Halliburton said Monday its first-quarter profit slumped nearly 46% with the industry still recovering from last year's drop in oil drilling.
The Houston oil services concern is the first big energy company to report results in an industry that is shifting and consolidating rapidly.
Halliburton this month, following its major rivals, snapped up a company it believes will allow it to offer a broader array of services to international oil companies.
The Houston oil services company reported earnings of $206 million, or 23 cents a share, in the first three months of the year. That compares with $378 million, or 42 cents a share, in the prior-year period.
Revenue fell 4% to $3.76 billion, compared with the first quarter of last year.
Halliburton said it would have earned 28 cents a share excluding special charges related to the recent devaluation of Venezuela's currency.
Analysts, which typically exclude one-time items, had expected earnings of 25 cents a share on revenue of $3.76 billion.
Industry Expected to Bounce Back
U.S. drilling operations, which the company depends on for about 45% of its revenue, plunged in 2009. But the number of active rigs bounced back in the quarter with oil prices rising above $85 a barrel, and company revenues improved compared with the final three months of 2009.
Barring any major economic disruption, the industry is likely to experience a steady resurgence in international activity in the second half of the year and into 2011, Halliburton CEO Dave Lesar said in a statement.
Service companies are expected to have a strong year with crude prices on the rise. Oil and gas producers are aggressively pursuing new petroleum sources around the world, and companies that help them pump and deliver crude will see a lot of extra business.
In the United States, the number of rigs actively exploring for oil and natural gas rose in each of the first three months of the year to an average of 1,345. An increasing number of those rigs are searching for shale gas, a service-intensive operation that likely will multiply Halliburton's workload and revenue in coming years, according to Raymond James analyst J. Marshall Adkins.
And Halliburton, like its competitors, is growing. The company said earlier this month it would buy the company Boots & Coots Inc. in a deal valued at $240.4 million. Boots & Coots specializes in pressure-control and emergency response services to control oil and gas fires.
Schlumberger Ltd., the world's biggest oilfield services company, recently announced it was buying Smith International Inc. for about $11 billion, following the acquisition by Baker Hughes Inc. of BJ Services Co. for $5.5 billion.
For Halliburton, North American drilling continued to prop up the company's operation in the first quarter. Drilling at home boosted revenues while the company's international operations faltered.
That is a reversal from last year, when plummeting demand in North America dragged down operations elsewhere.
Lesar said profit margins weakened in Latin America because of project delays and falling activity in Mexico. Halliburton's business in the eastern hemisphere also suffered from harsh weather and a seasonal decline in software sales. Lesar said he believes profit margins in the East bottomed out in the first quarter.
Shares of Halliburton Co. slid 44 cents to $31.20 before the market opened and as oil prices fell sharply for the second straight trading day.
Copyright 2010 The Associated Press.