By Vallari Srivastava
July 21 (Reuters) - Halliburton shares fell more than 6% on Tuesday after the U.S. oilfield services provider forecast weaker third-quarter revenue and flagged uncertainty about the pace of recovery in the Middle East.
The conflict in the Middle East has dominated energy markets this year as a major oil-producing region remained on edge following repeated flare-ups, although oil prices have not soared as feared when the U.S. and Israel went to war with Iran in February.
Halliburton
Chief Operating Officer Shannon Slocum said activity in the region was recovering from the lows seen during the conflict, but cautioned that the pace of recovery remained dependent on day-to-day events.
Kicking off the earnings season for the U.S. oilfield services industry, Halliburton forecast current-quarter revenue from its Completion and Production unit to be flat to down 2% sequentially, while revenue from its Drilling and Evaluation business is expected to decline 3%-5%.
The company expects third-quarter revenue in Latin America and Europe and Africa to edge lower sequentially, with some support from a Middle East recovery.
"Energy security remains a central issue ... to achieve it countries must rebuild inventories, refill and expand strategic reserves, and diversify supply," CEO Jeff Miller said. "I expect this work will take years."
Slocum said land well construction activity remained steady across the region in the second quarter, except for pockets of disruption in Iraq and Bahrain, while offshore activity increased but remained below pre-conflict levels.
Outside the region, it expects international business to grow at a low double-digit rate in the third quarter from a year earlier.
NORTH AMERICA SUBDUED
Latin America revenue rose nearly 15% in the second quarter, while Europe and Africa climbed 24%. The gains were partly offset by lower activity in Kuwait, Iraq and Qatar.
In North America, revenue remained flat from a year earlier as lower specialty chemicals activity following the sale of part of its chemicals business and weaker drilling in the Gulf of Mexico offset gains elsewhere.
"Halliburton is deliberately trading some domestic volume for higher-margin international work," Melius Research analyst James West said, adding that it was "a rational returns-focused use" of its fleet position and not a signal of North American weakness.
The company reported second-quarter revenue of $5.71 billion and adjusted earnings of 55 cents per share, topping analysts' estimates by a cent, according to LSEG data.
Top oilfield services provider SLB reports results on Friday, followed by Baker Hughes on Sunday.
(Reporting by Vallari Srivastava in Bengaluru; Editing by Sriraj Kalluvila)
