Halliburton reported fourth-quarter adjusted profit that beat analysts’ estimates after oil explorers kicked off a year-end recovery in North America where the service provider generates most of its sales.

The world’s largest fracing services provider posted profit excluding certain items of 4 cents a share, according to a statement Monday, exceeding the 2-cent average of 39 analysts’ estimates compiled by Bloomberg, The net loss was $149 million, or 17 cents a share, compared with a loss of $28 million, or 3 cents a share, a year earlier.

Customers in the U.S. and Canada boosted the number of oil and natural gas rigs 19% in the final three months of the year. Halliburton cut thousands of workers during the downturn and has been pressing customers for higher prices in order to return to profitability in North America.

“On the top line, it’s pretty well understood that we’re in growth mode again, at least for now,” Matt Marietta, an analyst at Stephens Inc. who rates the shares the equivalent of a buy and owns none, said in a phone interview before the results were released. “It’s important for the company to show that they can generate profits on the increased activity.”

After unprecedented spending cuts over the past two years, explorers are forecast to boost capital expenditures worldwide by 7% in 2017, according to a Barclays note to investors earlier this month. The U.S. is expected to lead the rest of the world with as much as a 40% hike in E&P spending, according to Bloomberg Intelligence.

Halliburton returned to profitability in North America with a 1.6% operating margin in the final three months of the year.

“For the fourth quarter, our total company revenue increased 5% sequentially, and our adjusted operating income doubled,” CEO David Lesar said in the statement. “We also generated over a billion dollars in cash flow from operations during the fourth quarter, demonstrating our attention to efficient working capital management.”

Shares fell 70 cents, or 1.2%, to $55.75 before the start of regular trading in New York.

Schlumberger Ltd., the world’s largest oilfield services provider, said Friday its fourth-quarter net loss narrowed to $204 million from $1.02 billion a year earlier.

Source: www.worldoil.com