(Reuters) - Halliburton Co (HAL.N) said on Monday that oil producers are completing nearly as many wells as they are drilling, a major reversal from when companies left wells unfinished in anticipation of higher oil prices.
Increased demand for Halliburton’s pressure pumping and well-construction services helped the world’s No.2 oilfield services provider report slightly better-than-expected quarterly profit and revenue.
Halliburton’s shares were up more than 1 percent at $47.72 in morning trade on Monday.
“There’s no doubt that the pace of completions activity is catching up with the rig count, and we expect to see that relationship continue into next quarter, most certainly,” interim Chief Financial Officer Robb Voyles said on a post-earnings call.
Halliburton’s long-time chief financial officer, Mark McCollum, is taking up the role of chief executive at smaller rival Weatherford International Plc (WFT.N).
U.S. shale producers have been putting more rigs to work, buoyed by oil prices that have stabilized above $50 after a more than two-year slump.
And since the fourth quarter of 2016, oil producers have also returned to complete wells they had left unfinished during the downturn on hopes of bringing them online when prices rose.
Halliburton said on Monday it expects revenue in its completion and production unit to increase in the upper teens in percentage terms in the second quarter, with margins expected to increase by 275-325 basis points.
The company’s revenue from North America rose 24.4 percent in the first quarter ended March 31.
“North America activity increased rapidly during the first quarter, which was highlighted by our U.S. land revenue growth of nearly 30 percent, outperforming the sequential average U.S. land rig count growth of 27 percent,” Halliburton’s Chief Executive Dave Lesar said in a statement.
However, Halliburton and larger rival Schlumberger (SLB.N) have been burdened by the costs associated with reactivating idled equipment to meet the increase in demand.
Halliburton’s reactivation costs are expected to persist into the second quarter, President Jeffrey Miller said on the call.
The company on Monday posted an adjusted profit of 4 cents per share, edging past analysts’ average estimate of 3 cents, according to Thomson Reuters I/B/E/S.
Analysts had sharply lowered their estimates after Halliburton warned last month of higher costs and weak demand in markets outside North America.
Revenue rose 1.9 percent to $4.28 billion, inching past analysts’ average estimate of $4.26 billion, according to Thomson Reuters I/B/E/S.
Reporting by Arathy S Nair in Bengaluru; Editing by Sriraj Kalluvila