Halliburton Blows Away Expectations Despite Posting Large Q2 Losses

Posted on 07/29/2020


On July 24, 2020, American oil field service giant Halliburton posted a net loss of US$ 1.7 billion in the second quartter, up from a net loss of US$ 1 billion in the first quarter. Revenue also decreased from $5 billion in Q1 down to just about US$ 2.8 billion. Halliburton executives and investors knew that Q2 was going to be a real test for the company amid the peaks of COVID-19 lockdown measures and subsequent decline in oil demand.

While the numbers look bleak, investors seem to have been preparing for even worse. In fact, Halliburton seems to blown most expectations out-of-the-water. Following the 10-Q, Bank of America upgraded Halliburton stock to a “Buy” with an US$ 18 target price. Analysts cite Halliburton’s recent aggressive structural cost-cutting strategies that have markedly increased free cash flow. Halliburton Chairman and CEO Jeff Miller, drives this silver-lining home:

“Halliburton’s second quarter performance in a tough market shows we can execute quickly and aggressively to deliver solid financial results and free cash flow despite a severe drop in global activity.”

Investors have even more reasons to be bullish on Halliburton as oil stock has been rising on the promises of upcoming economic stimulus from Washington. Even despite rising COVID-19 cases across the southern U.S., oil prices have been sharply increasing as it has become clear Congress is very intent on passing at least some sort of economic stimulus.

Even amidst rising oil prices, Halliburton and Jeff Miller have proven that they will run a tight ship and have no problem navigating the uncharted waters of a coronavirus market. The results Halliburton has posted has given investors newfound hope in the American oil giant–and perhaps provides hope to other American multinationals that aggressive and decisive financial discipline will allow them to weather this storm.

Schlumberger

Schlumberger N.V., one of the largest oilfield service providers in the world, disclosed plans to cut more than 21,000 employees. Schlumberger could end up paying more than US$ 1 billion in severance payments. Schlumberger disclosed revenues of US$ 5.4 billion for the second quarter, resulting in a net loss of US$ 3.43 billion.