Once you get beyond the excessively prominent discussion of a big non-recurring item at Halliburton (NYSE:HAL), the company's enthusiasm for a pickup in its business becomes palpable. But getting past that item was tough even for The Wall Street Journal, which insisted on highlighting it in its headline dealing with the company's second-quarter results.
Let's get the item out of the way first: Halliburton's net income was down 67% from a year ago because of a $933 million gain in the 2007 period from the spinoff of KBR (NYSE:KBR). But from a much more important continuing-operations perspective, the company managed to generate income of $623 million, or $0.68. Those figures compared with $595 million and $0.63 a share last year. And just as important was the 20% increase -- 26% outside North America -- in the company's revenues to a record for the second quarter.
It's interesting to try to look ahead at Halliburton using the now-historic results from its two operating segments. For the completion and production unit, operating income for the quarter increased by just 1%, mostly on the basis of pricing softness and higher costs in the U.S. At the same time, the drilling and evaluation arm reported an operating income increase of 38%.
Think about that imbalance for a minute and see if you can sense where things might be going at the company: Before wells can be completed and begin producing, there has to be drilling, with all the attendant services that Halliburton and other big oilfield service companies such as Schlumberger (NYSE:SLB) and Baker Hughes (NYSE:BHI) provide. With that in mind, I'll be looking for a bigger contribution in operating income from completion and production in coming quarters.
Further, as some Fools will recognize, I'm thoroughly convinced that new operating horizons and techniques -- unconventional gas plays and horizontal activity, for instance -- will make a big difference in the amount of demand for oilfield services in North America. That point was strongly endorsed by Halliburton CEO Dave Lesar and his team on their optimistic call. They noted that the company's recent technology introductions are increasing Halliburton's "ability to address our customers' most challenging reservoirs."
So Halliburton joins Schlumberger, Weatherford (NYSE:WFT), and Baker Hughes in reporting solid trends for the service sector. This, frankly, is a strong and attractive group, so I strongly urge my Foolish friends to look hard at the direction at Halliburton and its peers.
More than 2,500 Foolish CAPS players are convinced that Halliburton will outperform the market. Why not add your voice to the chorus?
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