Global oilfield service provider, Halliburton (HAL) expects its first quarter 2011 results to be negatively influenced by the turbulences in the Middle East and North Africa and adverse weather conditions in North America and Australia.
Halliburton reported that the chaotic geopolitical situations in Middle East and North Africa, owing to the government sanctions in Libya, will reduce the first quarter earnings by 3 to 4 cents per share. In addition, the company expects the impact of the seasonal declines to be at the high end of 5 to 8 cent per share.
However, Halliburton will likely expand its activities in the Manifa project, based on the talks with the Saudi Arabian customers. The scope of the venture includes supply of directional drilling, logging-while-drilling, cementing, logging and perforating, coiled tubing and stimulation services for 93 wells offshore Northeast Saudi Arabia.
The Zacks Consensus Estimate for first quarter 2011 earnings is pegged at 61 cents per share, while that for the full-year 2011 is $2.89.
Halliburton’s closest rival Schlumberger Limited (SLB) also reported that it expects first quarter earnings to be lowered by 8 to 10 cents per share, due to the unrest in the Middle-East nation.
Houston, Texas-based Halliburton offers a variety of equipment, maintenance, and engineering and construction services to the energy, industrial, and government sector. The company operates under two main segments: Completion and Production, and Drilling and Evaluation.
We believe that Halliburton enjoys a strong competitive edge within the global oilfield services market, owing to its solid presence in the highest profile plays, such as the Haynesville, Eagle Ford shale and Bakken, healthy financial profile and technological expertise.
However, we maintain our long-term Neutral recommendation on the company, reflecting commodity price fluctuations, bearish oil and gas price outlook and operational hindrances. Halliburton currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.
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