Page 7 - NorthAmOil Week 16 2021

NorthAmOil COMMENTARY NorthAmOil

Halliburton is a leader
in the provision of
hydraulic fracturing
services.

Halliburton’s chief financial officer, Lance discipline and maintenance-mode spending
Loeffler, warned on the company’s earnings call remains intact among the public exploration
that while both completions and drilling activ- and production companies,” Baker Hughes’
ity momentum were anticipated to continue, CEO, Lorenzo Simonelli, said during his com-
sequential activity growth “should moderate”. pany’s earnings call.
He cited a seasonal decline in the company’s
global software sales as being the primary fac- What next?
tor behind moderate growth and anticipated Both Halliburton and Baker Hughes remain
reduction in margins. hopeful that demand for their services will pick
According to a Tudor, Pickering, Holt & Co. up. However, the companies are also attempting
analyst, George O’Leary, this guidance suggests to address the uncertain outlook for their busi-
that Halliburton’s second-quarter operating ness – which is exacerbated by the energy tran-
income will come in below expectations. He sition – by diversifying beyond their core focus
told Bloomberg that confidence in the contin- areas.
ued strengthening of oil prices had taken a hit Halliburton is providing drilling and cement-
from worries about resurgent COVID-19 out- ing services for geothermal wells in Indonesia. Increased drilling
breaks in India and elsewhere. Additionally, its innovation-focused accelerator,
“That stung,” O’Leary told the news service. Halliburton Labs, is investing in companies that and completion
Halliburton needs “positive earnings momen- are transforming plastic waste into renewable activity in
tum or stronger crude to keep the run going.” power and recycling lithium-ion batteries.
The fact that producers remain hesitant Baker Hughes, for its part, is investing in North America
on ramping up new activity is having a major LNG, carbon capture and storage (CCS) and
impact on the outlook for service providers. hydrogen. The company anticipates that carbon contributed to
And recent comments from upstream players, capture will become a $35-40bn market by 2030,
especially in North America, illustrate that they with hydrogen becoming a $25-30bn market the companies’
are proceeding with caution. over the same period. results, especially
Indeed, Baker Hughes’ comments in the wake “We’re also starting to see, even though
of its first-quarter results also illustrate that its minimal in numbers, increased traction on for Halliburton.
hopes for a recovery are tempered by expec- our offerings for carbon capture and hydro-
tations that the process will be slow. The com- gen,” Simonelli said. “There is a pick-up there
pany is proceeding with previously announced relative to discussions with customers, more
plans to close nearly 100 of its facilities this year. forward-looking.”
Meanwhile, Halliburton said it would con- Both Baker Hughes and Halliburton – along
tinue to “drive cost out of our North America with Schlumberger – are also trying to pivot
operations”. to overseas markets and away from the North
“Although the rig count is moving higher, American shale industry, after shale drilling col-
we believe that the commitment toward capital lapsed last year and remains restrained today.™

Week 16 22•April•2021 www. NEWSBASE .com P7