Halliburton Co, a firm that provides oilfield services, reported an 85% increase in its first-quarter adjusted profit Tuesday. This was due to a rise in crude prices which boosted demand.
Crude futures rose to their highest levels in over a decade during this quarter, after oil sales from Russia’s second-largest exporter were disrupted by a series of Western sanctions. Brent futures are currently at $111.76 per barrel, while U.S. West Texas Intermediate costs $106.95 per barrel.
According to Baker Hughes data, the price rise has encouraged oil and gas producers in the United States to increase drilling activity. The U.S. rig count was 673 at the close of the first quarter. This is almost 15% higher than the fourth quarter of 2021.
Halliburton reported that margins in its Drilling and Evaluation division surpassed 15% in the first quarter, the highest level since 2010. This was despite severe weather and disruptions to supply chains. Halliburton expects supply chain problems that have plagued the industry ever since coronavirus-related lockdowns ended to continue.
Jeff Miller, Chief Executive Officer, stated that he saw tightness in the entire North American oil and gas value chain.
He said that supportive commodity prices and a stronger customer demand against a nearly sold-out market for equipment are expected to drive growth in Completion & Production division margins. He also stated that the company’s international business will continue to grow over the course of the year.
Halliburton also had a $22 million pre-tax charge in the quarter to cover the writedown of assets in Ukraine as a result of the ongoing conflict.
The adjusted net income of the Houston-based company was $314million, or 35c per share for the quarter ended March 31, as compared to $170 million or 19c per share a year ago. According to Refinitiv, analysts had expected earnings of 34 cents per share for the first quarter.
Pre-market trading saw shares fall by 2.3% to $40.84 each. This was in contrast to a 1.5% drop in U.S. crude oil futures Tuesday morning.
