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Halliburton posts $3.2B loss, but CEO says worst is past for North America

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Halliburton posts $3.2B loss, but CEO says worst is past for North America

reported a $3.21billion loss, or $3.73 per share, for the second quarter, hammered by the $3.5billion termination fee paid after its merger with fell apart. Still,the company's CEO said better times are coming for the company and the NorthAmerican producers it serves.

"Ibelieve that the second quarter will mark the trough for our earnings,"David Lesar said on the company's July 20 earnings call.

Lesaralso showed optimism that the worst is over for the industry as a whole."We said we saw North America differently, and we're the first to call abottom for the rig count. This is precisely what happened," Lesar said.

Heexpects the turnaround for North American E&P to begin sooner rather thanlater.

"Ourcustomers are thinking about growing their business again rather than beingfocused on survival," he said. "There are two distinct factors thatwork in North America — psychological and economic — and I think it's criticalto understand them both. Now you haven't heard me talk about the psychology ofNorth American producers before, but given what has happened to many of ourcustomers in the last 18 months, I think it's an important point to understand.… I can tell you there is a growing survivor mentality out there, and you can'tunderestimate the positive change in attitude that we are seeing in our NorthAmerican customers."

Lesarsaid a supply shortfall is on the horizon and will spur a rebound. When thatoccurs, he said, North America will probably be the first region in the worldto bounce back.

"[Producers]see today's looming supply shortfall and know that U.S. unconventionals willlikely be the first and deepest beneficiary of growing supply shortages, andyou can be sure they want to reap some of that benefit," he said. "TheNorth America market has turned, and we expect to see a continued modest uptickin the U.S. rig count during the second half of the year and becoming moremeaningful as we go into 2017."

Adjustingfor the breakup fee and other items, Halliburton reported a loss of $121million, or 14 cents per share, from continuing operations in the secondquarter. S&P Capital IQ's consensus normalized earnings estimate was 19cents per share. In the second quarter of 2015, Halliburton reported a $2.41billion net loss, or $2.81 per share, and $64 million in adjusted income fromcontinuing operations, or 7 cents per share.

Halliburtonsaid its total revenue for the most recent quarter was $3.84 billion, a 9%decline from the first quarter. Adjusted operating income declined 72%, andHalliburton also announced that it will lay off 5,000 employees as a result ofthe oil and gas price downturn.