KEY POINTS

  • The company posted a net loss of $1.7 billion, or $1.91 per share
  • Excluding the impairment, Halliburton posted a second-quarter adjusted profit of $0.05 per share
  • Halliburton reported free cash flow of $456 million, well above expectations

Halliburton Co (HAL) recorded its third consecutive quarterly loss on Monday as the oilfield services company incurred a $2.1 billion impairment charge as oil priced dropped and drilling in North America virtually collapsed.

The company posted a net loss of $1.7 billion, or $1.91 per share, in the second quarter, versus with a profit of $75 million, or $0.09 per share, in the year-ago quarter.

Excluding the impairment, Halliburton posted a second-quarter adjusted profit of $0.05 per share.

"We believe [second quarter] results reflect quicker and potentially stronger cost reductions," analysts from Wells Fargo wrote.

Halliburton reported free cash flow of $456 million, well above expectations.

“Halliburton’s second quarter performance in a tough market shows we can execute quickly and aggressively to deliver solid financial results and free cash flow despite a severe drop in global activity. Our results demonstrate a significant and sustainable reset to the power of our business to generate positive earnings and free cash flow,” said Jeff Miller, chairman, president and CEO.

Analysts at Tudor Pickering Holt & Co called the results “simply outstanding” versus expectations as “structural cost cuts are clearly bearing fruit.”

Along with its peers, Schlumberger (SLB) and Baker Hughes (BKR), Halliburton suffered a plunge in demand for drilling services. Some smaller oilfield service providers have had to file for bankruptcy since oil prices tumbled.

Halliburton also said it expects third quarter revenue to fall by the low single digits, due to lower drilling activity, while North American production will remain "structurally lower.”

Miller also said he expects the company’s international operations to contribute more to its overall revenue as North American markets remain weak.

Halliburton has also cut its quarterly dividend by 75%, reduced its capital spending forecast in half to $800 million, and slashed its workforce and executive pay.

Praveen Narra, an analyst at Raymond James, noted that the second quarter “marked the near total shutdown of the U.S. oilfield.”

“Companies saw a month-long ‘frac holiday’ with little to no activity, while drilling rigs declined at their fastest ever pace,” Narra added.

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