Halliburton Inc. (HAL) - Get Report swung back into profit for the fourth quarter, with earnings that topped analysts' forecasts, but shares dipped as the group said completion and production sales slowed from the previous three-month period.
The oil field services group said adjusted earnings for the three months ended in December came it at 41 cents per share, topping the Street forecast of 37 cents on better-than-expected group revenues of $5.936 billion. Halliburton also said it set aside just over $1 billion to cover expenses related to corporate tax changes introduced in late 2017, and noted that completion and production revenue fell 8% from the previous quarter to $3.8 billion.
"I am pleased with our overall financial results for the year and for the fourth quarter," said CEO Jeff Miller. "Our team optimized our performance in North America as the market softened, and the recovery of our international business continued."
"The trajectory of this cycle has been far from smooth," he added. "As expected, in North America, the demand for completion services decreased during the fourth quarter, leading to lower pricing for hydraulic fracturing services."
Halliburton shares fell 3.1% to $31.26 by the close of trading on Tuesday, a move that extends the stock's three-month decline to around 12%.
Last week, rival Schlumberger Ltd (SLB) - Get Report posted stronger-than-expected fourth-quarter revenues and declared a 50 cent share dividend, even as it cautioned that recent oil price volatility has added more uncertainty into its 2019 outlook.
"We upgraded our rating on Schlumberger today into the Haliburton-related weakness," said Jeff Marks, senior portfolio analyst for Jim Cramer's Action Alerts Plus portfolio, which owns Schlumberger. "We prefer SLB here due to its higher dividend yield (and management confirmed it will be supported by cash flow) as well as its increased exposure to international markets."
Schlumberger shares were down 1.3% to $44.17 on Tuesday afternoon.
Schlumberger said adjusted earnings for the three months ended in December came in at 36 cents a share, largely in-line with the consensus forecast. Revenues slowed 4% from the previous quarter to $8.2 billion but beat Street estimates of $8.04 billion.
"Looking forward to 2019, we expect a more positive supply- and demand-balance sentiment to lead to a gradual recovery in the price of oil over the course of the year, as the OPEC and Russia cuts take full effect," CEO Paal Kibsgaard said. "In the meantime, the recent oil price volatility has introduced more uncertainty around the E&P spending outlook for 2019, with customers generally taking a more conservative approach at the start of the year."
Kibsgaard continued that "for Schlumberger, this means that even with the current oil prices, we expect solid, single-digit growth in the international markets while in North America land, the increased cost of capital and focus on aligning investments closer to free cash flow has introduced more uncertainty to the outlook for both drilling and production activity."
U.S. oil prices whipsawed through most of the fourth quarter, falling to a multi-year low of $42.53 per barrel on Christmas Eve before rebounding more than 20% to trade at $52.52 on Friday as OPEC members reported the biggest monthly drop in production in nearly two year.
OPEC said collective output from its members fell by 751,000 barrels a day last month, to 31.58 million, led by a 368,000 reduction from swing producer Saudi Arabia as the cartel prepared to meet its own agreed productions cuts that kicked-in on January 2.
At the same time, OPEC trimmed its 2019 daily demand forecast by 910000 barrels to 30.85 million, citing economic and trade uncertainty. OPEC also called on members to "redouble" their efforts to keep oil markets balanced over the whole of 2019.
U.S. output is likely to top 12 million barrels per day this year, the Energy Information Administration said earlier this week, as the shale oil boom continues to add to swelling domestic stockpiles and push the United States to the top of the world production table.
The EIA said last month that production from the country's seven biggest shale areas, including the Permian Basin, will rise to around 8.1 million in early 2019. That's likely to add to overall U.S. output, which hit a record 11.9 million barrels per day in the week ending January 11.
That's helped drive energy sector gains over the past three months, with the S&P Oil & Gas Exploration & Production total return index rising 27.8% since mid-October. Crude's late December rebound, meanwhile, which has added more than 20% to global oil prices since the Christmas Eve trough, has lifted Chevron Corp. (CVX) - Get Report shares 10.86% higher, to $111.96 each, and rival Exxon Mobil (XOM) - Get Report 10.1% higher at $72.13 each.