Halliburton Co. fell after the king of fracking failed to deliver with weaker-than-expected operating profit in its biggest business.

The Houston-based oilfield-services giant dropped almost 2 per cent in early trading on Monday after reporting a US$789 million second-quarter operating profit that fell short of the US$816 million average estimate from 14 analysts in a Bloomberg survey. Halliburton had been a consistent outperformer in most earnings measures until now.

Halliburton, the world’s biggest frack provider, is facing a double whammy in North America this year. The Permian Basin is headed for a temporary slowdown, and the company’s chief rival, Schlumberger Ltd., is ramping up competition in Halliburton’s home market.

“People definitely expect the pause in the second half, but you need a substantial beat in 2Q to start from a new level,” Luke Lemoine, an analyst at Capital One Securities, said Monday in a phone interview. “We all know the second half is coming down, but you want to come down from a higher level.”

Still, growth in the U.S. and Canada grew at more than twice the rate of Halliburton’s overseas business. And Chief Executive Officer Jeff Miller said the company “is better positioned for the international recovery than it has ever been.”

GROWTH ENGINE 

Thanks to the Permian Basin, North America has been the world’s growth engine, leading the global oil industry out of the worst crude crash in a generation. That’s allowed Halliburton and its peers to push up pricing for everything from drilling to fracking and even the grains of sand that prop open rocks for the oil flow.

Schlumberger posted a 43-cent per-share profit on July 20 that matched analysts’ estimates. Baker Hughes, the No. 3 player in oilfield services, fell short of expectations. Still, both companies expressed optimism that a global recovery in demand for their expertise and gear will yield tangible financial benefits by the end of this year.

The U.S. fracking market was already fully recovered from the rout as recently as last month, having employed 480 fleets of rock-crushing pumps throughout the industry in June, according Primary Vision Inc. That’s more than triple the number of crews fracking in the U.S. two years ago and already eclipsing pre-bust levels in 2014.

Halliburton reported an operating profit of US$669 million in its completion and production unit, which houses the world’s biggest fracking business. That’s less than the US$711 million that Lemoine said he was looking for.

In North America, the company’s largest region, sales expanded 38 per cent from a year earlier. It’s third-straight quarter that year-over-year revenue growth shrunk from the previous period.

The results were posted before the start of regular trading in New York. Shares fell 0.7 per cent to US$44.90 at 8:08 a.m. in New York. Halliburton shares are down 7.5 per cent this year, lagging the 14 per cent growth in West Texas Intermediate, the U.S. crude benchmark.

"We were hoping a Q2 print better than market expectations would be just what doctor ordered to jumpstart some HAL stock relative outperformance this summer," analysts at Tudor Pickering Holt & Co. wrote Monday in a note to investors. "But these in-line results likely won’t be that catalyst."