Reuters – Oil field service companies Halliburton Co and smaller rival Baker Hughes Inc reported quarterly earnings above market estimates due to strong activity outside North America, particularly in the Middle East and Africa.
Both companies have been expanding outside North America as excess capacity and a drop in the number of rigs drilling for gas have depressed margins in their traditional strongholds.
Halliburton and Baker Hughes, No. 2 and No. 3 in the industry, received nearly half of their revenue from outside North America in the fourth quarter.
Market leader Schlumberger Ltd, which gets almost 70% of its revenue from outside North America, reported a better-than-expected profit on Friday thanks to robust drilling activity in Saudi Arabia and the United Arab Emirates.
Halliburton, whose shares were up 1.3% before the bell, said on Tuesday its revenue from Middle East and Asia climbed 13% in the fourth quarter.
Baker Hughes said its revenue from Middle East and Asia Pacific jumped 27% despite a temporary shutdown of operations in southern Iraq in November that cost it $80m, or 18 cents per share.
Baker Hughes, whose shares were also up 1.3% premarket, has the second-largest presence in Iraq after Schlumberger, whose operations were also disrupted by protests by Shi’a over allegations that a foreign security adviser had insulted their religion.
Baker Hughes said revenue from its operations in Europe, Africa, Russia and the Caspian region combined rose 10%. Halliburton’s revenue from the same areas rose 15%.
Halliburton’s income from continuing operations rose 31% to $770mn, or 90 cents per share, in the fourth quarter. Revenue rose 5% to $7.64bn.
Adjusted income from continuing operations was 93 cents per share. On that basis, analysts on average had expected earnings of 89 cents on revenue of $7.55bn, according to Thomson Reuters I/B/E/S.
Net income attributable to Baker Hughes rose 16% to $248m, or 56 cents per share, in the quarter. Revenue rose 10% to $5.86bn.
Excluding one-time items, Baker Hughes earned 62 cents per share. Analysts on average had expected earnings of 61 cents on revenue of $5.67bn.
Halliburton shares have risen 35% in the past year, while Baker Hughes shares have risen 27%. The broader Philadelphia oil service index has risen 17%.
Halliburton shares were trading at $51.36 before the opening bell, while Baker Hughes stock was trading at $54.82.