Halliburton’s Earnings Beat Wasn’t Enough. Why the Stock Is Falling.

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Halliburton storage tanks in Port Fourchon, Louisiana.


Luke Sharrett/Bloomberg

Oil services giant

Halliburton

reported first-quarter numbers that just beat analysts’ expectations. It isn’t enough.

Halliburton (ticker: HAL) reported adjusted earnings per share of 35 cents from $4.3 billion in sales. Wall Street was expecting EPS of 34 cents from $4.2 billion in sales. A year ago, Halliburton reported EPS of 19 cents from $3.5 billion.

Shares fell 3.9% in premarket trading.


S&P 500

and


Dow Jones Industrial Average

futures were down about 0.2% and 0.1%, respectively.

The stock is down because of the starting point. Coming into Tuesday trading, Haliburton stock has risen about 82% year to date and is up more than 100% over the past year. Shares hit a 52-week high on Monday. Expectations coming into the quarterly report were running high.

Oil prices are the big reason things are good for oil-related stocks. Benchmark oil prices averaged about $95 a barrel in the first quarter, up from an average of about $77 in the fourth quarter. Oil prices are up about 40% year to date.

Despite the drop, management seems happy with how things are going. “I am pleased with Halliburton’s first-quarter results,” said CEO Jeff Miller in the company’s news release. “We see significant tightness across the entire oil and gas value chain in North America. Supportive commodity prices and strengthening customer demand against an almost sold-out equipment market are expected to drive expansion in [profit] margins.”

One small negative was an asset write-down. The company wrote off all of its Ukrainian assets due to the conflict with Russia. The amounted to $22 million. Halliburton’s total asset base is more than $22 billion.

Management hosts a conference call at 9 a.m. Eastern time to discuss results. Analysts and investors will be interested in the outlook for oil prices and drilling activity in the balance of 2022.

Write to Al Root at allen.root@dowjones.com