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Oil stocks: Halliburton rises on past earnings; More field service giants to report

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Halliburton (HAL) beat earnings guidance early Tuesday as the Houston-based company posted earnings per share up 88% in the second quarter. HAL shares rose as energy and oil stocks were mixed in presale activity.




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estimates: Wall Street is forecasting earnings per share of 45 cents and revenue of $4.7 billion for the energy sector giant.

Results: Halliburton EPS rose 88% to 49 cents. Second quarter revenue increased 38% to $5.1 billion.

In the second quarter, Halliburton recorded a pre-tax expense of $344 million related to its decision to leave Russia due to sanctions. The company also recorded a similar expense of $22 million in the first quarter.

“I expect international markets to experience multi-year growth and I am confident that Halliburton will be able to capitalize more on this multi-year upswing than ever before,” said CEO Jeff Miller. “We have a cutting-edge technology portfolio, the right geographic footprint and new service line capabilities that align perfectly with our strategy for profitable international growth.”

Oil inventories and prices rose sharply on Monday after news that Saudi Arabia has no plans to increase oil production beyond OPEC+ quotas. Amid limited oil and gas supplies, rising demand and skyrocketing costs in the energy industry, Halliburton kicks off the week with major oilfield services and infrastructure companies’ second-quarter reports.

Reports – from Halliburton, Baker Hughes (BKR) and Schlumberger (SLB) – should give investors clues about whether activity in the oil fields indicates an increase in supply and whether inflation in the oil fields will further reduce the industry’s capital expenditure budgets.

Oil stocks rise amid rising prices

U.S. crude rose more than 4% on Monday morning after Saudi Foreign Minister Prince Faisal bin Farhan Al Saud said oil was not discussed at the U.S.-Arab summit on Saturday. Partners and members of the expanded Organization of the Petroleum Exporting Countries, known as OPEC+, will continue to assess and respond to market conditions.

On Friday, West Texas Intermediate oil prices posted their second weekly decline in a row, dropping below $100 a barrel for the first time since early April. Crude oil futures fell 7.8% from July to Friday but are still up 30% since Dec. 31. Meanwhile, U.S. natural gas rose more than 29% from July to Friday, up nearly 88% year-to-date. According to the AAA, the price of gasoline in a tank on Monday was $4.52.

Baker Hughes follows Halliburton on Wednesday and then on Friday Schlumberger announces second quarter results. All three oil stocks traded sharply higher on Monday.


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For most of the year, oil stocks have been a strong market leader. Recent fears of a recession and worries about a new wave of Covid in China have dampened some of the heat in energy stocks.

While many companies, including ExxonMobil (HOM) and Chevron (CVX) reported a significant increase in capital expenditures in the reporting season for the first quarter, oil and gas companies showed a reluctance to expand production operations.

However, the upcoming earnings reports may be an indicator of changes in production in the industry. There were 756 active oil rigs in the US last week, up four from the previous week, according to Baker Hughes. Every Friday BKR publishes data on the number of drilling rigs. At the beginning of June, there were 727 oil rigs operating in the US, up 60% from last year.

Halliburton Stoke

HAL closed up 3.6% to 28.88 in market close on Monday. Halliburton is one of the world’s largest providers of products and services to the energy industry. The company says it has contracts in the Middle East as well as North and South America, Europe and Africa.

Like many oil stocks, Halliburton’s chart does not paint a rosy picture. HAL collapsed after trying to break out of the handleless cup pattern in June. Promotions called auto sell ruledropping on heavy volumes below their 10-week and 40-week moving averages.

Nevertheless, Halliburton shares are ranked second in the oil and gas services group. HAL stock has a composite rating of 74. It has a relative strength rating of 78, which measures the price movement of a stock with a score ranging from 1 to 99. The rating shows how a stock has performed over the last 52 weeks compared to all other stocks in the IBD database. HAL shares have an EPS rating of 78.

Baker Hughes

BKR rose 1.8% to 27.17 on Monday. The Texas-headquartered company provides services, products, technologies and systems to the oil and gas industry worldwide. The firm operates in multiple segments and provides products and services for land and sea operations.

Baker Hughes fell short of analysts’ forecasts for first-quarter earnings. The company reported a 1% increase in revenue to $4.8 billion. EPS rose 25% to 15 cents.

estimates: Analysts estimate earnings per share of 22 cents on second-quarter sales of $5.3 billion.

Results: BKR will publish a report on Wednesday before the market opens.

Like Halliburton, BKR breaks down and looks for the bottom. This is 30% below its 52-week high of 39.78. Baker Hughes is the third largest manufacturer of machinery and equipment for the oil and gas industry. BKR has a composite rating of 72 and a relative strength rating of 74. Its EPS rating is 95.

Schlumberger

Shares of SLB rose 2.57% to 33.13 in market trading on Monday. The Houston Multinational Corporation is one of the world’s largest offshore drilling service providers. It also provides technologies for well drilling, oil and gas production and processing.

estimates: Analysts predict that the company will record earnings per share of 40 cents and revenue of $6.27 billion in the second quarter.

ResultsA: Earnings are due out Friday morning.

The company increased revenue by 14% in the first quarter to $5.9 billion. Its earnings per share jumped 62% to 34 cents.

SLB also retained its full-year outlook. Schlumberger expects year-over-year revenue growth on average and adjusted EBITDA margin at least 200 basis points higher than Q4 2021. Based on this forecast, SLB initiated an additional return for shareholders with a 40% dividend increase.

Like other oil stocks, Schlumberger’s shares fell sharply below the 50-day moving average and the 200-day line. Since June 10, the SLB relative strength line has also fallen. However, the shares are up 4.8% year on year.

Schlumberger is ranked fourth in the oil and gas services group and has an aggregate rating of 65. It has a relative strength rating of 62 and an earnings per share rating of 78.

Oil market, oil reserves

U.S. oil futures fell about 2% to $100 a barrel on Tuesday. The U.S. oil benchmark fell nearly 7% last week and has been declining since mid-June on growing recession worries and worries that China could restore widespread Covid-19 lockdowns.

The price of crude oil has been on an upward trajectory since the beginning of last year. Prices soared after Russia’s invasion of Ukraine in February, and the global backlash to the invasion led to a backsliding on Russian oil purchases. U.S. oil spot prices briefly hit $130 in March.

US natural gas prices continued to rise just above $7 per million BTUs. This is the highest price since June.

Russia’s Gazprom on Monday announced force majeure on gas supplies to Europe, citing “extraordinary” circumstances that would prevent it from fulfilling its supply obligations, Reuters reported. The Nord Stream pipeline cuts off Russian gas supplies to Germany amid sky-high demand and supply shortages.

Gazprom’s Nord Stream pipeline, which connects Russian gas fields with Europe, has already been closed for annual maintenance until July 21.

Please follow Keith Norton on Twitter @KitNorton for more coverage.

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