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Halliburton sees ‘modest uptick’ in rig count this year

Halliburton, the world's No.2 oilfield services provider and a major operator in North Dakota's Oil Patch, said it expects a "modest uptick" in rig count in the second half of the year, but emphasized that the current low pricing environment was ...

Oil production equipment is seen in a Halliburton yard in Williston, N.D., April 30, 2016. REUTERS/Andrew Cullen/File Photo
Oil production equipment is seen in a Halliburton yard in Williston, N.D., April 30, 2016. REUTERS/Andrew Cullen/File Photo

Halliburton, the world's No.2 oilfield services provider and a major operator in North Dakota’s Oil Patch, said it expects a "modest uptick" in rig count in the second half of the year, but emphasized that the current low pricing environment was unsustainable.

Shale oil companies have started putting rigs back to work, encouraged by a near 70 percent jump in U.S. benchmark oil prices since February.

"We believe the North America market has turned," Chief Executive David Lesar said in a statement Wednesday.

After months of decline to below 30 earlier this year, the rig count in North Dakota stood at 31 Wednesday.

But the rise in rig count has come without a corresponding jump in spending by oil and gas producers as increased productivity in the hydraulic fracturing process yields more barrels at lower cost.

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Lesar said on a post-earnings call that while some efficiency gains were sustainable and would continue, "deep, uneconomic pricing cuts" would have to be reversed.

"Price negotiations have been a bar-room brawl," company President Jeffrey Miller said on the call.

With signs of recovery, the company has walked away from money-losing jobs in recent months and has been reviewing every contract and program, down to individual wells, Miller said.

"It's a tough market, but we believe pricing will recover as activity increases."

Halliburton derives about 40 percent of its revenue from North America and is more exposed to the region than larger rival Schlumberger NV.

Excluding a $3.5 billion fee Halliburton paid Baker Hughes Inc for terminating a proposed acquisition and other items, loss from continuing operations was 14 cents per share in the second quarter ended June 30.

Analysts on average had expected a loss of 19 cents per share, according to Thomson Reuters estimates.

Halliburton and Baker Hughes scrapped their deal - valued at about $35 billion when it was announced in November 2014 - in May after opposition from U.S. and European antitrust regulators.

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Net loss attributable to Halliburton was $3.21 billion, or $3.73 per share, in the quarter, compared with a profit of $54 million, or 6 cents per share, a year earlier.

Revenue fell 35 percent to $3.84 billion, but beat analysts' average estimate of $3.75 billion.

Schlumberger is scheduled to report its quarterly results on Thursday, while Baker Hughes will release its earnings on July 28.

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