Halliburton warns of slower growth as U.S. rig count drops

By Nivedita Bhattacharjee and Yashaswini Swamynathan

(Reuters) - Oilfield services giant Halliburton Co on Monday warned of slower growth at its oil well drilling and evaluation business, reflecting a steady drop in rig counts in the United States.

The outlook suggests Halliburton's current-quarter might not be as strong as its latest quarter, echoing warnings on Friday from its two bigger rivals, Schlumberger NV and Baker Hughes.

Halliburton's shares fell about 1.5 percent. Schlumberger was down 1.5 percent, while Baker Hughes fell 4 percent.

North American revenue from Halliburton's drilling and evaluation business is likely to fall in step with the average U.S. rig count in the fourth quarter, Chief Financial Officer Christopher Weber said on a conference call.

The company's drilling and evaluation business posted a 15 percent rise in revenue in the third quarter.

After a strong start to the year, the average rig count in the United States has fallen in 10 of the past 12 weeks, soon after U.S. oil producers, including Anadarko Petroleum Corp and ConocoPhillips, cut their budgets for the year.

U.S. oil producers are under pressure to boost shareholder returns after ramping up spending earlier this year, while crude oil prices remained flat.

"(Halliburton's) commentary about rig counts driving near term growth creates some level of uncertainty regarding whether they will be able to meet Q4 estimates," said Brian Youngberg, an analyst with Edward Jones.

Halliburton, the market leader in the fracking industry, also reported lower-than-expected margins for the third quarter in its completion and production (C&P) business, its biggest.

Margins in the business increased 15 percent but missed Wall Street's expectation of a 16 percent rise, taking analysts by surprise as North America revenue nearly doubled.

Still, the Houston-based company's profit and revenue topped Wall Street estimates in the quarter.

"Our North American business is hitting on all cylinders and our international business proved resilient in a challenging environment," Chief Executive Jeff Miller said.

(Reporting by Yashaswini Swamynathan and Nivedita Bhattacharjee in Bengaluru; Editing by Savio D'Souza)