July 23, 2007 / 10:30 AM / 12 years ago

Halliburton profit up, shares hit new high

HOUSTON (Reuters) - Halliburton Co. (HAL.N), the world’s second-largest oil services company, said on Monday second-quarter profit from continuing operations rose 19 percent, topping Wall Street views, helped by new international contracts and stronger demand from its customers.

The headquarters of Halliburton near downtown Houston in a file photo. Halliburton, the world's second-largest oil services company, said on Monday that second-quarter profit from continuing operations rose 19 percent, topping Wall Street views, helped by new international contracts. REUTERS/File

The company, which opened a headquarters in Dubai this year in an effort to grow its business in the Eastern Hemisphere, noted recent contract wins in India and Malaysia that helped offset weakness in its largest market, North America.

Investors, encouraged by the international results, sent shares of Halliburton to $38, the highest level in more than a year. The stock edged down a bit and was trading up $1.25 at $37.82 on the New York Stock Exchange at midday.

“From our standpoint, North America wasn’t great but international was so strong that they were able to put these numbers up,” said Roger Read, analyst with Natexis Bleichroeder. “There was good profitability across the board.”

Earnings from continuing operations climbed to $595 million, or 63 cents a share, from $498 million, or 47 cents a share, a year earlier.

Also included in second-quarter 2007 operating income was an after-tax gain of 3 cents a share from the sale of an investment, Halliburton said.

Excluding one-time items, analysts, on average, had expected the company to report a profit of 56 cents a share, according to Reuters Estimates.

Halliburton Chief Executive Dave Lesar also noted a “strong recovery” in the company’s U.S. well stimulation market, where there has been worry about overcapacity. Energy companies use those services to increase production of natural gas from hard-to-reach pockets in substances like shale.

Even so, while Halliburton said it expects utilization of its well fracturing and stimulation equipment to increase this year, it said slight pricing declines seen in the first half of 2007 may continue through the balance of the year.

And in Canada, where oil service companies have been hit hard by a sharp decline in drilling, Lesar said Halliburton was not looking for a significant recovery in that market in 2007.

Net income for the second quarter was $1.5 billion, or $1.62 per share, including a gain of $933 million from the separation of engineering and construction firm KBR Inc. (KBR.N). This compares with $591 million, or 55 cents per diluted share, a year earlier.

KBR, which is the U.S. Army’s largest private contractor in Iraq and has drawn scrutiny from the government for billing claims, was split off from Halliburton earlier this year.

Operating income in North America, which included a $49 million gain from the sale of an investment, rose 9 percent to $526 million. In the Middle East and Asia, 2007 second-quarter operating income rose to $154 million, a gain of 18 percent.

Revenue for the company, which has headquarters in Houston and Dubai, rose 20 percent to $3.7 billion. Analysts had expected about $3.5 billion, according to Reuters Estimates.

Through Friday’s close, shares of Halliburton had risen 18 percent this year, underperforming the Philadelphia Stock Exchange index of oil service companies .OSX, which climbed 40 percent in the same period.

Reporting by Anna Driver in Houston

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