- Reported loss from continuing
operations of $0.04 per diluted share
- Adjusted income from continuing
operations of $0.04 per diluted share, excluding costs related to
an early extinguishment of debt
Halliburton Company (NYSE:HAL) announced today a loss from
continuing operations of $32 million, or $0.04 per diluted share,
for the first quarter of 2017. This compares to a loss from
continuing operations for the fourth quarter of 2016 of $149
million, or $0.17 per diluted share. Adjusted income from
continuing operations for the first quarter of 2017, excluding
costs related to an early extinguishment of debt, was $34 million,
or $0.04 per diluted share. This compares to adjusted income from
continuing operations for the fourth quarter of 2016, excluding
impairments and other charges and a class action lawsuit
settlement, of $35 million, or $0.04 per diluted share.
“Our total company revenue was $4.3 billion, a 6% improvement
sequentially, while operating income was $203 million for the
quarter. North America activity increased rapidly during the first
quarter, which was highlighted by our U.S. land revenue growth of
nearly 30%, outperforming the sequential average U.S. land rig
count growth of 27%. In the international markets, activity
declines due to seasonality were exacerbated by the current
cyclical headwinds,” said Dave Lesar, CEO.
“First quarter revenue in North America increased 24%
sequentially, significantly outperforming our largest peer. This
result was primarily driven by increased activity in our pressure
pumping and well construction product service lines. The first
quarter is best described as one of change, but I love the
opportunity that is developing in North America because our
strategy is designed to take advantage of that opportunity,”
remarked Jeff Miller, President.
“Eastern Hemisphere revenue declined by 12% sequentially, due to
seasonality, reduced activity and pricing pressure. While we
believe that the first quarter represents the bottom in the Eastern
Hemisphere rig count, the full year average for 2017 will likely be
only marginally higher than the full year average for 2016.
“Latin America revenue increased by 8% sequentially. This
increase was primarily due to improved activity levels in Brazil
and Mexico. Although we are seeing improvement in certain basins,
there are a variety of country specific headwinds that must be
overcome for a meaningful recovery in this region.
“We are in the midst of a unique and challenging cycle with very
different dynamics between the North American and international
markets. We are the execution company. I am excited by the activity
I see in North America and confident in our ability to manage
through any challenges in the international markets,” concluded
Miller.
Operating Segments
Completion and Production
Completion and Production revenue in the first quarter of 2017
was $2.6 billion, an increase of $336 million, or 15%, from the
fourth quarter of 2016, while operating income was $147 million, an
increase of $62 million, or 73%. These improvements were primarily
due to improved pressure pumping pricing and utilization in the
United States land market, partially offset by a decline of
completion tool sales in the Gulf of Mexico. International revenue
was negatively impacted by the seasonal decline in year-end
completion tool sales across the Eastern Hemisphere, and partially
offset by increased activity in the Middle East and Latin
America.
Drilling and Evaluation
Drilling and Evaluation revenue in the first quarter of 2017 was
$1.7 billion, a decrease of $78 million, or 4%, from the fourth
quarter of 2016, while operating income was $122 million, a
decrease of $126 million, or 51%. These reductions resulted
primarily from lower software sales across all regions, as well as
lower pricing and decreased fluid sales in the Middle East. The
decreases were partially offset by improved fluid sales and project
management activity in Mexico.
Geographic Regions
North America
North America revenue in the first quarter of 2017 was $2.2
billion, a 24% increase sequentially. This improvement was driven
primarily by increased pricing and utilization throughout the
United States land sector, particularly pressure pumping and well
construction product service lines.
International
International revenue in the first quarter of 2017 was $2.0
billion, an 8% decrease sequentially, resulting primarily from
lower activity in completion tools, Landmark, fluid services and
project management.
Latin America revenue in the first quarter of 2017 was $463
million, an 8% increase sequentially, driven by increased activity
in well completion, fluid services and production solutions in
Brazil, as well as pressure pumping, fluid services and project
management in Mexico.
Europe/Africa/CIS revenue in the first quarter of 2017 was $604
million, an 11% decrease sequentially, resulting primarily from
reduced well completion services and stimulation activity in
Angola, weather-related reduced activity in the North Sea and
Russia, and a decrease in drilling activity in Nigeria.
Middle East/Asia revenue in the first quarter of 2017 was $981
million, a 12% decrease sequentially, with reduced pricing and
activity across the region, particularly completion tools sales,
project management and drilling services.
Corporate and Other
Halliburton redeemed $1.4 billion of debt during the first
quarter of 2017, which included $400 million of 5.90% senior notes
due September 2018 and $1.0 billion of 6.15% senior notes due
September 2019. This redemption resulted in $104 million in costs
related to the early extinguishment of debt, which included the
redemption premium and a write-off of the remaining original debt
issuance costs and debt discount, partially offset by a gain from
the termination of related interest rate swap agreements.
Selective Technology &
Highlights
- Halliburton signed a contract with
Shell Iraq Petroleum Development to provide drilling services for
sustained production at Shell's Majnoon Oil Field in Southern Iraq.
Under the contract, Halliburton will mobilize three rigs to drill
development wells and carry out workover activities over the next
two years.
- Halliburton released Cruzer™
depth-of-cut rolling element, an innovative drill bit technology
designed to increase tool face control without reducing drilling
efficiency. This provides operators with the ability to increase
their rate of penetration at a lower cost per foot for improved
economics.
- Halliburton entered into the second
phase of a technology cooperation agreement with Petrobras which
will advance collaboration in a diverse set of projects targeting
complex reservoirs such as deepwater pre-salt and mature fields.
The project collaboration uses Halliburton's Brazil Technology
Center in Rio de Janeiro. The agreement will facilitate the
development of innovative solutions in geophysics, drilling and
completions, reservoir characterization, well testing, flow
assurance and production.
- Halliburton's Completion Tools product
service line recently set an industry record for a successful
operation of a toe sleeve. The performance of its RapidStart®
Initiator CT (casing test) sleeves opening up after 32 months down
hole in two separate wells of over 7,000 feet with static bottom
hole temperatures up to 215 degrees Fahrenheit. The sleeves also
were functional at a total pressure of 10,000 psi, and provided a
30-minute casing integrity test.
- Halliburton introduced SPECTRUMSM
FUSION, a hybrid coiled tubing service which combines diagnostic
and intervention capabilities in a single trip downhole. The FUSION
service includes the first real-time system in the market using
hybrid cable technology that combines fiber optic and electric to
provide downhole communication and continuous power for a variety
of diagnostic applications. The cable is conveyed through coiled
tubing to deliver intervention, diagnostic and reservoir assessment
services in one trip downhole to help customers achieve greater
efficiency, safer operations and a higher return on
investment.
About Halliburton
Founded in 1919, Halliburton is one of the world's largest
providers of products and services to the energy industry. With
approximately 50,000 employees, representing 140 nationalities and
operations in approximately 70 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, 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: the resolution of class action lawsuits;
indemnification and insurance matters; 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; 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;
agreement with respect to and completion of potential acquisitions
and integration and success of acquired businesses and operations
of joint ventures. Halliburton's Form 10-K for the year ended
December 31, 2016, 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
2017 2016 2016
Revenue: Completion and
Production $ 2,604 $ 2,324 $ 2,268 Drilling and Evaluation
1,675 1,874 1,753
Total revenue $ 4,279
$ 4,198 $ 4,021
Operating
income (loss): Completion and Production $ 147 $ 30 $ 85
Drilling and Evaluation 122 241 248 Corporate and other (a) (66 )
(46 ) (111 ) Impairments and other charges
-
(2,766 ) (169 ) Merger-related costs (b)
-
(538 )
-
Total operating income (loss) 203
(3,079 ) 53 Interest
expense, net (c) (242 ) (165 ) (137 ) Other, net (18
) (47 ) (91 )
Loss before income
taxes (57 ) (3,291 ) (175 ) Income tax benefit 25
875 22
Loss
from continuing operations (32 ) (2,416 ) (153 ) Loss from
discontinued operations, net
-
(2 )
-
Net loss $ (32 ) $ (2,418
) $ (153 ) Net loss attributable to noncontrolling
interest
-
6 4
Net loss
attributable to company $ (32 ) $
(2,412 ) $ (149 )
Amounts attributable to company
shareholders: Loss from continuing operations $ (32 ) $ (2,410
) $ (149 ) Loss from discontinued operations, net
-
(2 )
-
Net loss attributable to company $ (32
) $ (2,412 ) $ (149 ) Basic and diluted
net loss per share $ (0.04 ) $ (2.81 ) $ (0.17 ) Basic and diluted
weighted average common shares outstanding 867
858 865 (a) Includes a
$54 million charge related to the class action lawsuit settlement
for the three months ended December 31, 2016. (b) Includes $464
million of charges taken in the three months ended March 31, 2016
for the reversal of assets held for sale accounting.
(c) Includes $104 million of costs related
to early extinguishment of $1.4 billion of senior notes in the
three months ended March 31, 2017.
See Footnote Table 1 for Reconciliation of As Reported Loss from
Continuing Operations to Adjusted Income from Continuing
Operations. See Footnote Table 2 for Reconciliation of As Reported
Operating Income to Adjusted Operating Income.
HALLIBURTON COMPANY
Condensed Consolidated Balance Sheets
(Millions of dollars)
(Unaudited)
March 31 December 31 2017
2016
Assets Current assets: Cash and
equivalents $ 2,107 $ 4,009 Receivables, net 4,008 3,922
Inventories 2,295 2,275 Prepaid income taxes 555 585 Other current
assets 863 886
Total current
assets 9,828 11,677 Property, plant and equipment, net
8,415 8,532 Goodwill 2,419 2,414 Deferred income taxes 2,141 1,960
Other assets 2,082 2,417
Total assets $ 24,885 $
27,000
Liabilities and Shareholders’ Equity
Current liabilities: Accounts payable $ 2,006 $ 1,764
Accrued employee compensation and benefits 544 544 Current
maturities of long-term debt 97 163 Other current liabilities
1,195 1,552
Total current
liabilities 3,842 4,023 Long-term debt 10,812 12,214
Employee compensation and benefits 539 574 Other liabilities
703 741
Total liabilities 15,896
17,552 Company shareholders’ equity 8,951 9,409
Noncontrolling interest in consolidated subsidiaries
38 39
Total shareholders’ equity
8,989 9,448
Total liabilities and
shareholders’ equity $ 24,885
$ 27,000
HALLIBURTON COMPANY
Condensed Consolidated Statements of Cash
Flows
(Millions of dollars)
(Unaudited)
Three Months Ended March 31
2017 2016
Cash flows from operating
activities: Net loss $ (32 ) $ (2,418 )
Adjustments to reconcile net loss to cash flows from operating
activities: Depreciation, depletion and amortization 383 346
Payment related to the Macondo well incident (335 )
-
Deferred income tax benefit, continuing operations (132 ) (857 )
Working capital (a) 32 92 Impairments and other charges
-
2,766 Other 89 (100 )
Total
cash flows provided by (used in) operating activities
5 (171 )
Cash flows from
investing activities: Capital expenditures (265 ) (234 )
Proceeds from sales of property, plant and equipment 41 50 Other
investing activities (13 ) (24 )
Total cash flows used in investing activities
(237 ) (208 )
Cash flows from financing
activities: Payments on long-term borrowings (1,566 )
-
Dividends to shareholders (156 ) (154 ) Other financing activities
63 77
Total cash flows
used in financing activities (1,659 )
(77 ) Effect of exchange rate changes on cash
(11 ) (28 ) Decrease in cash and equivalents
(1,902 ) (484 ) Cash and equivalents at beginning of period
4,009 10,077
Cash and
equivalents at end of period $ 2,107
$ 9,593 (a) Working capital includes
receivables, inventories and accounts payable.
HALLIBURTON COMPANY
Revenue and Operating Income (Loss)
Comparison
By Operating Segment and Geographic
Region
(Millions of dollars)
(Unaudited)
Three Months Ended March 31
December 31
Revenue 2017
2016 2016 By operating segment:
Completion and Production
$ 2,604 $ 2,324 $ 2,268 Drilling and Evaluation
1,675 1,874
1,753
Total revenue
$ 4,279 $
4,198 $ 4,021
By geographic region: North America $ 2,231 $ 1,794 $
1,802 Latin America 463 541 428 Europe/Africa/CIS 604 778 676
Middle East/Asia 981
1,085 1,115
Total
revenue $ 4,279
$ 4,198
$ 4,021 Operating Income
(Loss)
By operating segment: Completion and
Production $ 147 $ 30 $ 85 Drilling and Evaluation
122 241
248 Total 269
271 333 Corporate
and other (66 ) (46 ) (111 ) Impairments and other charges
-
(2,766 ) (169 ) Merger-related costs
-
(538 )
-
Total operating income (loss)
$ 203 $
(3,079 ) $ 53
See Footnote Table 2 for Reconciliation of As
Reported Operating Income to Adjusted Operating Income.
FOOTNOTE TABLE 1
HALLIBURTON COMPANY
Reconciliation of As Reported Loss from
Continuing Operations to
Adjusted Income from Continuing
Operations
(Millions of dollars and shares except per
share data)
(Unaudited)
Three Months Ended March 31, 2017
December 31, 2016 As reported loss from continuing
operations attributable to company $ (32 ) $
(149 ) Adjustments:
Costs related to the early extinguishment
of debt
104
-
Impairments and other charges
-
169 Class action lawsuit settlement
-
54 Total adjustments, before
taxes (a) 104 223 Income tax benefit (38 ) (39
) Total adjustments, net of tax $ 66 $ 184
Adjusted income from continuing operations
attributable to company $ 34 $ 35
As reported diluted weighted average common shares
outstanding (b) 867 865 Adjusted diluted weighted average common
shares outstanding (b) 871 868 As reported loss from
continuing operations per diluted share (c) $ (0.04 ) $ (0.17 )
Adjusted income from continuing operations per diluted share (c)
$ 0.04 $
0.04
(a)
Management believes that income (loss)
from continuing operations adjusted for costs related to the early
extinguishment of debt, impairments and other charges, and class
action lawsuit settlement 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 income (loss) from continuing
operations 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 items. Adjusted income from continuing operations
attributable to company is calculated as: “As reported loss from
continuing operations attributable to company” plus "Total
adjustments, net of tax" for the three months ended March 31, 2017
and December 31, 2016.
(b) As reported diluted weighted average common shares
outstanding for the three months ended March 31, 2017 and December
31, 2016 excludes options to purchase four million and three
million shares of common stock, respectively, as their impact would
be antidilutive because our reported income from continuing
operations attributable to company was in a loss position during
each period. When adjusting income from continuing operations
attributable to company in each period for the adjustments
discussed above, these shares become dilutive. (c) As
reported loss from continuing operations per diluted share is
calculated as: "As reported 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."
FOOTNOTE TABLE 2
HALLIBURTON COMPANY
Reconciliation of As Reported Operating
Income to Adjusted Operating Income
(Millions of dollars)
(Unaudited)
Three Months Ended March 31,
2017 December 31, 2016 As reported operating
income $ 203 $ 53 Impairments and other
charges: Severance costs
-
54 Country closures
-
37 Inventory write-downs
-
36 Fixed asset impairments
-
13 Intangible asset impairments
-
1 Other
-
28 Total Impairments and other charges
-
169 Class action lawsuit settlement
-
54 Adjusted
operating income (a) $ 203
$ 276 (a) Management believes that operating income
(loss) adjusted for impairments and other charges and a class
action lawsuit settlement for the three months ended December 31,
2016 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 (loss) 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 items. Adjusted operating income is
calculated as: “As reported operating income” plus "Total
Impairments and other charges" and "Class action lawsuit
settlement" for the three months ended December 31, 2016. There
were no such charges or costs for the three months ended March 31,
2017.
Conference Call Details
Halliburton will host a conference call on Monday, April 24,
2017, to discuss the first quarter 2017 financial results. The call
will begin at 8:00 AM Central Time (9:00 AM Eastern Time).
Please visit the website to listen to the call live via webcast.
Interested parties may also participate in the call by dialing
(888) 393-0263 within North America or (973) 453-2259 outside North
America. 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 (855) 859-2056 within North
America or (404) 537-3406 outside of North America, using the
passcode 69590119.
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HalliburtonFor Investors:Lance Loeffler,
281-871-2688Halliburton, Investor
RelationsInvestors@Halliburton.comorFor Media:Emily Mir,
281-871-2601Halliburton, Public RelationsPR@Halliburton.com
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