Share repurchase authorization increased to $6
billion
Halliburton (NYSE:HAL) announced today that income from
continuing operations for the second quarter of 2014 was $776
million, or $0.91 per diluted share. This compares to income from
continuing operations for the first quarter of 2014 of $623
million, or $0.73 per diluted share.
Halliburton's total revenue in the second quarter of 2014 was a
record $8.1 billion, compared to $7.3 billion in the first quarter
of 2014. Operating income was $1.2 billion in the second quarter of
2014, 23% higher than operating income of $970 million in the first
quarter of 2014 resulting from significant activity improvements in
North America and the Eastern Hemisphere.
“I am very pleased with Halliburton’s second quarter results and
continue to be very excited about the momentum of our business for
the rest of the year and beyond. Once again, we delivered
industry-leading revenue growth both sequentially and year over
year compared to our primary peers,” commented Dave Lesar,
chairman, president and chief executive officer.
“In North America, second quarter revenue increased 11% and
operating income was up 31% compared to the first quarter of 2014,
outpacing a 4% increase in the United States land rig count.
Service intensity levels continued to expand, as completion volumes
per well were up more than 35% compared to the second quarter of
last year.
“We expect North America activity levels to continue to improve,
with margins approaching 20% in the third quarter. We have
concluded based on the strength of this outlook that we will
immediately accelerate additions to our hydraulic fracturing fleet
and logistics capabilities, with new crews available for service
beginning later this year.
“In the Eastern Hemisphere, we are successfully executing our
growth strategy. Relative to the first quarter of 2014, we grew
Eastern Hemisphere revenue by 9% and operating income by 26%. We
continue to forecast full-year Eastern Hemisphere revenue growth in
the low double digits, with average full year margins in the upper
teens.
“In the Middle East/Asia region, revenue increased 11% and
operating income increased 25% sequentially. Saudi Arabia continued
to lead the growth, and we expect this region to have the highest
growth rate for the full-year 2014, despite the potential for
activity disruptions or project delays in Iraq later this year.
“In Europe/Africa/CIS, sequential revenue and operating income
increased 6% and 27%, respectively. The growth resulted from
seasonal recovery in the North Sea and in Russia, as well as
activity gains in sub-Saharan Africa.
“In Latin America, revenue increased 4% sequentially, while
operating income declined 39%. While we are very encouraged about
the prospects for Energy Reform in Mexico, the land rig count was
near historic low levels during the second quarter. Our results for
the second quarter of 2014 were also negatively impacted by the
late receipt of our blanket order for consulting and project
management work, which impacted our ability to book revenue and
offset costs. In addition, margins were impacted by mobilization
costs for our integrated projects in Mexico. Both of these issues
are expected to turn around in the second half of the year. We
believe full year Latin America margins should improve sufficiently
to be in line with 2013 assuming the timely approval of our
billings under the blanket order in Mexico, as well as a swift
resolution of the retender of our Brazil drilling contract.
“Our strategy is working well and we intend to stay the course.
We see strong, sustainable growth opportunities across the mature
field, deepwater and unconventional markets. We continue to be
excited about the North America market, and although there may be
near-term choppiness in certain international markets, we see a
strong pipeline of opportunities.
“Our recent strong financial performance has enabled us to
increase our shareholder distributions while maintaining robust
liquidity to fund future growth. Our board recently approved an
additional $4.8 billion in stock repurchase authorization, to a new
total repurchase capacity of $6 billion. This reflects our
confidence in the strength of our long-term business outlook, our
commitment to shareholder distributions, and our focus on
delivering best-in-class returns,” concluded Lesar.
2014 Second Quarter Results
Completion and Production
Completion and Production (C&P) revenue in the second
quarter of 2014 was $4.9 billion, an increase of $522 million, or
12%, from the first quarter of 2014. This increase was primarily
driven by higher stimulation activity in the United States land
market and strong growth in our international operations, which
more than offset the effects of the seasonal Canadian spring
break-up.
C&P operating income in the second quarter of 2014 was $887
million, an increase of $226 million, or 34%, from the first
quarter of 2014. North America C&P operating income improved by
$184 million, or 41%, sequentially, mainly due to increased
stimulation activity in the United States land market. Latin
America C&P operating income was flat compared to the first
quarter, primarily due to higher cementing activity in Mexico,
which was offset by lower activity in Venezuela. Europe/Africa/CIS
C&P operating income increased $18 million, or 23%, compared to
the first quarter of 2014, due to seasonal activity increases in
Russia and Europe and higher activity in Congo, which were
partially offset by lower completion tools sales in Angola. Middle
East/Asia C&P operating income rose $24 million, or 27%,
sequentially, due to increased activity for most product lines in
Saudi Arabia, Australia, and Malaysia.
Drilling and Evaluation
Drilling and Evaluation (D&E) revenue in the second quarter
of 2014 was $3.1 billion, an increase of $181 million, or 6%, from
the first quarter of 2014. This increase was primarily driven by
higher wireline and fluid services in the Eastern Hemisphere and
the United States, which more than offset the effects of the
seasonal Canadian spring break-up and lower activity in Mexico.
D&E operating income in the second quarter of 2014 was $414
million, an increase of $16 million, or 4%, from the first quarter
of 2014. North America D&E operating income increased $4
million, or 3%, sequentially, due to increased logging and fluid
services in the United States, which were partially offset by
reduced software sales in the United States and the effects of the
Canadian spring break-up. Latin America D&E operating income
decreased $39 million, or 75% from the first quarter of 2014,
primarily due to lower activity in Mexico and reduced drilling
activity in Brazil, which were partially offset by higher wireline
activity in Venezuela. Europe/Africa/CIS D&E operating income
improved by $22 million, or 32%, sequentially, due to increased
drilling activity in Norway and Angola, which was partially offset
by lower drilling services in the United Kingdom and Eurasia.
Middle East/Asia D&E operating income increased $29 million, or
24%, compared to the first quarter of 2014, mainly due to higher
drilling activity in Saudi Arabia and increased direct sales in
China, which were partially offset by lower demand for drilling
services in Malaysia.
Corporate and Other
During the second quarter of 2014, 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 wind
down during the remainder of 2014.
Significant Recent Events and Achievements
- Halliburton announced the release of
the CYPHERsm 2.0 Seismic-to-Stimulation Service, a proprietary and
collaborative workflow that links geoscience with reservoir,
drilling, and completion engineering to allow operators to better
predict and produce unconventional reserves. The CYPHER 2.0 service
builds on the complete full-field solution and provides enhanced
capabilities through innovative software applications allowing
operators to optimize the development of their unconventional
reservoirs and reduce their cost per barrel of oil equivalent
(BOE).
- Halliburton announced that its TDReam™
tool was one of the winners of the Offshore Technology Conference’s
Spotlight on New TechnologySM Awards. The TDReam tool is an
innovation over traditional reamers, which are typically housed
above rotary steerable and logging-while-drilling tools in the
reaming-while-drilling assembly.
- Halliburton announced that its
FlexRite® Multibranch Inflow Control (MIC) system was awarded
E&P magazine’s Meritorious Award for Engineering Innovation at
the Offshore Technology Conference. It is the world’s first
multilateral completion system that provides sand control at the
junction and the ability to remotely control the flow of each
individual branch of a multilateral well with three or more legs,
without costly subsea intervention.
- Halliburton acquired Neftex Petroleum
Consultants Limited, the industry leader in sequence
stratigraphy-based products and consulting focused on subsurface
risk reduction. Neftex’s four-dimensional subsurface model is
driven by a proprietary framework which allows geoscientists to use
a single global platform to search, discover, analyze and integrate
geoscience data essential to understanding and managing subsurface
risk. By integrating the Neftex Earth Model with Landmark’s
DecisionSpace® application platform, Halliburton expects to improve
its customers’ ability to explore prospects more rapidly, and
better predict the probability of drilling success.
- Halliburton acquired Europump Systems
Inc., an industry leader in the design, fabrication, distribution,
and service of progressive cavity pump systems, progressive cavity
wellhead drives, and surface drive units. These offerings will
expand Artificial Lift’s reach into a variety of customer well
challenges that include, but are not limited to, heavy oil
applications and high sand producing wells.
- Halliburton was recognized by the
American Petroleum Institute (API) for its strong support and
contributions to the development of API Specification Q2, the
advanced industry certification standard for oil and natural gas
service providers. API Spec Q2 focuses heavily on defect
prevention, waste reduction, and reliability of services. In
addition to helping develop the standard, Halliburton hosted two
beta audits, was the first company to go through a stage 1 audit in
both the Gulf of Mexico and Indonesia, the first to apply for
certification of multiple facilities worldwide, and the first
company to receive an API Q2 certification in the Gulf of
Mexico.
Founded in 1919, Halliburton is one of the world's largest
providers of products and services to the energy industry. With
more than 80,000 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. Connect with Halliburton
on Facebook, Twitter, LinkedIn, Oilpro and YouTube.
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; structural
changes in the oil and natural gas industry; maintaining a highly
skilled workforce; availability and cost of raw materials; and
integration and success of acquired businesses and operations of
joint ventures. Halliburton's Form 10-K for the year ended December
31, 2013, Form 10-Q for the quarter ended March 31, 2014, 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
June 30 March 31
2014 2013
2014
Revenue:
Completion and Production
$ 4,942 $
4,363 $ 4,420 Drilling and Evaluation
3,109 2,954
2,928
Total revenue
$ 8,051 $
7,317 $ 7,348
Operating income: Completion and Production
$
887 $ 732 $ 661 Drilling and Evaluation
414 415 398
Corporate and other (a)
(107
) (163 ) (89 )
Total operating income
1,194 984
970 Interest expense, net
(94 ) (71 )
(93 ) Other, net
(24 )
(11 ) (31 )
Income
from continuing operations before income taxes 1,076 902
846 Provision for income taxes
(299 ) (256 )
(229 )
Income from continuing operations 777
646 617 Income (loss) from discontinued operations, net
(2 ) 2
(1 )
Net income
$ 775
$ 648 $ 616 Net
(income) loss attributable to noncontrolling interest
(1 ) (4 )
6
Net income attributable to company
$ 774
$ 644 $ 622
Amounts attributable to company shareholders: Income
from continuing operations
$ 776 $ 642 $ 623 Income
(loss) from discontinued operations, net
(2 ) 2
(1 )
Net income attributable to company
$ 774
$ 644 $ 622
Basic income per share attributable to company
shareholders: Income from continuing operations
$
0.92 $ 0.69 $ 0.73 Income from discontinued operations, net
-
0.01
-
Net income per share
$ 0.92 $
0.70 $ 0.73
Diluted income
per share attributable to company shareholders: Income
from continuing operations
$ 0.91 $ 0.69 $ 0.73
Income from discontinued operations, net
-
-
-
Net income per share
$ 0.91 $
0.69 $ 0.73 Basic weighted
average common shares outstanding
846 925 849 Diluted
weighted average common shares outstanding
852 928
853 (a) Includes a
$55 million, pre-tax, charge in the three months ended June 30,
2013, related to a charitable contribution to the National Fish and
Wildlife Foundation. HALLIBURTON COMPANY Condensed
Consolidated Statements of Operations (Millions of dollars and
shares except per share data) (Unaudited)
Six Months Ended June 30
2014 2013
Revenue:
Completion and Production
$
9,362 $ 8,463 Drilling and Evaluation
6,037 5,828
Total revenue $
15,399 $ 14,291
Operating income: Completion and Production
$
1,548 $ 1,347 Drilling and Evaluation
812 822
Corporate and other (a)
(196
) (1,283 )
Total operating
income 2,164
886 Interest expense, net
(187
)
(142
)
Other, net
(55 )
(25
)
Income from continuing operations before income taxes
1,922 719 Provision for income taxes (b)
(528 )
(84
)
Income from continuing operations 1,394 635 Loss from
discontinued operations, net
(3
)
(3
)
Net income $ 1,391
$ 632 Net (income) loss
attributable to noncontrolling interest
5
(6
)
Net income attributable to company
$ 1,396 $
626
Amounts attributable to company shareholders:
Income from continuing operations
$ 1,399 $ 629 Loss
from discontinued operations, net
(3 )
(3
)
Net income attributable to company
$ 1,396 $
626
Basic income per share attributable to company
shareholders: Income from continuing operations
$
1.65 $ 0.68 Loss from discontinued operations, net
-
(0.01
)
Net income per share $
1.65 $ 0.67
Diluted income per share attributable to company
shareholders: Income from continuing operations
$
1.64 $ 0.68 Loss from discontinued operations, net
-
(0.01 )
Net income per
share $ 1.64
$ 0.67 Basic weighted average
common shares outstanding
847 928 Diluted weighted average
common shares outstanding
853
931
(a)
Includes a $1.0 billion, pre-tax, charge
related to the Macondo well incident and a $55 million, pre-tax,
charge related to a charitable contribution to the National Fish
and Wildlife Foundation in the six months ended June 30, 2013.
(b) Includes $50 million in federal tax benefits in the six
months ended June 30, 2013. HALLIBURTON COMPANY
Condensed Consolidated Balance Sheets (Millions of dollars)
(Unaudited)
June 30 December 31
2014
2013
Assets Current assets: Cash and equivalents
$ 2,360 $ 2,356 Receivables, net
6,781 6,181
Inventories
3,529 3,305 Other current assets (a)
1,495 1,862
Total current assets 14,165 13,704 Property,
plant, and equipment, net
11,677 11,322 Goodwill
2,267 2,168 Other assets (b)
2,375 2,029
Total assets
$ 30,484
$ 29,223
Liabilities and Shareholders’
Equity Current liabilities: Accounts payable
$
2,727 $ 2,365 Accrued employee compensation and benefits
940 1,029 Loss contingency for Macondo well incident
278 278 Other current liabilities
1,424 1,354
Total
current liabilities 5,369 5,026 Long-term debt
7,816 7,816 Loss contingency for Macondo well incident
1,022 1,022 Other liabilities
1,690 1,744
Total
liabilities 15,897 15,608 Company shareholders’
equity
14,562 13,581 Noncontrolling interest in consolidated
subsidiaries
25
34
Total shareholders’ equity
14,587 13,615
Total liabilities and shareholders’ equity
$ 30,484 $
29,223
(a) Includes $125 million of
investments in fixed income securities at June 30, 2014, and $239
million of investments in fixed income securities at December 31,
2013. (b) Includes $156 million of investments in fixed
income securities at June 30, 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)
Six Months Ended June 30
2014 2013
Cash flows from operating
activities: Net income
$
1,391
$ 632 Adjustments to reconcile net income to net cash flows
from operating activities: Depreciation, depletion, and
amortization
1,034 922 Loss contingency for Macondo well
incident
-
1,000 Payment of Barracuda-Caratinga obligation
-
(219 ) Other, primarily working capital
(350 ) (864 )
Total cash
flows from operating activities
2,075 1,471
Cash flows from investing activities: Capital expenditures
(1,375 ) (1,396 ) Sales of investment securities
204 232
Purchases of investment securities
(115
) (110 ) Other investing activities
(234 ) 83
Total
cash flows from investing activities
(1,520 ) (1,191 )
Cash flows from financing activities: Payments to reacquire
common stock
(500 ) (1,015 ) Dividends to
shareholders
(254 ) (231 ) Other financing activities
230
(83 )
Total cash flows from financing activities
(524 )
(1,329 ) Effect of exchange rate changes on cash
(27 ) (23 )
Increase (decrease) in cash and equivalents
4 (1,072 ) Cash
and equivalents at beginning of period
2,356 2,484
Cash and
equivalents at end of period
$ 2,360 $
1,412 HALLIBURTON COMPANY
Revenue and Operating Income Comparison By Segment and Geographic
Region (Millions of dollars) (Unaudited) Three Months Ended
June 30
March 31
Revenue by geographic region:
2014 2013
2014 Completion and Production:
North America
$ 3,325 $ 2,876 $
2,927 Latin America
395 391 355 Europe/Africa/CIS
634
576 607 Middle East/Asia
588
520 531
Total
4,942
4,363 4,420
Drilling and Evaluation: North America
1,019 926 974 Latin
America
502 553 504 Europe/Africa/CIS
747 723 692
Middle East/Asia
841
752 758
Total
3,109
2,954 2,928 Total revenue
by region: North America
4,344 3,802 3,901 Latin America
897 944 859 Europe/Africa/CIS
1,381 1,299 1,299
Middle East/Asia
1,429
1,272 1,289
Total revenue
$
8,051 $ 7,317
$ 7,348
Operating income by
geographic region:
Completion and Production: North America
$ 630
$ 517 $ 446 Latin America
48 48 48 Europe/Africa/CIS
96 74 78 Middle East/Asia
113 93
89 Total
887
732 661
Drilling and Evaluation: North America
160 149 156
Latin America
13 53 52 Europe/Africa/CIS
90 87 68
Middle East/Asia
151
126 122
Total
414
415 398 Total operating
income by region: North America
790 666 602 Latin America
61 101 100 Europe/Africa/CIS
186 161 146 Middle
East/Asia
264
219 211 Corporate
and other
(107 )
(163 ) (89 ) Total operating
income
$ 1,194
$ 984
$ 970 HALLIBURTON COMPANY Revenue and
Operating Income Comparison By Segment and Geographic Region
(Millions of dollars) (Unaudited)
Six Months Ended June 30
Revenue by geographic
region: 2014
2013 Completion and Production: North
America
$ 6,252 $ 5,621 Latin America
750 746
Europe/Africa/CIS
1,241 1,108 Middle East/Asia
1,119 988
Total
9,362
8,463 Drilling and Evaluation: North America
1,993 1,887 Latin America
1,006 1,143
Europe/Africa/CIS
1,439 1,378 Middle East/Asia
1,599 1,420
Total
6,037
5,828 Total revenue by region: North America
8,245 7,508 Latin America
1,756 1,889
Europe/Africa/CIS
2,680 2,486 Middle East/Asia
2,718 2,408
Total revenue
$ 15,399
$ 14,291
Operating income by
geographic region:
Completion and Production: North
America
$ 1,076 $ 949 Latin America
96 76
Europe/Africa/CIS
174 138 Middle East/Asia
202 184
Total
1,548
1,347 Drilling and Evaluation: North America
316 322 Latin America
65 134 Europe/Africa/CIS
158 144 Middle East/Asia
273 222 Total
812 822
Total operating income by region: North America
1,392
1,271 Latin America
161 210 Europe/Africa/CIS
332 282
Middle East/Asia
475
406 Corporate and other
(196 ) (1,283 )
Total operating income
$
2,164 $ 886
Conference
Call Details
Halliburton (NYSE:HAL) will host a conference call on Monday,
July 21, 2014, to discuss the second quarter 2014 financial
results. The call will begin at 8:00 AM Central Time (9:00 AM
Eastern Time).
Halliburton’s second 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) 639-1106. 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
1637086.
HalliburtonKelly Youngblood, 281/871-2688Investor
Relationsinvestors@halliburton.comorCindy Bigner,
281/871-2601Corporate AffairsPR@halliburton.com
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