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Oilfield services company Halliburton Co. reported unexpected profit in the third quarter on the back of improved oil exploration activities and cost cutting measures.
In a statement released on Wednesday, the world's second-largest oilfield services provider reported its first improvement in sales in about two years in North America, which makes up more than 40 percent of its business. Sales in the market rose 9 percent from the level in the second quarter to $1.66 billion.
Halliburton posted a net income of $6 million, or 1 cent per share, during the third quarter. This was a significant improvement on the $54 million, or 6 cents per share, loss reported a year earlier.
Some analysts polled by Bloomberg had predicted average loss of 6 cents per share.
"I am pleased with our third-quarter results given the devastation our industry has faced over the last two years," Chief Executive Dave Lesar said. "In the near term, we remain cautious around fourth quarter customer activity due to holiday and seasonal weather-related down times. However, it does not change our view that things are getting better for us and our customers."
Operating results from North America rose by $58 million, representing incremental margins of 41 percent.
Crude oil prices have gone ahead to increase by almost double since hitting the bottom in February. More shale oil companies have began putting their rigs back to work, months after the number of U.S. land rigs reached its lowest.
The count of active rigs in the U.S. increased for the seventh week in a row through Oct. 14, according to a report from Baker Hughes Inc. The oil services company said the number of onshore rigs in the country jumped by 25 percent (100) in the third quarter.
The improvement noticed caused executives at both Halliburton and its larger rival Schlumberger to state at the end of July that the toughest period may already be over.
Lesar attributed the unexpected profit record by Halliburton during the quarter to the cost-cutting efforts of the company.
"North America results improved as we took advantage of the rig count growth by increasing utilization, working our surface efficiency model and relentlessly managing costs," he said.
Like Schlumberger, the Houston-based oil services company has had to embark on cost-cutting to boost profitability amid falling oil revenues. It set a target in July to cut down on "structural costs" by $1 billion – roughly 25 percent – on an annual run-rate by the end of this year, as reported by Reuters.
A large number of companies in the oil services sector have been incurring losses in the North American market. Some experts expect things to remain this way, at least for the remaining part of 2016, as a result of very low prices.
Bloomberg reported that Halliburton shares edged up to $47.89 – representing an increase of around 1.7 percent – during premarket trading in New York.
Market leader Schlumberger is expected to release its results for the third quarter on Thursday. Baker Hughes, the world's third-biggest oilfield services provider, is scheduled to report next Tuesday.