 percent to $16.96; and Smith International rose 9.42 percent to $36.47

The rally came after Weatherford and Halliburton released third-quarter financial results that met or beat Wall Street expectations.

Houston-based Weatherford’s net income for the quarter ended Sept. 30 rose to $370.6 million, or 53 cents per share, on revenue of $2.54 billion. Profit matched the average estimate of analysts polled by Thomson Reuters, and revenue topped analysts’ $2.48 billion forecast.

Halliburton, with headquarters in Houston and Dubai, swung to a $21 million loss, or 2 cents per share, in the July-to-September quarter, from a gain of $727 million, or 83 cents a share, in the same period a year ago.

The drop was largely due to a $693 million non-tax deductible loss on a debt repayment. Other non-recurring events contributing included $33 million in losses related to hurricanes Gustav and Ike in the Gulf of Mexico and a charge related to an acquisition.

Excluding those items, Halliburton had profits of $687 million, or 76 cents a share, ahead of the 73 cents a share analysts had predicted.

Revenue rose 24 percent to $4.9 billion, also ahead of analyst targets, after the company posted gains in all of its business segments.

Chairman and Chief Executive Dave Lesar called the quarter “very successful” from an operating standpoint, but noted that the performance was overshadowed by a “severe downturn in the global stock markets.”

Oil prices that reached a record close of $145.29 per barrel July 3 helped lift demand for oil field services and equipment, which companies like Halliburton provide on a contract basis to oil and gas companies that own and develop fields.

Last week, Schlumberger, the world’s largest oil field services company, reported a 13 percent jump in third-quarter profit.

But with crude prices down more than 50 percent from the summer peaks and recession fears growing, analysts are more focused on what industry leaders see ahead.

“Nobody is paying attention to the third quarter because that represents the old regime of commodity prices,” said Mark Urness, industry analyst with Calyon Securities, in an interview last week.

Halliburton officials warned that falling oil prices could cause customers to cancel or delay exploration projects, like heavy oil developments, that depend on high commodity prices to make them affordable.

They said 10 oil and gas companies already have announced plans to scale back drilling programs in 2009.

But the volatility in the credit and equity markets have not yet affected Halliburton, Lesar said. And the challenges will likely be short-lived.

“Despite the growing prospects of a global economic slowdown and related decrease in hydrocarbon demand, we continue to believe in the long-term fundamentals of the oil and gas industry,” Lesar said.

http://www.chron.com/disp/story.mpl/business/energy/6068968.html

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Oil field services stocks rise on Halliburton Weatherford earnings