Middle East conflict impacts overall situation unaffected, Halliburton (HAL.US) delivers better-than-expected results thanks to Latin America and Europe.

Halliburton (HAL.US) released its first-quarter report on Tuesday, showing that despite the impact of conflicts in the Middle East on some of its business, strong demand in Latin America and European markets helped it exceed market expectations in overall profitability. The world's largest oil and gas fracking service provider also stated that with the Iran conflict driving up global oil prices, the company has seen early signs of oil field activity recovery in the North American market. Halliburton CEO Jeff Miller stated in the financial report, "In North America, I see clear signals indicating that we are in the early stages of recovery." The disruption in the global crude oil market due to the Iran conflict has created conditions for the warming of oil field activities in North America. However, the company's overall revenue in the North American region still decreased by 4.5% year-on-year to $2.14 billion, mainly due to reduced fracking and artificial lift activities. International business became the highlight of this quarter. Revenue in Latin America increased by 22% year-on-year, while Europe and Africa saw an 11% growth, driving the overall revenue of the international segment to a slight increase of $3.3 billion. In contrast, revenue in the Middle East region dropped by 12.7% due to the conflict, totaling $1.32 billion. The company stated that the conflict in the Middle East impacted its drilling and evaluation division, leading to a decrease in diluted earnings per share by about 2 to 3 cents. Nevertheless, Halliburton's first-quarter net profit doubled from $204 million to $461 million, with an adjusted earnings per share of $0.55, higher than the analysts' general expectation of $0.50 per share. Total revenue slightly decreased to $5.4 billion. Melius Research analyst James West pointed out in a client report that Halliburton "delivered a comprehensive, robust, and better-than-expected performance thanks to the strong performance of its international business, which is sufficient to offset the continued weakness in the North American market." Halliburton is the first major oilfield service provider to announce its performance after the outbreak of the Iran conflict. This conflict has effectively severed oil and gas supplies from the Persian Gulf, posing a heavy blow to oilfield service companies that rely on growth in the Middle East market. Last year, approximately 26% of Halliburton's revenue came from the Middle East and Asia, while industry leader SLB (SLB.US) had about one-third of its sales in the region, and the latter will announce its financial report on Friday. Analysts believe that while the conflict will pose challenges for oilfield service contractors in the short term, in the long run, once the conflict ends and countries begin to rebuild their damaged energy infrastructure, Halliburton and its competitors may benefit. Return to Venezuela At the same time, with the change in the political situation in Venezuela - after Maduro was overthrown, although most US oil and gas producers are cautious about returning to operate in Venezuela, service providers such as Halliburton, who provide equipment and professional technology, have shown strong enthusiasm. Analysts and industry executives estimate that to restore the production capacity of Venezuelan oil fields, capital expenditure of about $10 billion per year will be needed over the next several years, with a significant portion flowing to oilfield service companies like Halliburton. However, the market generally expects the process of resuming oil exports from Venezuela to be gradual. Furthermore, many US producers are still cautious about increasing production, indicating that they believe the rise in oil prices caused by the Iran conflict is only a temporary phenomenon. Boosted by the financial report, Halliburton's stock price rose by approximately 0.8% in pre-market trading. As of Monday, the stock had cumulatively fallen by 5.9% since April, while during the intense conflict in March, the stock had risen by 8.3%. Year-to-date, Halliburton's stock price has cumulatively risen by 29.8%.