London (Platts)--25Jan2013/904 am EST/1404 GMT

US oil field services giant Halliburton said Friday its fourth quarter earnings fell sharply from year-ago levels as falling US drilling activity more than offset growing income from its work outside North America.

Halliburton, which is heavily dependent on activity in the US market, said North America revenues shrank 5% compared to the previous quarter, in line with the sequential 5% drop in the US land rig count.

US operating income fell to $465 million in the quarter, down from $1.12 billion in the year ago period and a 22% fall on the $557 million reported for the previous quarter.

"Operating income was down...driven mainly by an unusually high post-Thanksgiving decline in activity levels with key customers, increased consumption of our high priced supply of guar, and continued pricing pressure around hydraulic fracturing contracts," the company said.

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Gum from guar beans is a key thickening agent used for the fracking of unconventional reserves such as shale gas or tight oil and prices of the gum have risen sharply due to soaring demand from US frackers.

Halliburton also said higher well completion activity in the Gulf of Mexico and increased sales internationally, however, more than offset seasonally lower activity levels in the US land market, the company said.

Looking ahead, Halliburton said it expects US rig counts this year will improve from fourth quarter levels but remain slightly lower than the 2012 level.

For the fourth quarter, Halliburton said revenues of $7.3 billion were up from $7.06 billion in the year ago period and 3% higher sequentially, representing the highest quarterly revenues in the company's history.

In Europe/Africa/CIS, the company saw revenue and operating income increase 8% and 23% respectively compared to the prior quarter.

Halliburton said the improvement was driven by the seasonally higher year-end completion tool sales in Angola and the North Sea, greater demand for drilling services in the North Sea and Russia, and increased service activity in East Africa.

Compared with the third quarter, Halliburton said its revenue and operating income from Middle East/Asia rose by 14% and 46% respectively driven by higher software, equipment, and completion tools sales, as well as increased service activity in Saudi Arabia and Australia.

Halliburton report a net income of $669 million for the quarter, down from $906 million in the year-ago period and up from $602 million in Q3.

--Robert Perkins, robert_perkins@platts.com
--Edited by Maurice Geller, maurice_geller@platts.com

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