Halliburton eyes slimmer shale industry but more profitable future

The U.S. shale industry will continue to shrink, but energy companies will emerge from the COVID-19 pandemic downturn stronger, Halliburton’s Chief Executive Jeff Miller told investors on Monday.

Halliburton, the largest U.S. hydraulic fracturing service provider, beat Wall Street estimates, earning 11 cents a share versus expectations of 8 cents per share while posting its fourth straight quarterly loss on Monday.

The next decade would be more profitable for the company, Miller said, noting rivals’ consolidation has been “great” for Halliburton. Some 30% of hydraulic fracturing equipment has been permanently retired, he estimated.

Oil prices have recouped some of their losses from historic spring lows, but fresh travel lockdowns on a resurgence in COVID-19 infections are threatening that recovery. U.S. oil futures were trading around $40.75 early Monday.

“The pace of activity declines in the international markets is slowing, while the North America industry structure continues to improve, and activity is stabilizing,” Miller said in a statement.

“We see progressive improvement in 2021,” Miller said, pointing to an uptick in activity around unfinished wells. He estimated revenue in its completions and drilling business to increase by 10% this quarter, while margins will remain flat.

Miller warned that a resurgence in COVID-19 cases remained a near-term risk, echoing larger rival Schlumberger NV, which on Friday posted a loss and warned that the recent economic recovery remained “fragile.”

Halliburton has sharply cut costs, reducing its North American headcount and real estate footprint by 50% compared with the last year, Miller said.

Its North American revenue fell 67% to $984 million in the third quarter. For the past two quarters, Miller said two-thirds of its revenue came from international markets as the Houston-based firm shifts its focus away from American operations.

Revenue from its completion and production business was $1.57 billion for the quarter, compared with $3.51 billion a year ago, a decline of roughly 55%. Total revenue fell 46.4% to $2.98 billion.

Shares were up about 3.4% in early trading at $12.67.

Net loss attributable to the company was $17 million, or 2 cents per share, in the quarter ended Sept. 30, compared with a profit of $295 million, or 34 cents per share, a year earlier.

The company took $133 million in severance and other charges.