- Reported net income of $0.09 per diluted share
- Adjusted net income of $0.35 per diluted share, excluding
impairments and other charges
Halliburton Company (NYSE:HAL) announced today net income of $75
million, or $0.09 per diluted share, for the second quarter of
2019. This compares to net income for the first quarter of 2019 of
$152 million, or $0.17 per diluted share. Adjusted net income for
the second quarter of 2019, excluding impairments and other
charges, was $303 million, or $0.35 per diluted share. This
compares to adjusted net income for the first quarter of 2019 of
$201 million, or $0.23 per diluted share. Reported operating income
was $303 million during the second quarter of 2019, compared to
reported operating income of $365 million in the first quarter of
2019. Excluding impairments and other charges, adjusted operating
income was $550 million for the second quarter of 2019 compared to
$426 million for the first quarter of 2019.
“Halliburton’s execution in the second quarter was outstanding
and I am pleased with our results. We continue to build on the
growth momentum internationally and successfully manage the market
dynamics in North America,” commented Jeff Miller, Chairman,
President and CEO.
“Total company revenue was $5.9 billion and adjusted operating
income was $550 million, representing increases of 3% and 29%,
respectively, compared to the first quarter of 2019.
“International revenue increased 6% sequentially, confirming our
expectation of high single-digit international growth for all of
2019. Momentum is building internationally and activity improvement
should continue into 2020. Halliburton has the footprint and the
expanded technology portfolio to capitalize on this international
growth.
“I’m pleased with how Halliburton performed in North America in
the second quarter. Both of our divisions made meaningful
contributions to growing North America revenue and margins in the
second quarter. We are successfully executing our strategy of
controlling what we can control and managing our business to
perform well in any market conditions.
“As international growth continues and North American
unconventionals mature, we remain focused on delivering consistent
execution, generating superior financial performance and providing
industry-leading shareholder returns,” concluded Miller.
Operating Segments
Completion and Production
Completion and Production revenue in the second quarter of 2019
was $3.8 billion, an increase of $143 million, or 4%, when compared
to the first quarter of 2019, while operating income was $470
million, an increase of $102 million, or 28%. These improvements
were primarily driven by increased cementing activity and
completion tool sales internationally, higher artificial lift
activity in North America, increased stimulation activity in North
America and Middle East/Asia, and increased pipeline services in
Europe/Africa/CIS. This was offset by reduced stimulation activity
in Latin America.
Drilling and Evaluation
Drilling and Evaluation revenue in the second quarter of 2019
was $2.1 billion, an increase of $50 million, or 2%, when compared
to the first quarter of 2019, while operating income was $145
million, an increase of $22 million, or 18%. These improvements
were primarily driven by increased wireline activity globally,
improved drilling activity in North America, Latin America and
Europe/Africa/CIS, and higher project management activity in Middle
East/Asia. Partially offsetting these increases were reduced fluids
activity in Latin America and North America and lower software
revenue globally.
Geographic Regions
North America
North America revenue in the second quarter of 2019 was $3.3
billion, a 2% increase when compared to the first quarter of 2019.
Improvements were primarily driven by higher stimulation,
artificial lift and wireline activity in North America land and
higher drilling activity in the Gulf of Mexico. These improvements
were partially offset by lower software revenue across the region
and reduced fluids activity in the Gulf of Mexico.
International
International revenue in the second quarter of 2019 was $2.6
billion, a 6% increase when compared to the first quarter of 2019,
resulting primarily from higher completion tool sales and increased
cementing, project management, and fluids activity in the Eastern
Hemisphere, coupled with improved stimulation activity in Middle
East/Asia and higher wireline activity across all regions. These
improvements were partially offset by reduced fluids activity in
Latin America and lower software revenue internationally.
Latin America revenue in the second quarter of 2019 was $571
million, a 3% decrease sequentially, resulting primarily from lower
software revenue and reduced fluids activity throughout the region
and reduced stimulation activity in Argentina. These reductions
were partially offset by increased drilling and wireline activity
in Mexico and higher cementing activity and completion tool sales
in Argentina.
Europe/Africa/CIS revenue in the second quarter of 2019 was $823
million, a 10% increase sequentially, primarily driven by higher
activity across multiple product service lines in the North Sea and
increased well construction services in Russia, partially offset by
reduced software revenue throughout the region.
Middle East/Asia revenue in the second quarter of 2019 was $1.2
billion, a 7% increase sequentially, largely resulting from higher
completion tool sales and increased pressure pumping, wireline, and
project management activity throughout the region, coupled with
improved drilling activity in Asia. These improvements were
partially offset by lower drilling activity in the Middle East.
Corporate and Other
Events
Halliburton recognized company-wide impairments and other
charges during the second quarter of 2019 of $247 million, pre-tax.
These charges consisted primarily of asset impairments and
severance costs, as the company continues to adjust its cost
structure and footprint to the current operating environment.
During the second quarter of 2019, Halliburton repurchased
approximately 4.5 million shares of common stock at a total cost of
$100 million.
Selective Technology &
Highlights
- Halliburton acquired the PROMORE downhole pressure gauge
business. PROMORE is a leader in the application of permanent well
monitoring systems and will be a part of Halliburton's Intelligent
Completions group. The addition of PROMORE technologies aligns with
the strategic focus within Halliburton Completion Tools on sensors
and digitalization.
- Halliburton released Flex™ Managed Pressure Drilling System
(MPD), a scalable and mobile technology that can be configured to
address specific operator challenges and deliver greater rig
efficiency. The tiered system allows operators to select the right
level of service to help maximize the cost/benefit of managed
pressure drilling services.
- The Special Task Force for Upstream Oil and Gas Business
Activities (SKK Migas), an institution established by the
government of the Republic of Indonesia, selected Halliburton's
Landmark software technology for end-to-end workflow solutions. SKK
Migas adopted the DecisionSpace® suite of software to improve
exploration and production efficiency through data analytics,
integration and cross-disciplinary collaboration.
- Halliburton introduced the Elect® frac sleeve, a monobore
sleeve solution that enables unlimited stage count in multistage
fracturing operations. The Elect frac sleeve is an evolutionary
step in completion sleeves, supporting greater flexibility for
highly optimized reservoir access with pinpoint well stimulation
options.
- Halliburton announced the execution of an integrated offshore
drilling services contract with Kuwait Oil Company for six
high-pressure high-temperature exploration wells on two jack-up
rigs in the Arabian Gulf. Under the contract, which includes a
three-year term with a six-month extension option, Halliburton will
provide well construction, well testing, coring, coiled tubing, and
the majority of offshore logistical services.
About Halliburton
Founded in 1919, Halliburton celebrates its 100 years of service
as one of the world's largest providers of products and services to
the energy industry. With approximately 60,000 employees,
representing 140 nationalities in more than 80 countries, the
company helps its customers maximize value 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 throughout
the life of the asset. Visit the company’s website at
www.halliburton.com. Connect with Halliburton on Facebook, Twitter,
LinkedIn, Instagram 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 continuation or suspension of our stock 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; potential catastrophic events related to our operations, and
related 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 oil and
natural gas exploration, radioactive sources, explosives,
chemicals, hydraulic fracturing services, and climate-related
initiatives; the impact of federal tax reform, 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 sanctions, 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 and infrastructure issues 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, 2018, Form 10-Q for the
quarter ended March 31, 2019, 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
2019
2018
2019
Revenue:
Completion and Production
$
3,805
$
4,164
$
3,662
Drilling and Evaluation
2,125
1,983
2,075
Total revenue
$
5,930
$
6,147
$
5,737
Operating income:
Completion and Production
$
470
$
669
$
368
Drilling and Evaluation
145
191
123
Corporate and other
(65
)
(71
)
(65
)
Impairments and other charges (a)
(247
)
—
(61
)
Total operating income
303
789
365
Interest expense, net
(144
)
(137
)
(143
)
Other, net
(8
)
(19
)
(30
)
Income before income taxes
151
633
192
Income tax provision
(74
)
(125
)
(40
)
Net income
$
77
$
508
$
152
Net (income) loss attributable to
noncontrolling interest
(2
)
3
—
Net income attributable to
company
$
75
$
511
$
152
Basic and diluted net income per share
$
0.09
$
0.58
$
0.17
Basic weighted average common shares
outstanding
874
877
873
Diluted weighted average common shares
outstanding
875
880
873
(a) For further details of the 2019
impairments and other charges, see Footnote Table 1.
See Footnote Table 1 for Reconciliation of
As Reported Operating Income to Adjusted Operating Income.
See Footnote Table 2 for Reconciliation of
As Reported Net Income to Adjusted Net Income.
HALLIBURTON COMPANY
Condensed Consolidated Statements
of Operations
(Millions of dollars and shares
except per share data)
(Unaudited)
Six Months Ended June 30
2019
2018
Revenue:
Completion and Production
$
7,467
$
7,971
Drilling and Evaluation
4,200
3,916
Total revenue
$
11,667
$
11,887
Operating income:
Completion and Production
$
838
$
1,169
Drilling and Evaluation
268
379
Corporate and other
(130
)
(140
)
Impairments and other charges (a)
(308
)
(265
)
Total operating income
668
1,143
Interest expense, net
(287
)
(277
)
Other, net
(38
)
(44
)
Income before income taxes
343
822
Income tax provision
(114
)
(267
)
Net income
$
229
$
555
Net (income) loss attributable to
noncontrolling interest
(2
)
2
Net income attributable to
company
$
227
$
557
Basic net income per share
$
0.26
$
0.64
Diluted net income per share
$
0.26
$
0.63
Basic weighted average common shares
outstanding
874
876
Diluted weighted average common shares
outstanding
874
879
(a) See Footnote Table 1 for details of the 2019 impairments and
other charges. During the six months ended June 30, 2018,
Halliburton recognized a pre-tax charge of $265 million related to
a write-down of its remaining investment in Venezuela, consisting
of receivables, fixed assets, inventory and other assets and
liabilities. HALLIBURTON COMPANY
Condensed Consolidated Balance
Sheets
(Millions of dollars)
(Unaudited)
June 30
December 31
2019
2018
Assets
Current assets:
Cash and equivalents
$
1,176
$
2,008
Receivables, net
5,700
5,234
Inventories
3,347
3,028
Other current assets
997
881
Total current assets
11,220
11,151
Property, plant and equipment, net
8,778
8,873
Goodwill
2,825
2,825
Deferred income taxes
1,408
1,384
Operating lease right-of-use assets
(a)
978
—
Other assets
1,671
1,749
Total assets
$
26,880
$
25,982
Liabilities and Shareholders’
Equity
Current liabilities:
Accounts payable
$
3,017
$
3,018
Accrued employee compensation and
benefits
650
714
Current portion of operating lease
liabilities (a)
215
—
Other current liabilities
1,073
1,070
Total current liabilities
4,955
4,802
Long-term debt
10,307
10,312
Operating lease liabilities (a)
761
—
Employee compensation and benefits
469
483
Other liabilities
864
841
Total liabilities
17,356
16,438
Company shareholders’ equity
9,508
9,522
Noncontrolling interest in consolidated
subsidiaries
16
22
Total shareholders’ equity
9,524
9,544
Total liabilities and shareholders’
equity
$
26,880
$
25,982
(a) During the first quarter of 2019,
Halliburton adopted a new lease accounting standard, resulting in
$1.0 billion of additional assets and liabilities on the balance
sheet at June 30, 2019.
HALLIBURTON COMPANY
Condensed Consolidated Statements
of Cash Flows
(Millions of dollars)
(Unaudited)
Six Months Ended
June 30
2019
2018
Cash flows from operating
activities:
Net income
$
229
$
555
Adjustments to reconcile net income to
cash flows from operating activities:
Depreciation, depletion and
amortization
836
784
Working capital (a)
(755
)
(163
)
Impairments and other charges
308
265
Other operating activities
(211
)
87
Total cash flows provided by (used in)
operating activities
407
1,528
Cash flows from investing
activities:
Capital expenditures
(845
)
(1,066
)
Proceeds from sales of property, plant and
equipment
87
121
Payments to acquire businesses
(21
)
(148
)
Other investing activities
(32
)
(344
)
Total cash flows provided by (used in)
investing activities
(811
)
(1,437
)
Cash flows from financing
activities:
Dividends to shareholders
(314
)
(316
)
Stock repurchase program
(100
)
—
Other financing activities
6
(14
)
Total cash flows provided by (used in)
financing activities
(408
)
(330
)
Effect of exchange rate changes on
cash
(20
)
(40
)
Decrease in cash and equivalents
(832
)
(279
)
Cash and equivalents at beginning of
period
2,008
2,337
Cash and equivalents at end of
period
$
1,176
$
2,058
(a) Working capital includes receivables,
inventories and accounts payable.
HALLIBURTON COMPANY
Revenue and Operating Income
Comparison
By Operating Segment and
Geographic Region
(Millions of dollars)
(Unaudited)
Three Months Ended
June 30
March 31
Revenue
2019
2018
2019
By operating segment:
Completion and Production
$
3,805
$
4,164
$
3,662
Drilling and Evaluation
2,125
1,983
2,075
Total revenue
$
5,930
$
6,147
$
5,737
By geographic region:
North America
$
3,327
$
3,834
$
3,275
Latin America
571
479
587
Europe/Africa/CIS
823
726
748
Middle East/Asia
1,209
1,108
1,127
Total revenue
$
5,930
$
6,147
$
5,737
Operating Income
By operating segment:
Completion and Production
$
470
$
669
$
368
Drilling and Evaluation
145
191
123
Total
615
860
491
Corporate and other
(65
)
(71
)
(65
)
Impairments and other charges
(247
)
—
(61
)
Total operating income
$
303
$
789
$
365
See Footnote Table 1 for Reconciliation of
As Reported Operating Income to Adjusted Operating Income.
HALLIBURTON COMPANY
Revenue and Operating Income
Comparison
By Operating Segment and
Geographic Region
(Millions of dollars)
(Unaudited)
Six Months Ended June 30
Revenue
2019
2018
By operating segment:
Completion and Production
$
7,467
$
7,971
Drilling and Evaluation
4,200
3,916
Total revenue
$
11,667
$
11,887
By geographic region:
North America
$
6,602
$
7,351
Latin America
1,158
936
Europe/Africa/CIS
1,571
1,442
Middle East/Asia
2,336
2,158
Total revenue
$
11,667
$
11,887
Operating Income
By operating segment:
Completion and Production
$
838
$
1,169
Drilling and Evaluation
268
379
Total
1,106
1,548
Corporate and other
(130
)
(140
)
Impairments and other charges
(308
)
(265
)
Total operating income
$
668
$
1,143
FOOTNOTE TABLE 1
HALLIBURTON COMPANY
Reconciliation of As Reported
Operating Income to Adjusted Operating Income
(Millions of dollars)
(Unaudited)
Three Months Ended
June 30, 2019
March 31, 2019
As reported operating income
$
303
$
365
Impairments and other charges:
Long-lived asset impairments
108
42
Severance costs
58
19
Inventory write-downs
33
—
Other
48
—
Total impairments and other charges
247
61
Adjusted operating income (a)
$
550
$
426
(a)
Management believes that operating income
adjusted for impairments and other charges for the three months
ended June 30, 2019 and March 31, 2019 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 effect of these
items. Adjusted operating income is calculated as: “As reported
operating income” plus "Impairments and other charges" for the
three months ended June 30, 2019 and March 31, 2019.
FOOTNOTE TABLE 2
HALLIBURTON COMPANY
Reconciliation of As Reported Net
Income to Adjusted Net Income
(Millions of dollars and shares
except per share data)
(Unaudited)
Three Months Ended
June 30, 2019
March 31, 2019
As reported net income attributable to
company
$
75
$
152
Adjustments:
Impairments and other charges
247
61
Total adjustments, before taxes
247
61
Tax benefit
(19
)
(12
)
Total adjustments, net of taxes (a)
$
228
$
49
Adjusted net income attributable to
company
$
303
$
201
Diluted weighted average common shares
outstanding
875
873
As reported net income per diluted share
(b)
$
0.09
$
0.17
Adjusted net income per diluted share
(b)
$
0.35
$
0.23
(a)
Management believes that net income
adjusted for impairments and other charges, 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 net income without
the impact of these items as an indicator of performance, to
identify underlying trends in the business and to establish
operational goals. Total adjustments remove the effect of these
items. Adjusted net income attributable to company is calculated
as: “As reported net income attributable to company” plus "Total
adjustments, net of taxes" for the three months ended June 30, 2019
and March 31, 2019.
(b)
As reported net income per diluted share
is calculated as: "As reported net income attributable to company"
divided by "Diluted weighted average common shares outstanding."
Adjusted net income per diluted share is calculated as: "Adjusted
net income attributable to company" divided by "Diluted weighted
average common shares outstanding."
Conference Call Details
Halliburton Company (NYSE: HAL) will host a conference call on
Monday, July 22, 2019, to discuss its second quarter 2019 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 via live webcast.
You may also participate in the call by dialing (888) 393-0263
within North America or +1 (973) 453-2259 outside of North America.
A passcode is not required. Attendees should log in to the webcast
or dial in approximately 15 minutes prior to the start of the
call.
A replay of the conference call will be available on
Halliburton’s website until July 29, 2019. Also, a replay may be
accessed by telephone at (855) 859-2056 within North America or +1
(404) 537-3406 outside of North America, using the passcode
6897750.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190722005113/en/
For Investors: Abu Zeya Halliburton, Investor Relations
Investors@Halliburton.com 281-871-2688 For Media: Emily Mir
Halliburton, Public Relations PR@Halliburton.com 281-871-2601
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