Good News Where Least Expected (HAL, WFT, SLB)

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The earnings reports from oil field services companies Halliburton Company (NYSE:HAL) and Weatherford International Inc. (NYSE:WFT) surprised investors on the upside this morning. Given the bad news out of Schlumberger Limited (NYSE:SLB) last week, these reports were really unexpected.

Halliburton reported fourth-quarter diluted EPS of $0.87, up from $0.74a year ago. Analysts had been expecting EPS of $0.73. Revenue for thequarter reached $4.91 billion, up from $4.18 billion a year ago.Analysts were looking for revenue of $4.82 billion.

The company would have done better but for a $308 million charge tosettle investigations of violations of the Foreign Corrupt PracticesAct by the US Department of Justice and the SEC. Halliburton revealedthe settlements before earnings were released this morning.

Weatherford didn’t fare quite as well, but still managed to beatexpectations. EPS for the fourth quarter came in at $0.53, beatinganalysts’ expectations of $0.52. Revenue amounted to $2.63 billion,also a bit higher than expectations of $2.61 billion.

Neither company included guidance or forecasts with their earningsreleases. Halliburton’s chairman, CEO, and president did not that NorthAmerican operations were flat sequentially and that "operating marginswere impacted by lower volume and pricing pressure" at the end of thequarter. Those pressures are expected to continue "into 2009."Weatherford noted that operating income for the quarter was 16% higherthan the same period a year ago, but 5% lower sequentially.

The drop in new drilling suggests that 2009 will be a tough year forthe oil field services guys. Schlumberger, Halliburton, and Weatherfordhave all said that next year will be tough for them. Low crude prices,a very weak global economy, and high costs add up to lower activity inthe oil patch, and a lowered outlook for the future.

But for today, everything’s coming up roses. Halliburton shares are upmore than 6%, Weatherford is up more than 4%, and Schlumberger is upnearly 4%.

Paul Ausick
January 26, 2009