Repurchased $500 million of common stock during
the first quarter
Halliburton (NYSE:HAL) announced today that income from
continuing operations for the first quarter of 2014 was $623
million, or $0.73 per diluted share. This compares to income from
continuing operations for the first quarter of 2013 of $624
million, or $0.67 per diluted share, excluding a $637 million
charge, after-tax, or $0.68 per diluted share, to increase a
reserve related to the Macondo litigation. Reported loss from
continuing operations for the first quarter of 2013 was $13
million, or $0.01 per diluted share.
Halliburton's total revenue in the first quarter of 2014 was
$7.3 billion, compared to $7.0 billion in the first quarter of
2013. Operating income was $970 million in the first quarter of
2014, compared to adjusted operating income of $902 million in the
first quarter of 2013. Reported operating loss was $98 million for
the first quarter of 2013.
“I am pleased with total company revenue of $7.3 billion, which
was a record first quarter for Halliburton,” commented Dave Lesar,
chairman, president and chief executive officer.
“Operating income of $970 million was 8% higher than adjusted
operating income in the first quarter of 2013, and was the result
of our double-digit growth in the Eastern Hemisphere.
“In the Eastern Hemisphere, we continue to successfully execute
our growth strategy. Relative to the first quarter of 2013, we grew
revenue by 11% and operating income by 16%. We continue to forecast
that full-year Eastern Hemisphere revenue growth will be in the low
double digits, and average full year margins will be in the upper
teens.
“In the Middle East/Asia region, compared to the first quarter
of the prior year, both revenue and operating income increased by
13%. Saudi Arabia led the improvement with growth across all
product lines due to an increase in integrated project activity
along with an overall higher rig count that is driving increased
services.
“In Europe/Africa/CIS, relative to the first quarter of 2013, we
saw revenue and operating income increase 9% and 21%, respectively.
The improvement was led by higher completion tools sales and
cementing activity throughout the region, and increased drilling
and open hole wireline activity in Angola.
“In Latin America, revenue and operating income declined by 9%
and 8%, respectively, compared to the same quarter last year,
primarily due to a decline in drilling-related activity in Brazil
and activity reductions in Mexico. For the full year, we expect
Latin America revenue and operating income to be in line with 2013
levels.
“In North America, revenue increased 5% and operating income was
flat compared to the first quarter of 2013. Results were negatively
impacted by lower pressure pumping pricing and transitory issues
related to weather disruption and higher logistics costs. We are
optimistic about the potential for increased activity levels in the
second half of the year, and expect North America margins to expand
over the remainder of 2014. Service intensity levels are expanding
across the United States, where we continue to see a trend to
longer laterals, increased stage density, and rising volumes per
stage. We continue to expect North America margins to approach 20%
before the end of the year.
“Our strategy is working well and we intend to stay the course.
I am optimistic about our ability to grow our North America revenue
and margins, and to realize industry-leading revenue and margin
growth in our international business, resulting in solid EPS growth
and significantly higher cash generation. We expect earnings per
share to grow approximately 25% in the second quarter, with further
increases to follow. We remain focused on generating superior
financial performance and providing industry-leading shareholder
returns, as evidenced by our $500 million share repurchase this
quarter,” concluded Lesar.
2014 First Quarter Results
Completion and Production
Completion and Production (C&P) revenue in the first quarter
of 2014 was $4.4 billion, an increase of $320 million, or 8%, from
the first quarter of 2013. This increase was primarily driven by
stronger stimulation activity in the United States land market, as
well as higher completion tools sales in all regions.
C&P operating income in the first quarter of 2014 was $661
million, an increase of $46 million, or 7%, from the first quarter
of 2013. North America C&P operating income, improved by $14
million, or 3%, compared to the first quarter of 2013, due to
increased stimulation activity in the United States land market,
partially offset by pricing pressures associated with pressure
pumping services. Latin America C&P operating income rose by
$20 million, or 71%, compared to the first quarter of 2013,
primarily due to improved profitability for pressure pumping in
Argentina. Europe/Africa/CIS C&P operating income increased $14
million, or 22%, compared to the first quarter of 2013, driven by
increased completion tools sales in Angola and Norway, and higher
Boots and Coots activity in Algeria. Middle East/Asia C&P
operating income was down $2 million, or 2%, compared to the first
quarter of 2013, due to lower completion tools sales in Malaysia
and decreased Boots and Coots activity in Australia and India,
which were partially offset by increased completion tools sales in
Saudi Arabia and China.
Drilling and Evaluation
Drilling and Evaluation (D&E) revenue in the first quarter
of 2014 was $2.9 billion, an increase of $54 million, or 2%, from
the first quarter of 2013. This increase was primarily driven by
higher drilling activity in the Eastern Hemisphere and improved
testing activity in all regions, which more than offset the decline
in Latin America activity.
D&E operating income in the first quarter of 2014 was $398
million, a decrease of $9 million, or 2%, from the first quarter of
2013. North America D&E operating income decreased $17 million,
or 10%, compared to the first quarter of 2013, due to decreased
activity in Canada and decreased logging services in the United
States land market, which were partially offset by increased
testing services in the Gulf of Mexico. Latin America D&E
operating income decreased $29 million, or 36%, compared to the
first quarter of 2013, primarily due to lower drilling activity in
Brazil. Europe/Africa/CIS D&E operating income improved by $11
million, or 19%, compared to the first quarter of 2013, due to
increased drilling activity in the United Kingdom and Angola, which
was partially offset by lower demand for fluid services in Norway.
Middle East/Asia D&E operating income increased $26 million, or
27%, compared to the first quarter of 2013, due to increased
drilling services in Thailand and Saudi Arabia, which were
partially offset by a decline in logging sales in China.
Corporate and Other
During the first quarter of 2014, Halliburton repurchased
approximately 9 million shares of common stock at a total cost of
$500 million. Since the inception of the stock repurchase program
in February 2006, Halliburton has purchased 197 million shares at a
total cost of approximately $8.1 billion. Approximately $1.2
billion of repurchases remain authorized under the program.
Also during the first quarter, Halliburton invested an
additional $15 million, pre-tax, in strategic projects aimed at
strengthening Halliburton's North America service delivery model
and repositioning technology, supply chain, and manufacturing
infrastructure to support projected international growth.
Halliburton expects the cost of these strategic projects to
continue to wind down during 2014.
Significant Recent Events and Achievements
- Halliburton announced the release of
the RezConnect™ Well Testing System, a complete well testing
solution for wireless control of downhole drill stem test (DST)
tools and the measurement and analysis of well-test data in real
time. The RezConnect Well Testing System uses Halliburton’s
proprietary DynaLink® Telemetry System, a fully wireless downhole
sensor and actuator network using acoustic energy in the tubing
string. The RezConnect Well Testing System integrates all the DST
tools and allows surface verification of their operational
status.
- Halliburton announced the signing of a
partnership agreement with Gubkin Russian State University of Oil
and Gas for the development of unconventional resources in Russia,
including the Bazhenov shale. As part of the agreement, Halliburton
will provide senior technical and management staff to serve on
Gubkin's Industry Advisory Boards, as well as provide the
foundation material for Gubkin's unconventional resources
curriculum that will become the basis for student and industry
training.
- Halliburton expanded its line of
DrillDOC® drilling optimization tools with the launch of 4 3/4-inch
and 9 1/2-inch collars. The addition of the two new sizes is
especially beneficial while drilling complex directional well
trajectories and horizontal or extended reach wells. The new
DrillDOC collars provide the measurements necessary to fully
understand downhole drilling dynamics.
- Halliburton announced its plans for a
new Integrated Completions Center located in New Iberia, LA. This
new facility will expand Halliburton’s resources and capabilities
for deepwater completion tools while continuing to focus on service
alignment, equipment maintenance, preparation, and job execution
for Halliburton’s Gulf of Mexico customers.
Founded in 1919, Halliburton is one of the world's largest
providers of products and services to the energy industry. With
more than 75,000 employees, representing 140 nationalities in
approximately 80 countries, the company serves the upstream oil and
gas industry throughout the lifecycle of the reservoir - from
locating hydrocarbons and managing geological data, to drilling and
formation evaluation, well construction and completion, and
optimizing production through the life of the field. Visit the
company's website at www.halliburton.com.
NOTE: The statements in this press release that are not
historical statements, including statements regarding future
financial performance, are forward-looking statements within the
meaning of the federal securities laws. These statements are
subject to numerous risks and uncertainties, many of which are
beyond the company's control, which could cause actual results to
differ materially from the results expressed or implied by the
statements. These risks and uncertainties include, but are not
limited to: results of litigation, settlements, and investigations;
actions by third parties, including governmental agencies; whether
a settlement relating to the Macondo multi-district litigation will
be reached at the amounts contemplated by our reserve or at all;
settlement discussions relating to the Macondo incident do not
cover all possible parties and claims, and there are additional
reasonably possible losses relating to the Macondo incident that we
cannot reasonably estimate at this time; with respect to
repurchases of Halliburton common stock, the continuation or
suspension of the repurchase program, the amount, the timing and
the trading prices of Halliburton common stock and the availability
and alternative uses of cash; changes in the demand for or price of
oil and/or natural gas can be significantly impacted by weakness in
the worldwide economy; consequences of audits and investigations by
domestic and foreign government agencies and legislative bodies and
related publicity and potential adverse proceedings by such
agencies; indemnification and insurance matters; protection of
intellectual property rights and against cyber attacks; compliance
with environmental laws; changes in government regulations and
regulatory requirements, particularly those related to offshore oil
and natural gas exploration, radioactive sources, explosives,
chemicals, hydraulic fracturing services, and climate-related
initiatives; compliance with laws related to income taxes and
assumptions regarding the generation of future taxable income;
risks of international operations, including risks relating to
unsettled political conditions, war, the effects of terrorism,
foreign exchange rates and controls, international trade and
regulatory controls, and doing business with national oil
companies; weather-related issues, including the effects of
hurricanes and tropical storms; changes in capital spending by
customers; delays or failures by customers to make payments owed to
us; execution of long-term, fixed-price contracts; impairment of
oil and natural gas properties; structural changes in the oil and
natural gas industry; maintaining a highly skilled workforce;
availability and cost of raw materials; and integration of acquired
businesses and operations of joint ventures. Halliburton's Form
10-K for the year ended December 31, 2013, recent Current Reports
on Form 8-K, and other Securities and Exchange Commission filings
discuss some of the important risk factors identified that may
affect Halliburton's business, results of operations, and financial
condition. Halliburton undertakes no obligation to revise or update
publicly any forward-looking statements for any reason.
HALLIBURTON COMPANY Condensed Consolidated Statements of Operations
(Millions of dollars and shares except per
share data)
(Unaudited) Three Months Ended March 31
December 31
2014
2013 2013
Revenue:
Completion and Production
$ 4,420 $ 4,100 $ 4,542
Drilling and Evaluation
2,928
2,874 3,097
Total revenue
$ 7,348 $ 6,974
$ 7,639
Operating income:
Completion and Production
$ 661 $ 615 $ 765 Drilling
and Evaluation
398 407 498 Corporate and other (a)
(89 ) (1,120 )
(119 )
Total operating income (loss)
970 (98 ) 1,144
Interest expense, net
(93 ) (71 ) (98 ) Other, net
(31 ) (14 )
(6 ) Income (loss) from continuing operations before income taxes
846 (183 ) 1,040 Income tax (provision) benefit (b)
(229 ) 172
(268 ) Income (loss) from continuing operations
617 (11 )
772 Income (loss) from discontinued operations, net
(1 ) (5 ) 23
Net income (loss) $ 616
$ (16 ) $ 795
Noncontrolling interest in net (income)
loss of subsidiaries
6 (2 ) (2 )
Net income (loss) attributable to company
$ 622 $ (18 ) $
793
Amounts attributable to company shareholders:
Income (loss) from continuing operations
$ 623 $ (13
) $ 770 Income (loss) from discontinued operations, net
(1 ) (5 ) 23
Net income (loss) attributable to company
$ 622 $ (18 )
$ 793
Basic income (loss) per share attributable
to company shareholders: Income (loss) from continuing
operations
$ 0.73 $ (0.01 ) $ 0.91 Income (loss) from
discontinued operations, net
—
(0.01 ) 0.02
Net income (loss) per
share $ 0.73 $
(0.02 ) $ 0.93
Diluted income (loss) per
share attributable to company shareholders: Income (loss) from
continuing operations
$ 0.73 $ (0.01 ) $ 0.90 Income
(loss) from discontinued operations, net
—
(0.01 ) 0.03
Net
income (loss) per share $ 0.73
$ (0.02 ) $ 0.93 Basic
weighted average common shares outstanding
849 931 849
Diluted weighted average common shares outstanding
853 931 854
(a) Includes a $1 billion, pre-tax, charge in the three
months ended March 31, 2013 related to the Macondo well incident.
(b) Includes $50 million in federal tax benefits in the three
months ended March 31, 2013. See Footnote Table 1 for certain items
included in operating income (loss). See Footnote Table 2 for
operating income (loss) adjusted for certain items. See Footnote
Table 3 for a reconciliation of as-reported income (loss) from
continuing operations to adjusted income from continuing
operations. HALLIBURTON COMPANY Condensed Consolidated
Balance Sheets (Millions of dollars)
(Unaudited)
March 31
December 31
2014
2013
Assets Current assets: Cash and
equivalents
$ 2,123 $ 2,356 Receivables, net
6,314 6,181 Inventories
3,415 3,305 Other current
assets (a)
1,634 1,862
Total current assets 13,486 13,704 Property,
plant, and equipment, net
11,463 11,322 Goodwill
2,193 2,168 Other assets (b)
2,114
2,029
Total assets
$ 29,256 $ 29,223
Liabilities and Shareholders’ Equity Current
liabilities: Accounts payable
$ 2,525 $ 2,365
Accrued employee compensation and benefits
823 1,029 Loss
contingency for Macondo well incident
278 278 Other current
liabilities
1,306 1,354
Total current liabilities 4,932 5,026
Long-term debt
7,816 7,816 Loss contingency for Macondo well
incident
1,022 1,022 Other liabilities
1,734 1,744
Total liabilities
15,504 15,608 Company shareholders’ equity
13,725 13,581 Noncontrolling interest in consolidated
subsidiaries
27 34
Total shareholders’ equity 13,752
13,615
Total liabilities and shareholders’
equity $ 29,256
$ 29,223 (a) Includes $238 million of
investments in fixed income securities at March 31, 2014, and $239
million of investments in fixed income securities at December 31,
2013. (b) Includes $140 million of investments in fixed income
securities at March 31, 2014, and $134 million of investments in
fixed income securities at December 31, 2013. HALLIBURTON
COMPANY Condensed Consolidated Statements of Cash Flows (Millions
of dollars) (Unaudited) Three Months Ended
March 31
2014 2013
Cash flows from operating activities: Net
income (loss)
$ 616 $ (16 ) Adjustments to reconcile
net income (loss) to net cash flows from operating activities:
Depreciation, depletion, and amortization
510 448 Loss
contingency for Macondo well incident
— 1,000 Payment of
Barracuda-Caratinga obligation
— (219 ) Other, primarily
working capital
(172 )
(864 )
Total cash flows from operating activities
954 349
Cash
flows from investing activities: Capital expenditures
(643 ) (685 ) Purchase of investment securities
(55 ) (28 ) Sales of investment securities
50
9 Other
(26 ) 53
Total cash flows from investing activities
(674 ) (651 )
Cash flows from
financing activities: Payments to reacquire common stock
(500 ) (50 ) Dividends to shareholders
(127
) (116 ) Other
113
21
Total cash flows from financing activities
(514 ) (145 ) Effect of
exchange rate changes on cash
1
(8 ) Decrease in cash and equivalents
(233 )
(455 ) Cash and equivalents at beginning of period
2,356 2,484
Cash and
equivalents at end of period $
2,123 $ 2,029 HALLIBURTON
COMPANY Revenue and Operating Income Comparison By Segment and
Geographic Region (Millions of dollars) (Unaudited)
Three Months Ended March 31
December 31
Revenue by geographic region:
2014 2013 2013 Completion
and Production: North America
$
2,927 $ 2,745 $ 2,871 Latin America
355 355 428
Europe/Africa/CIS
607 532 647 Middle East/Asia
531 468 596
Total
4,420 4,100
4,542 Drilling and Evaluation: North America
974 961 952 Latin America
504 590 590
Europe/Africa/CIS
692 655 752 Middle East/Asia
758 668 803
Total
2,928 2,874
3,097 Total revenue by region: North America
3,901 3,706 3,823 Latin America
859 945 1,018
Europe/Africa/CIS
1,299 1,187 1,399 Middle East/Asia
1,289 1,136
1,399 Total revenue
$ 7,348
$ 6,974 $ 7,639
Operating income by geographic region:
Completion and
Production: North America
$ 446 $ 432 $ 478 Latin
America
48 28 72 Europe/Africa/CIS
78 64 99 Middle
East/Asia
89 91
116 Total
661
615 765 Drilling and
Evaluation: North America
156 173 166 Latin America
52 81 81 Europe/Africa/CIS
68 57 108 Middle East/Asia
122 96
143 Total
398
407 498 Total operating income
by region: North America
602 605 644 Latin America
100 109 153 Europe/Africa/CIS
146 121 207 Middle
East/Asia
211 187
259 Corporate and other
(89 ) (1,120 ) (119 )
Total operating income (loss)
$ 970
$ (98 ) $ 1,144
See Footnote Table 1 for certain items included in operating income
(loss). See Footnote Table 2 for operating income (loss) adjusted
for certain Items. See Footnote Table 3 for a reconciliation of
as-reported income (loss) from continuing operations to adjusted
income from continuing operations. FOOTNOTE TABLE 1
HALLIBURTON COMPANY
Items Included in Operating Income
(Loss)
(Millions of dollars except per share
data)
(Unaudited) Three Months Ended
Three Months Ended March 31, 2013 December 31,
2013 Operating After Tax Operating After Tax
Income Per Share
Income Per Share Completion and Production: North America
Restructuring charges — — (5 ) (0.01 ) Latin America Restructuring
charges — — (1 ) — Europe/Africa/CIS
Restructuring charges
— — (1 ) — Middle East/Asia Restructuring charges —
— (3 ) — Drilling
and Evaluation: North America Restructuring charges — — (2 ) —
Latin America Restructuring charges — — (3 ) — Europe/Africa/CIS
Restructuring charges — — (1 ) — Middle East/Asia Restructuring
charges
—
— (2 ) — Corporate
and other: Macondo-related charge (1,000 ) (0.68 ) — —
Restructuring charges
—
—
(20 ) (0.02 ) FOOTNOTE TABLE 2
HALLIBURTON COMPANY Adjusted Operating Income Excluding
Certain Items By Segment and Geographic Region (Millions of
dollars) (Unaudited) Three Months Ended
March 31 December 31
Adjusted operating income by
geographic region: (a)(b) 2014
2013 2013 Completion and Production:
North America
$ 446 $ 432 $ 483
Latin America
48 28 73 Europe/Africa/CIS
78 64 100
Middle East/Asia
89 91
119 Total
661
615 775 Drilling
and Evaluation: North America
156 173 168 Latin America
52 81 84 Europe/Africa/CIS
68 57 109 Middle East/Asia
122 96
145 Total
398
407 506 Adjusted operating
income by region: North America
602 605 651 Latin America
100 109 157 Europe/Africa/CIS
146 121 209 Middle
East/Asia
211 187
264 Corporate and other
(89 ) (120 ) (99 )
Adjusted total operating income
$ 970
$ 902 $ 1,182 (a)
Management believes that operating income
adjusted for the Macondo-related charge for the quarter ended March
31, 2013 and restructuring charges for the quarter ended December
31, 2013 is useful to investors to assess and understand operating
performance, especially when comparing those results with previous
and subsequent periods or forecasting performance for future
periods, primarily because management views the excluded items to
be outside of the company's normal operating results. Management
analyzes operating income without the impact of these items as an
indicator of performance, to identify underlying trends in the
business, and to establish operational goals. The adjustments
remove the effects of these expenses.
(b)
Adjusted operating income for each segment
and region is calculated as: "Operating income (loss)" less "Items
Included in Operating Income (Loss)."
FOOTNOTE TABLE 3 HALLIBURTON COMPANY
Reconciliation of As-Reported Income
(Loss) from Continuing Operations to
Adjusted Income from Continuing Operations (Millions of dollars
except per share data) (Unaudited)
Three Months Ended Three Months Ended
March 31, 2013
December 31, 2013 As-reported income (loss) from continuing
operations attributable to company $ (13 ) $ 770 Macondo-related
charge, net of tax (a) 637 — Restructuring charges, net of tax (a)
— 28 Adjusted income from continuing
operations attributable to company (a) $ 624
$ 798 As-reported diluted weighted average common
shares outstanding (b) 931 854 Adjusted diluted weighted average
common shares outstanding (b) 935 854 As-reported income
(loss) from continuing operations per diluted share (c) $ (0.01 ) $
0.90 Adjusted income from continuing operations per diluted share
(c) $ 0.67 $ 0.93 (a)
Management believes that income (loss)
from continuing operations adjusted for the Macondo-related charge
for the quarter ended March 31, 2013 and restructuring charges for
the quarter ended December 31, 2013 is useful to investors to
assess and understand operating performance, especially when
comparing those results with previous and subsequent periods or
forecasting performance for future periods, primarily because
management views the excluded item to be outside of the company's
normal operating results. Management analyzes income from
continuing operations without the impact of this item as an
indicator of performance, to identify underlying trends in the
business, and to establish operational goals. The adjustment
removes the effect of this expense. Adjusted income from continuing
operations attributable to company is calculated as: “As-reported
income (loss) from continuing operations attributable to company”
plus "Macondo-related charge, net of tax" for the quarter ended
March 31, 2013 and "Restructuring charges, net of tax" for the
quarter ended December 31, 2013.
(b) As-reported diluted weighted average common shares outstanding
excludes four million shares of common stock associated with awards
granted under employee stock plans for the quarter ended March 31,
2013, as their impact would be antidilutive since our reported
continuing operations attributable to company was in a loss
position. When adjusting income from continuing operations
attributable to company for the Macondo-related charge, these four
million shares become dilutive. (c) As-reported income (loss) from
continuing operations per diluted share is calculated as:
"As-reported income (loss) from continuing operations attributable
to company" divided by "As-reported diluted weighted average common
shares outstanding." Adjusted income from continuing operations per
diluted share is calculated as: "Adjusted income from continuing
operations attributable to company" divided by "Adjusted diluted
weighted average common shares outstanding."
Conference Call
Details
Halliburton (NYSE:HAL) will host a conference call on Monday,
April 21, 2014, to discuss the first quarter 2014 financial
results. The call will begin at 8:00 AM Central Time (9:00 AM
Eastern Time).
Halliburton’s first quarter press release will be posted on the
Halliburton website at www.halliburton.com. Please visit the website to
listen to the call live via webcast. In addition, you may
participate in the call by telephone at (703) 639-1127. A passcode
is not required. Attendees should log in to the webcast or dial in
approximately 15 minutes prior to the call’s start time.
A replay of the conference call will be available on
Halliburton’s website for seven days following the call. Also, a
replay may be accessed by telephone at (703) 925-2533, passcode
1631885.
HalliburtonInvestor RelationsKelly Youngblood,
281-871-2688investors@halliburton.comCorporate AffairsCindy Bigner,
281-871-2601PR@halliburton.com
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