Halliburton Co. (HAL) – one of the largest oilfield service providers in the world – is scheduled to report its first quarter 2010 results on Monday, Apr 19, before the opening bell.
 
The Zacks Consensus Estimate for the current quarter is 25 cents per share (with an upside of 4%), compared to the 44 cents per share earned in the year-earlier period.
 
Fourth Quarter Recap
 
The world’s second-largest oil services firm after Schlumberger Ltd. (SLB) reported profit of 28 cents per share in the fourth quarter of 2009, a penny above the Zacks Consensus Estimate of 27 cents. The company believed improvement in North America market helped it to top expectations.
 
Drilling Activity Picking up in North America
 
As reinforced by the quarterly results released in December, the all-important North American activity levels (to which the company is heavily exposed through its market-share-leading pressure-pumping business) are showing signs of revival. Margins had bottomed in most basins during the third quarter of 2009 and now appear to be poised for a rebound, as the industry looks to balance supply growth with recovering hydrocarbon demand. We are further encouraged by Halliburton’s recent deals with industry giants like SGS SA and ConocoPhillips (COP). 
 
Gas Prices Remain a Concern
 
But the continued glut in domestic gas supplies, the end of the three-month cold snap (from Dec. ‘09 through Feb. ’10) and the arrival of mild spring weather, as well as the rapid rise in the natural gas rig count, has renewed investor skepticism about natural gas prices.
 
Estimate Revisions Trend: Erratic & Lacking Any Specific Trend
 
With the Zacks Consensus Estimate staying at 25 cents over the past month, estimates for the first quarter of 2010 have remained firm. Overall, 4 out of the 26 analysts covering the stock raised their projections during that time, with 3 downward revisions. Over the last 7 days, 1 analyst upped estimates for the first quarter 2010, while 2 moved in the opposite direction. Our short-term recommendation on Halliburton remains Hold (Zacks Rank #3).
 
Positive Surprise History
 
The company has a history of positive earnings surprises, surpassing the Zacks Consensus Estimate in 3 of the last 4 quarters. Halliburton has performed consistently well during this period with its average earnings surprise being 11.35%. This implies that the company has beaten the Zacks Consensus Estimate by 11.35% over the last four quarters.
 
As such, we will not be surprised if Halliburton reports better-than-expected results, yet again, driven by improved U.S. pressure pumping activity on the back of higher drilling activity.
 
Company Profile
 
Houston, Texas-based Halliburton offers a variety of equipment, maintenance, and engineering and construction services to the energy, industrial, and government sectors.
Read the full analyst report on “HAL”
Read the full analyst report on “SLB”
Read the full analyst report on “COP”
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