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MOSCOW (MRC) -- Halliburton Co
predicted a recovery in the global oil and gas industry from the second quarter
after the oilfield services provider beat profit estimates on cost cuts and
modest gains in activity following last year's slump, said Hydrocarbonprocessing.
Crude
oil prices are holding to gains from a rebound in late-2020 from a
coronavirus-induced slump, with Brent crude hovering around USD55 per barrel on
Tuesday after averaging around $45 in the last three months of 2020. This has
encouraged producers to complete more wells and add rigs. North America rig
count was 410 at year-end, compared with 341 in the third quarter.
"We
view 2021 as a bit of a transition year, and 2022 is when we see the global
rebalancing of supply and demand," Chief Executive Officer Jeff Miller said on a
post-earnings call, adding that he expected more consolidation in the industry.
Miller said he is optimistic that the upturn in activity in North America would
continue, while international markets would bottom out during the first quarter
and improve as the year unfolds.
However, he expects pressure to improve
shareholder returns will hold output flat this year to 2020 exit levels.
Halliburton, which kicked off fourth-quarter earnings for service providers,
said revenue from North America jumped 25.8% from the third quarter, while
international revenue rose 0.4%.
Completion and production business
revenue was 15% higher in the fourth quarter, compared with the preceding three
months. The company expects revenue from the business to rise 3% to 5% in the
current quarter from the fourth, though operating margins are expected to fall
150 to 200 basis points.
Drilling and evaluation revenue rose 1.9%
sequentially and is expected to increase in the low single digit in the first
quarter from the fourth. Total revenue of USD3.24 billion beat analysts'
estimates of USD3.21 billion, while adjusted net income was 3 cents above
estimates at 18 cents per share, according to Refinitiv IBES
data.
Halliburton, like its customers, has cut its capital spending and
reduced its workforce, as energy demand and prices tumbled last year. The cost
cuts helped the company generate free cash flow of USD1.15 billion in 2020,
above the USD1 billion it had targeted.
Still, profit slumped 43.9% and
revenue tumbled 37.6% from the fourth quarter of 2019 as activity levels were
still well below year-ago levels. Rivals Schlumberger and Baker Hughes are
scheduled to report results later in the week.
We remind that the COVID-19
outbreak has led to an unprecedented decline in demand affecting all sections of
the Russian economy, which has impacted the demand for petrochemicals in the
short-term. However, the pandemic triggered an increase in the demand for
polymers in food packaging, and cleaning and hygiene products, according to
GlobalData, a leading data and analytics company. With Russian petrochemical
companies having the advantage of access to low-cost feedstock, and proximity to
demand-rich Asian (primarily China) and European markets for the supply of
petrochemical products, these companies appear to be well-positioned to derive
full benefits from an improving market environment and global economy
post-COVID-19, says GlobalData.
We also remind that in
December 2020, Sibur, Gazprom Neft, and Uzbekneftegaz agreed to cooperate on
potential investments in Uzbekistan including a major expansion of
Uzbekneftegaz’s existing Shurtan Gas Chemical Complex (SGCC) and the proposed
construction of a new gas chemicals facility. The signed cooperation agreement
for the projects includes “the creation of a gas chemical complex using
methanol-to-olefins (MTO) technology, and the expansion of the production
capacity of the Shurtan Gas Chemical Complex”.
Ethylene and propylene are
feedstocks for producing polyethylene (PE) and polypropylene
(PP).
According to MRC's DataScope report, PE
imports to Russia decreased in January-November 2020 by 17% year on year and
reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the
greatest reduction in imports. At the same time, PP imports into Russia
increased by 21% year on year to about 202,000 tonnes in the first eleven months
of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase
in imports. |
