If you're a company that's going to announce weak quarterly results, you might as well warn the market well in advance. Such was the situation with Halliburton (HAL) when it reported its 3Q figures. The results were weak, as expected, but the news was cushioned by the company's pessimistic, though ultimately accurate, guidance. The stock traded down, but not much more than the Dow; maybe that reaction was one of relief.

Out of gas
Halliburton was good in warning the market well in advance that this would happen. As it more or less predicted, EPS was $0.65, or $604 million. This was a 11% decline from the same quarter last year. Bearish sentiment was mitigated somewhat by the quarter's revenue, which, at $7.1 billion, was also generally in line with what analysts anticipated.

Meeting expectations cushioned the shares against the kind of drop that would ordinarily result from such top-line and profit shortfalls. Halliburton stock was off less than 2% (to $34.98), the first trading day after the results were announced.

This compared very favorably to what happened with the company's top domestic rival, Baker Hughes (BHI), which also reported its 3Q. The company's revenue came in at $5.2 billion, up a tiny 3% year-over-year, flat when compared to 2Q, and a good $200 million under market expectations. Net profit was $3.22 for EPS of $0.73 per share; the market had been anticipating $0.84.

What sapped the financials of both companies is developments in the domestic natural gas exploration and production sphere, and the continued, and high, popularity of fracking.

The issue with the former is that natural gas prices have been at sustained low levels. This means that many oil and gas customers are shifting efforts and resources to other activities that are more lucrative at the moment (oil), or have big potential for the future (fracking).

Everyone wants to get in on these acts. This means less dosh from the big revenue generators that oilfield service providers depend on, such as the country's number one and two natural gas producers, ExxonMobil (XOM 0.23%) and Chesapeake Energy (CHKA.Q).

Together, the two were responsible for over one-fifth of the output of the industry's top 40 producers; it hurts to go without their service revenue.

Staying at home
Halliburton, and Baker Hughes, to a lesser extent, is basically married to the U.S. market. This is fine and good when the domestic industry is booming; not so much when there's a shift afoot, and natural gas is low on the popularity scale. Unlike their most powerful rival, Schlumberger (SLB 0.67%), Halliburton and Baker Hughes are barely active abroad.

You wouldn't immediately realize that from Halliburton's 3Q results announcement. The company very proudly touted its record revenue for Latin America and the Middle East/Asia, saying that its international strategy was "playing out as planned."

That's nice, and the year-over-year gains in those regions were strong, but  we're not talking big numbers here. Latin America brought in $373 million during the quarter, while the company earned $419 million in the vast expanse of Middle East/Asia. Even combined, those two regions accounted for barely over one-quarter the take in North America, and were less than 20% of the company's grand total.

By contrast, in its 3Q, Schlumberger took in a combined $4.2 billion from those two areas, outpacing North American revenue by almost $1 billion. The two accounted for just under 40% of total revenue for the quarter.

This matters because, right now, most of the growth in oilfield services is occurring outside of North America. For proof, look no further than the encouraging 3Q numbers Schlumberger posted: revenue up 11% year over year to $10.6 billion, net 9% higher at $1.4 billion.

We'll get 'em next year
Necessarily, Halliburton's guidance had a positive cast, saying that, although the next few quarters could be tough, the domestic market had the potential to recover later in 2013. Customers will have fresh new budgets to work with, natural gas might stage a comeback, and the company should soon work through its oversupply of guar gum.

The latter is an essential component in the fracking process, and Halliburton has been stung by the high prices for it. At the moment, it's trying to find a wider market for an in-house synthetic version it's developed.

Meanwhile, this quarter wasn't as bloody as it could have been for the stock, given the heads-up provided by the company in advance of results. Oil and gas players should watch for Halliburton's guidance for future quarters; the rest of 2012 seems like it'll be a wash, but good news could spring from the well sometime in 2013.