Halliburton boosts dividends as oil field service providers prepare for slowing U.S. shale work

David Wethe, Bloomberg January 23, 2024

(Bloomberg) – Halliburton Co. joined its competitor SLB in boosting its quarterly dividend as the world’s biggest oil field contractors gear up for an international boom amid slowing shale work.

The top provider of fracking services will increase its payout by 6% to 17 cents a share, the highest level since the onset of the global pandemic, after posting fourth-quarter earnings that surpassed expectations. Shares rose 1.8% in premarket trading in New York.

“The outlook for oil field services demand remains strong,” Chief Executive Officer Jeff Miller said Tuesday in a statement. “We will deepen and strengthen our value proposition, and generate significant free cash flow.”

Halliburton reported more than $1 billion in free cash flow for the final three months of the year, better than the $886 million expected by analysts, according to data compiled by Bloomberg. The world’s biggest oil field services provider SLB, which dominates international services work, announced a 10% hike to its dividend last week on the expected growth in offshore markets in the coming years.

The top oil field contractors are looking to make up for a slowdown in U.S. shale work by boosting activity overseas. Halliburton, with its unrivaled footprint in all the major shale basins, offers the closest proxy to U.S. producer activity. Capital spending by operators in the U.S. is expected to increase 2% this year, far less than last year’s 19% expansion, according to Evercore ISI.

After posting surprising output growth in 2023, U.S. producers are downshifting expansion plans in order to make their inventory last long and continue returning profits to shareholders. As a result, Halliburton is expected to post little change in sales in the U.S. and Canada this year, while the rest of its business increases 12%, according to data compiled by Bloomberg.

Baker Hughes Co. will round out the Big 3 later today when it reports fourth-quarter results.

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