Halliburton, Weatherford Stumble (HAL, WFT, SLB, OIH)

Two of the largest oilfield services companies reported first quarter earnings today. Halliburton Company (NYSE:HAL) and Weatherford International Ltd. (NYSE:WFT) both came in close to analysts’ estimates, but that doesn’t look like it will satisfy investors. Schlumberger Ltd. (NYSE:SLB) reports earnings on Friday, and until then it will likely get tarred with the same brush as Halliburton and Weatherford.  To show how these are being received, the Oil Services HOLDRs (NYSE: OIH) are down over 3% in pre-market trading indications.

Halliburton reported EPS of $0.42, a penny better than analysts’ estimates. Revenue was $3.9 billion, lower than expectations of $3.99 billion. In the first quarter of 2008, Halliburton’s EPS was $0.63. Sequentially, Halliburton’s EPS fell from $0.52 in the fourth quarter of 2008.

The company noted that with a couple of exceptions, “results for all product service lines fell primarily due to lower demand for products and services in North America based on a reduction in rig count and pricing declines.”

Going forward, Halliburton expects continued weakness coupled with uncertainty about the length and depth of the global economic downturn. Of course, the company also believes “that the long-term prospects of the industry remain sound.” No kidding.

The story over at Weatherford is virtually identical. The company reported first quarter 2009 EPS of $0.27, lower than analysts’ estimates of $0.29. In the same quarter a year ago, Weatherford earned EPS of $0.50. Revenue met estimates of $2.26 billion, which is 3% higher than a year-ago.  Sequentially, EPS fell even more, from $0.53 in the fourth quarter of 2008.

Weakness in North America caused Weatherford’s problems, just like Haliburton. International revenue was up 28% at Weatherford and 3% at Halliburton. Most of the gains were in Latin America, with Weatherford’s business south of the border jumping 98% from a year ago, to $468 million.

Both companies noted declines in Russia, and Halliburton’s operating income in its Drilling & Evaluation business fell 26% compared with the year-ago quarter. In North America, the drilling business fell 62%.

Weatherford’s operating income in its Europe/West Africa/Russia business was down 15% sequentially on reduced sales and lower pricing. In pre-market trading this morning, Halliburton is down 5.70%, to $17.71 and Weatherford is down 5.02% to $14.01. Halliburton’s 52-week trading range is $12.80-$55.38, and Weatherford’s is $7.75-$49.98. Schlumberger is down more than 3.5% in sympathy.

Paul Ausick
April 20, 2009