Halliburton's third-quarter results Friday gave the first concrete evidence that the oil industry may have bottomed out as profits plunged but drilling activity in the critical region of North America grew.
"This is not going to be as hard a downturn as we thought a quarter or so ago," Dave Lesar, Halliburton's chairman, president and CEO, said in a conference call with investors.
Halliburton shares closed at $30.40 after hitting a 52-week high of $31.27.
Service companies like Halliburton Co. and Schlumberger Ltd. have been squeezed by major oil and gas producers, who demanded lower fees as energy prices collapsed starting in July 2008.
Those conditions remain but for the first time this year, Halliburton says its revenue rose from the previous quarter as operations picked up in the U.S. and Canada.
Halliburton is still relying on international clients for the bulk of its income, Lesar said, and the pressure to keep costs low in North America is fierce.
Those strains showed up in company results from the past three months, when Halliburton spent $19 million to cut jobs at home.
The company reported a profit of $262 million, about 61 percent smaller than a sluggish year-ago quarter that saw profits slashed by hurricanes in the Gulf of Mexico. The increase in revenues from the last quarter was the first sequential improvement this year.
"We are seeing signs that margins are bottoming in the third quarter, but it is likely that fourth quarter margins will continue to be under pressure," Lesar said.
Revenue in North America, where operations were slowed by recession, increased 2 percent from the second quarter. It is still a very rough climate for Halliburton.
North American operations, which last year dominated Halliburton's balance sheet, saw a 92 percent plunge in operating income. In the most recent quarter, North America and the Middle East traded places, with the latter generating $192 million in operating income versus $46 million from North America.
The Middle East has become increasingly important for Halliburton, which now has corporate headquarters in Houston and Dubai.
The company kicked off what's expected to be a rough earnings season in the oil patch. Companies will be comparing their performance with the most lucrative period in industry history.
Oil and gas demand has plunged with the world economy. During the third quarter of 2008 a barrel of crude topped out close to $150. A barrel cost less than half that this year.
