US well completions to help drive oil services growth in 2021: Halliburton

New York — US well completions activity should help to drive oilfield services growth in 2021, with more activity seen in Latin America and Asia as well, Halliburton's CEO said on an earnings call Jan. 19.

"Oil prices are back to pre-pandemic levels, driven by global vaccine distribution and unfolding demand recovery, OPEC+ discipline, and a declining production base. However, some caution is appropriate due to the surge in COVID-19 infections globally and the expected gradual return of spare production capacity," CEO Jeffrey Miller said during a fourth-quarter earnings call.

"While the pace of recovery depends on the trajectory of demand improvement, we believe the second half of this year could see a low double-digit increase in international activity year-on-year. Halliburton is well positioned to benefit from this increase," the CEO said.

In the first half of 2021, growth opportunities will rest on completions activity by private and small operators adding rigs to reduce their drilled but uncompleted well backlog. Smaller operators drove a land rig count recovery from August 2020 lows of 230 rigs despite slower moves by larger producers and the majors, Miller said.

The U.S. land rig count is still 60% below pre-pandemic levels, but completion activity in North America should continue improving in the first half, he said.

In the fourth quarter 2020, the North American land business reaped the benefits of a recovery in completions and drilling activity, delivering continued margin improvement despite a lack of pricing improvement, Miller said.

In the 2020 full year, Halliburton's completion and production segment contributed $7.84 billion for 2020, a drop from $14.03 billion in 2019.

Miller said as the only integrated oilfield services company still active in the hydraulic fracturing space, Halliburton is also well-positioned to take advantage of improvements in the fracking market in 2021 as the market structure continues to improve.

After a difficult 2020 in the international markets, Halliburton expects weather-related seasonality and a lack of year-end product sales will negatively impact first-quarter activity. Miller said activity levels tend to bottom at the close of the first quarter and should improve as the year unfolds.

Coming off of sharp lows, Latin America will continue its upward momentum both onshore and offshore, Asia Pacific also shows signs of activity improvement, and parts of Europe and West Africa will remain slow, especially in the deepwater areas, Miller said.

Plans to reduce carbon footprint

Strategic actions taken in 2020 to reduce the size of its operations to fit the shrinking market helped Halliburton to outperform fourth-quarter 2020 expectations. Supported by its commitment to the environment and profitable growth, the company is on track to take advantage of improved economic conditions in 2021, executives said.

Halliburton plans to reduce the carbon footprint and environmental impact of its operations, setting targets to reduce its greenhouse gas emissions.

"This is important in our journey to align with the latest climate science and contribute to sustainable energy advancement," Miller said.

Halliburton's technology and digital offerings will help facilitate customers' clean energy initiatives while reducing cost per barrel, improving project economics, and increasing efficiencies as exploration and production activities increase in 2021, Miller said.

Halliburton on Jan. 19 reported adjusted net income attributable to the company of $160 million, or 18 cents per share, in the fourth quarter of 2020, compared with net income of $285 million, or 32 cents per share, in the same period in 2019. The S&P Capital IQ consensus estimate for fourth-quarter normalized EPS was 14 cents per share.