- Income from continuing operations of
$0.42 per diluted share
Halliburton Company (NYSE:HAL) announced today income from
continuing operations of $365 million, or $0.42 per diluted share,
for the third quarter of 2017. This compares to income from
continuing operations for the second quarter of 2017 of $28
million, or $0.03 per diluted share, and adjusted income from
continuing operations for the second quarter of 2017 of $201
million, or $0.23 per diluted share, excluding a fair market value
adjustment related to Venezuela.
“We had a strong quarter and I am very pleased with our
results. Our North American business is hitting on all cylinders
and our international business proved resilient in a challenging
environment. These results demonstrate why Halliburton is the
execution company,” remarked Jeff Miller, President and CEO.
“Total company revenue was $5.4 billion, representing a 10%
increase compared to the second quarter of this year. Total
operating income was over $630 million, primarily driven by
continued strengthening of market conditions in North America and
improved profitability in our Drilling and Evaluation product
lines. We outgrew our peers on a global basis demonstrating that we
are taking market share globally, and we generated industry leading
returns.
“The Drilling and Evaluation division revenue increased 4% and
operating margins expanded by 260 basis points to approximately 9%,
demonstrating solid execution in our international franchise.
“The Completion and Production division revenue increased by 13%
in the third quarter and operating margins improved by 215 basis
points, despite the approximately 50 basis point negative impact of
hurricane Harvey. This was driven by improved activity and pricing
throughout North America land in our pressure pumping, completion
tools and cementing product service lines.
“Our North American revenue increased by 14%, significantly
outperforming the average sequential U.S. land rig count growth of
6%. I am pleased with the progress we made this quarter towards our
goal of normalized margins in North America, demonstrating that our
strategy is working.
“Outside North America, our conservative outlook for the last
several quarters is proving accurate. Our international
organization has shown impressive control over their costs and
their commitment to making the toughest of markets sustainable.
“Halliburton is proud to be a service company and we believe our
investors and customers appreciate that. I am confident we are
working on the right things that create the most value and generate
the highest returns. Our strong competitive position is not purely
a function of geographic footprint. It is demonstrated in the depth
of the products and services that we provide to our customers and
use to generate industry leading returns for our shareholders,”
concluded Miller.
Operating Segments
Completion and Production
Completion and Production revenue in the third quarter of 2017
was $3.5 billion, an increase of $405 million, or 13%, from the
second quarter of 2017, while operating income was $525 million, an
increase of $128 million. These increases were primarily due to
improved utilization and pricing throughout the United States land
sector in the majority of our product service lines, as well as
contributions from our recent artificial lift acquisition.
Additionally, spring break-up recovery and activity in pressure
pumping and completion tools benefitted Canada. Internationally,
new contracts in Brazil and increased activity in the Middle East
improved results.
Drilling and Evaluation
Drilling and Evaluation revenue in the third quarter of 2017 was
$1.9 billion, an increase of $82 million, or 4%, from the second
quarter of 2017, while operating income was $180 million, an
increase of $55 million. These increases were primarily due to
increased drilling activity in the Middle East, North America and
Latin America. In the Eastern Hemisphere, growth in our Consulting
and Project Management product line was partially offset by
activity declines across Asia Pacific.
Geographic Regions
North America
North America revenue in the third quarter of 2017 was $3.2
billion, a 14% increase sequentially, relative to a 6% increase in
average U.S. rig count. This improvement was driven primarily by
increased utilization and pricing throughout the United States land
sector in the majority of our product service lines, primarily
pressure pumping, as well as higher well completion and pressure
pumping activity in Canada.
International
International revenue in the third quarter of 2017 was $2.3
billion, a 4% increase sequentially, resulting primarily from
increased activity across multiple product services lines in Latin
America, and increased pressure pumping services and drilling
activity in the Eastern Hemisphere.
Latin America revenue in the third quarter of 2017 was $530
million, a 4% increase sequentially, driven by increased activity
in Argentina, higher production group activity in Brazil and
increased drilling activity in Mexico. These results were partially
offset by reduced well completion activity in Venezuela.
Europe/Africa/CIS revenue in the third quarter of 2017 was $722
million, a 6% increase sequentially, primarily due to improved
utilization in the majority of our product services lines in the
North Sea and improved drilling and well completion services in
Russia and Nigeria. These results were partially offset by reduced
activity in Angola.
Middle East/Asia revenue in the third quarter of 2017 was $1.0
billion, a 3% increase sequentially, primarily resulting from
increased drilling activity in the Middle East and project
management activity in Indonesia, partially offset by reduced
activity and pricing across Southeast Asia and lower project
management activity in Iraq.
Selective Technology &
Highlights
- Halliburton announced the release of
GeoTech HE™, a robust drill bit that incorporates new features and
materials to deliver enhanced performance and increased reliability
in today's high energy drilling systems characterized by very high
weight-on-bit and drilling torque. Recent years have seen advances
in drilling equipment and practices that have enabled operators to
significantly increase energy and drilling speed to reduce costs.
As a result, drill bits experience higher forces that challenge
traditional design and significantly increase risk of damage.
GeoTech HE bits are built to function in these challenging
conditions.
- In August 2017, Halliburton held its
annual LIFE event, the oil and gas industry's premier business and
technology conference, attracting super majors, independents,
national oil companies, service companies and other participants
from across the global exploration and production value chain. This
year's forum addressed the challenges that companies face as they
navigate a rapidly evolving landscape and how digital technologies
such as Internet of Things (IoT), cloud and big data analytics are
transforming the way business is done.
- Halliburton and Microsoft announced
plans to enter into a strategic alliance to drive digital
transformation across the oil and gas industry. The relationship
will combine the expertise of global leaders in cloud and digital
transformation and exploration and production science, software and
services. Both companies will leverage and optimize Microsoft
technologies in machine learning, augmented reality, user
interactions and Industrial IoT, as well as Azure's
high-performance infrastructure and built-in computing capabilities
to deliver tightly integrated solutions across the energy value
chain. As a first step in the alliance, Halliburton has made
DecisionSpace® 365 available on Azure, enabling real-time data
streaming from IoT edge devices in oilfields and the ability to
apply deep-learning models to optimize drilling and production to
lower costs for customers.
- Sperry Drilling announced the release
of Radian™ Azimuthal Gamma Ray and Inclination Service, a
geosteering solution that provides real-time, high quality borehole
images and continuous inclination measurements. This information
provides operators with enhanced data to assist in the decision
making of optimal well placement and better reservoir contact for
increased production and lower costs per BOE.
About Halliburton
Founded in 1919, Halliburton is one of the world's largest
providers of products and services to the energy industry. With
over 50,000 employees, representing 140 nationalities in
approximately 70 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, 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 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 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, Form 10-Q for the quarter ended June 30, 2017,
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 September 30
June 30 2017 2016
2017
Revenue:
Completion and Production $
3,537 $ 2,176 $ 3,132 Drilling and Evaluation
1,907 1,657
1,825
Total revenue $
5,444 $ 3,833
$ 4,957
Operating income: Completion
and Production $ 525 $ 24 $ 397 Drilling and Evaluation 180 151 125
Corporate and other (a) (71 ) (47 ) (114 ) Impairments and other
charges (b)
-
-
(262 )
Total operating
income 634 128
146 Interest expense, net
(115 ) (141 ) (121 ) Other, net (23 )
(39 ) (26 )
Income
(loss) before income taxes 496 (52 ) (1 ) Income tax
(provision) benefit (135 )
59 29
Net
income $ 361 $
7 $ 28 Net (income) loss
attributable to noncontrolling interest 4
(1 )
-
Net income attributable to company
$ 365 $ 6
$ 28 Basic and diluted net income per share $
0.42 $ 0.01 $ 0.03 Basic weighted average common shares outstanding
872 862 869 Diluted weighted average common shares outstanding
873 864
871 (a) Includes an
aggregate $42 million of litigation settlements and one-time
executive compensation charges in the three months ended June 30,
2017. (b) During the three months ended June 30, 2017, Halliburton
recognized a $262 million fair market value adjustment relating to
Venezuela. See Footnote Table 1 for Reconciliation of As Reported
Operating Income to Adjusted Operating Income. See Footnote Table 2
for Reconciliation of As Reported Income from Continuing Operations
to Adjusted Income from Continuing Operations.
HALLIBURTON COMPANY
Condensed Consolidated Statements of
Operations
(Millions of dollars and shares except per
share data)
(Unaudited)
Nine Months EndedSeptember 30
2017 2016
Revenue: Completion and
Production $ 9,273 $ 6,614 Drilling and Evaluation
5,407 5,252
Total
revenue $ 14,680
$ 11,866
Operating income (loss): Completion
and Production $ 1,069 $ 22 Drilling and Evaluation 427 546
Corporate and other (251 ) (153 ) Impairments and other charges (a)
(262 ) (3,189 ) Merger termination fee and related costs (b)
-
(4,057 )
Total operating
income (loss) 983
(6,831 ) Interest expense, net (c) (478 ) (502 ) Other, net
(67 ) (117 )
Income
(loss) before income taxes 438 (7,450 ) Income tax (provision)
benefit (81 ) 1,836
Income (loss) from continuing operations 357 (5,614 )
Loss from discontinued operations, net
-
(2 )
Net income (loss)
$ 357 $ (5,616 )
Net loss attributable to noncontrolling interest 4
2
Net income (loss)
attributable to company $ 361
$ (5,614 )
Amounts attributable to company
shareholders: Income (loss) from continuing operations $ 361 $
(5,612 ) Loss from discontinued operations, net
-
(2 )
Net income (loss)
attributable to company $ 361
$ (5,614 ) Basic net income (loss) per share $
0.42 $ (6.53 ) Diluted net income (loss) per share 0.41 (6.53 )
Basic weighted average common shares outstanding $ 869 $ 860
Diluted weighted average common shares outstanding
872 860 (a) During
the nine months ended September 30, 2017, Halliburton recognized a
$262 million fair market value adjustment relating to Venezuela.
(b) During the nine months ended September 30, 2016, Halliburton
recognized a $3.5 billion merger termination fee and an aggregate
$464 million of charges for the reversal of assets held for sale
accounting. (c) Includes $104 million of costs related to the early
extinguishment of $1.4 billion of senior notes in the nine months
ended September 30, 2017, as well as $41 million of debt redemption
fees and associated expenses in the nine months ended September 30,
2016.
HALLIBURTON COMPANY
Condensed Consolidated Balance Sheets
(Millions of dollars)
(Unaudited)
September 30 December 31 2017
2016
Assets Current assets: Cash and
equivalents $ 1,898 $ 4,009 Receivables, net 4,852 3,922
Inventories 2,444 2,275 Prepaid income taxes 53 585 Other current
assets 897 886
Total
current assets 10,144 11,677 Property, plant and
equipment, net 8,432 8,532 Goodwill 2,685 2,414 Deferred income
taxes 2,191 1,960 Other assets 2,338
2,417
Total assets $ 25,790
$ 27,000
Liabilities and
Shareholders’ Equity Current liabilities: Accounts
payable $ 2,416 $ 1,764 Accrued employee compensation and benefits
706 544 Short-term borrowings and current maturities of long-term
debt 515 170 Other current liabilities 964
1,545
Total current liabilities 4,601
4,023 Long-term debt 10,423 12,214 Employee compensation and
benefits 571 574 Other liabilities 949
741
Total liabilities 16,544 17,552
Company shareholders’ equity 9,217 9,409 Noncontrolling interest in
consolidated subsidiaries 29
39
Total shareholders’ equity 9,246
9,448
Total liabilities and
shareholders’ equity $ 25,790
$ 27,000
HALLIBURTON COMPANY
Condensed Consolidated Statements of Cash
Flows
(Millions of dollars)
(Unaudited)
Nine Months EndedSeptember 30
2017 2016
Cash flows from operating activities:
Net income (loss) $ 357 $ (5,616 )
Adjustments to reconcile net income (loss)
to cash flows from operating activities:
Depreciation, depletion and amortization 1,163 1,117 Working
capital (a) (502 ) 609 Tax refund (b) 478 430 Payment related to
the Macondo well incident (368 ) (33 ) Impairments and other
charges 262 3,189 Deferred income tax benefit, continuing
operations (183 ) (1,511 ) Other 250
(947 )
Total cash flows provided by
(used in) operating activities (c) 1,457
(2,762 )
Cash flows
from investing activities: Capital expenditures (934 ) (625 )
Payments to acquire businesses (628 )
-
Proceeds from sales of property, plant and equipment 111 176 Other
investing activities (56 )
(73 )
Total cash flows used in investing
activities (1,507 )
(522 )
Cash flows from financing activities:
Payments on long-term borrowings (1,633 ) (3,149 ) Dividends to
shareholders (469 ) (465 ) Other financing activities
92 163
Total
cash flows used in financing activities
(2,010 ) (3,451 ) Effect of
exchange rate changes on cash (51 )
(53 ) Decrease in cash and equivalents (2,111
) (6,788 ) Cash and equivalents at beginning of period
4,009 10,077
Cash and equivalents at end of period
$ 1,898 $ 3,289
(a) Working capital includes receivables, inventories and accounts
payable. (b) We received $478 million and $430 million in U.S. tax
refunds during the third quarter of 2017 and 2016, respectively,
primarily as a result of our carry back of net operating losses we
recognized in previous periods. (c) Includes a $3.5 billion merger
termination fee paid during the second quarter of 2016.
HALLIBURTON COMPANY
Revenue and Operating Income
Comparison
By Operating Segment and Geographic
Region
(Millions of dollars)
(Unaudited)
Three Months Ended September 30
June 30
Revenue 2017
2016 2017 By operating segment:
Completion and
Production $ 3,537 $ 2,176 $ 3,132 Drilling and Evaluation
1,907 1,657
1,825
Total revenue
$ 5,444
$ 3,833 $
4,957 By geographic region: North America $
3,163 $ 1,658 $ 2,770 Latin America 530 415 508 Europe/Africa/CIS
722 744 679 Middle East/Asia 1,029
1,016 1,000
Total revenue $
5,444 $ 3,833
$ 4,957
Operating Income
By
operating segment: Completion and Production $ 525 $ 24 $ 397
Drilling and Evaluation 180
151 125
Total 705 175
522 Corporate and other
(71 ) (47 ) (114 ) Impairments and other charges
-
-
(262 )
Total operating
income $ 634
$ 128
$ 146 See Footnote Table 1 for
Reconciliation of As Reported Operating Income to Adjusted
Operating Income.
HALLIBURTON COMPANY
Revenue and Operating Income (Loss)
Comparison
By Operating Segment and Geographic
Region
(Millions of dollars)
(Unaudited)
Nine Months Ended September 30
Revenue 2017
2016 By operating segment:
Completion and Production $ 9,273 $ 6,614 Drilling and Evaluation
5,407 5,252
Total revenue $
14,680 $
11,866 By geographic region: North America $
8,164 $ 4,968 Latin America 1,501 1,432 Europe/Africa/CIS 2,005
2,317 Middle East/Asia 3,010
3,149
Total revenue
$ 14,680
$ 11,866 Operating Income
(Loss)
By operating segment: Completion and Production $ 1,069 $ 22
Drilling and Evaluation 427
546 Total 1,496
568 Corporate and other
(251 ) (153 ) Impairments and other charges (262 ) (3,189 ) Merger
termination fee and related costs
-
(4,057 )
Total operating
income (loss) $ 983
$ (6,831 )
FOOTNOTE TABLE 1
HALLIBURTON COMPANY
Reconciliation of As Reported Operating
Income to Adjusted Operating Income
(Millions of dollars)
(Unaudited)
Three Months Ended September 30, 2017
June 30, 2017 As reported operating income $ 634
$ 146 Impairments and other charges (a)
-
262 Adjusted operating income
(b) $ 634 $ 408 (a) During the
three months ended June 30, 2017, Halliburton recognized a $262
million fair market value adjustment relating to Venezuela.
(b) Management believes that operating income adjusted for
impairments and other charges for the three months ended June 30,
2017 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 this excluded item to
be outside of the company's normal operating results. Management
analyzes operating income without the impact of this item as an
indicator of performance, to identify underlying trends in the
business, and to establish operational goals. The adjustments
remove the effect of this item. Adjusted operating income is
calculated as: “As reported operating income” plus "Impairments and
other charges" for the three months ended June 30, 2017. There were
no such operating charges for the three months ended September 30,
2017.
FOOTNOTE TABLE 2
HALLIBURTON COMPANY
Reconciliation of As Reported Income from
Continuing Operations to
Adjusted Income from Continuing
Operations
(Millions of dollars and shares except per
share data)
(Unaudited)
Three Months Ended June 30, 2017 As reported income
from continuing operations attributable to company $ 28
Adjustments: Impairments and other charges 262 Total
adjustments, before taxes (a) 262
Income tax benefit
(89 ) Total adjustments, net of tax $ 173 Adjusted income
from continuing operations attributable to company $ 201
Diluted weighted average common shares outstanding 871
As reported income from continuing operations per diluted
share (b) $ 0.03 Adjusted income from continuing operations per
diluted share (b) $ 0.23 (a) Management
believes that income from continuing operations 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 income 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 adjustment removes the effect of these
items. Adjusted income from continuing operations attributable to
company is calculated as: “As reported income from continuing
operations attributable to company” plus "Total adjustments, net of
tax" for the three months ended June 30, 2017. There were no such
operating charges for the three months ended September 30, 2017.
(b) As reported income from continuing operations per
diluted share is calculated as: "As reported income from continuing
operations attributable to company" divided by "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
"Diluted weighted average common shares outstanding."
Conference Call Details
Halliburton will host a conference call on Monday, October 23,
2017, to discuss the third 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 63665948.
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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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