Halliburton flags higher costs from Iran war as first-quarter profit tops estimates

April 22 (Reuters) – U.S. oilfield services provider Halliburton warned disruptions caused by the Iran war and the closure of the Strait of Hormuz ​could cut current-quarter earnings per share by about 7 to 9 cents after ‌beating first-quarter profit estimates.

The Strait of Hormuz is a key global energy chokepoint, and the company said on Tuesday rerouting has increased logistics costs with the prolonged conflict also raising raw material prices.

Halliburton has ​kicked off results for the global oilfield service providers amid investor focus on the ​potential gains from repairs to the infrastructure in the region, work that ⁠Rystad Energy projected to be worth as much as $58 billion.

Halliburton has maintained its presence and service capability ​in the Middle East throughout, positioning it to benefit from a recovery when conditions allow, ​Melius Research analyst James West said.

The company reported adjusted earnings of 55 cents per share for the first quarter, beating analysts’ expectations of 50 cents, according to LSEG data. The conflict shaved about 2 to ​3 cents per share from earnings.

Middle East revenue fell 12.7% to $1.32 billion, hurt by lower ​activity in Saudi Arabia and reduced drilling-related services in Qatar.

Halliburton shares were up 4% in morning trade.

Larger ‌rival ⁠SLB, set to report results on Friday, has flagged a 6-9 cent-per-share earnings hit, after the industry bellwether suspended travel and demobilized operations in the Middle East.

INTERNATIONAL STRENGTH OFFSETS MIDDLE EAST

Weakness in the Middle East was partly offset by stronger performance elsewhere, with international revenue edging up ​to $3.3 billion, driven by ​a 22% jump in ⁠Latin America and an 11% rise in Europe and Africa.

“In international markets, our performance around the world outpaced disruptions from the Middle ​East conflict,” CEO Jeff Miller said in a statement.

Halliburton expects revenue growth ​in the ⁠mid-to-high single digits for the full year, led by Latin America.

Revenue in North America fell 4.5% to $2.14 billion, although Miller said they were in the “early innings of a recovery.”

“We are increasingly bullish ⁠on ​the (North America) recovery as the back end of the ​oil curve picks up to $80+,” Barclays’ analysts said in a note.