SLB Schlumberger Ltd

Major oilfield services provider Halliburton Co. (HAL) is scheduled to report its second quarter 2011 results on July 18, 2011 before the start of trading.

The Zacks Consensus Estimate for the to-be-reported quarter is a profit of 72 cents per share (with an upside potential of 4.2%) on revenues of $5.6 billion. In the year-ago quarter, Halliburton recorded a gain of 52 cents per share, while sales came in at $4.4 billion.

First Quarter Recap

Halliburton’s first-quarter 2011 results came in better than expected, helped by the strength and sustainability of the all-important North American onshore activity levels (to which the company is heavily exposed through its market-share-leading pressure-pumping business).

Earnings per share, excluding special items, came in at 61 cents, beating the Zacks Consensus Estimate of 58 cents and were comfortably ahead of the year-ago adjusted profit of 28 cents.

Revenues of $5.3 billion were 40.4% greater than that achieved during the first quarter of 2010 and also surpassed the Zacks Consensus Estimate of $4.9 billion, as sales increased across the company’s business units.

(Read our full coverage on this earnings report: Halliburton: Another Strong Quarter).

Points to Ponder for Second Quarter

Halliburton enjoys a strong competitive position within the global oilfield services markets. We like the company’s broad and technologically-complex product and service offerings, along with its robust financial profile.

It remains the best-positioned company in the U.S. pressure pumping market, with significant acreage positions in the highest profile plays, such as the Haynesville, Eagle Ford shale and Bakken. In the to-be-reported quarter, Halliburton is likely to benefit from bullish U.S. land drilling trends, where activity is trending above expectations.

This is likely to be somewhat offset by pricing competition in international markets and disruptions in Libya that may put pressure on the company’s margins.

Agreement of Analysts

As a result of the above-mentioned factors, there has been an upward bias among the analysts regarding Halliburton’s outlook. In particular, we see a notable number of estimate revisions over the past 30 days.

Out of the 30 analysts covering the stock, 6 have revised their estimates upward for the second quarter of 2011, while none have gone in the opposite direction.

Magnitude of Estimate Revisions

Consequent to analysts revising estimates northward over the past 30 days, the Zacks Consensus Estimate for the quarter has gone up by a penny (from 71 cents to 72 cents).

Our Recommendation

Halliburton shares currently retain a Zacks #2 Rank, which translates into a short-term 'Buy' rating. We like Halliburton’s leading position in the global oilfield services market, along with its broad and technologically-complex product and service offerings, and its robust financial profile. Since the last few quarters, the company has been benefiting from increased activity in the unconventional oil and gas shale plays in North America, which have more than made up for the drop in deepwater Gulf of Mexico activity.

However, looking at the longer-term, we are maintaining our '"Neutral'" recommendation on Halliburton. The world's second-largest oilfield services company after Schlumberger Ltd. (SLB) continues to see intense competitive pressure in the market. Depressed natural gas prices and the expected curtailment in incremental drilling projects are also adding to the same. As such, we see the stock performing in line with the broader market and prefer to remain on the sidelines.

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