- Income from continuing operations of
$0.58 per diluted share
Halliburton Company (NYSE:HAL) announced today income from
continuing operations of $511 million, or $0.58 per diluted share,
for the second quarter of 2018. This compares to reported income
from continuing operations for the first quarter of 2018 of $46
million, or $0.05 per diluted share, and adjusted income from
continuing operations for the first quarter of 2018 of $358
million, or $0.41 per diluted share, excluding impairments and
other charges related to a write-down of all of the Company's
remaining investment in Venezuela. Operating income was $789
million during the second quarter of 2018, compared to reported
operating income of $354 million and adjusted operating income of
$619 million in the first quarter of 2018.
“We executed on our plan and delivered strong results. We
achieved total company revenue of $6.1 billion, representing a 7%
increase, while operating income was $789 million, a 27% increase
over adjusted operating income for the first quarter of 2018. Our
overall strategy is working well and we plan to stay the course,”
commented Jeff Miller, President and CEO.
“Our Completion & Production division grew operating income
by 34%, primarily driven by the strength of U.S. land. Despite
pricing levels that have yet to fully rebound from the recent down
cycle, we are achieving outstanding margins.
“North America had a strong performance this quarter. This is
the largest and fastest growing energy market in the world. On a
year-to-date basis, we have grown revenues 47% year over year,
while the U.S. land rig count has increased 16%. U.S. land achieved
margins that are closing in on what we achieved during the previous
peak in 2014.
“Halliburton is better positioned for the international recovery
than it has ever been and we are ready to make the most of it. We
have competitive market share in all of the major markets and have
consistently executed to manage the changing dynamics.
“Halliburton is resilient, adaptable and creative and we
outperform by keeping our core competencies strong and delivering
superior service quality. Our value proposition resonates with our
customers and we will continue to maximize their asset value while
providing industry leading returns for our shareholders,” concluded
Miller.
Operating Segments
Completion and Production
Completion and Production revenue in the second quarter of 2018
was $4.2 billion, an increase of $357 million, or 9%, from the
first quarter of 2018, while operating income was $669 million, an
increase of $169 million, or 34%. Improvements were led by
increased pressure pumping and artificial lift activity in the
United States land sector. Additionally, results improved due to
higher pressure pumping services in Europe/Africa/CIS and higher
completion tool sales in the Middle East, partially offset by
reduced completion tool sales in Europe/Africa/CIS and pressure
pumping services in the Middle East.
Drilling and Evaluation
Drilling and Evaluation revenue in the second quarter of 2018
was $2.0 billion, an increase of $50 million, or 3%, from the first
quarter of 2018, while operating income was $191 million, an
increase of $3 million, or 2%. These improvements were primarily
due to increased drilling activity in the United States land
sector, increased drilling services and project management activity
in the Middle East and India, and increased software sales in
Mexico. These improvements were partially offset by reduced
drilling fluid activity in the Gulf of Mexico.
Geographic Regions
North America
North America revenue in the second quarter of 2018 was $3.8
billion, a 9% increase sequentially. This improvement was driven by
increased activity throughout the United States land sector within
the majority of Halliburton’s product service lines, primarily
pressure pumping, as well as higher drilling and artificial lift
activity. Partially offsetting these increases were lower pressure
pumping activity in Canada and reduced drilling fluid activity in
the Gulf of Mexico.
International
International revenue in the second quarter of 2018 was $2.3
billion, a 4% increase sequentially, resulting primarily from
increased drilling services and project management activity in the
Middle East, as well as higher project management activity and
software sales in Mexico. These increases were partially offset by
lower completion tool sales in Europe/Africa/CIS, particularly in
the North Sea and Angola.
Latin America revenue in the second quarter of 2018 was $479
million, a 5% increase sequentially, resulting primarily from
increases in software sales and project management activity in
Mexico, as well as stimulation activity in Argentina.
Europe/Africa/CIS revenue in the second quarter of 2018 was $726
million, slightly improved sequentially. Higher pressure pumping
and pipeline services throughout the region were offset by lower
completion tool sales, primarily in the North Sea and Angola, along
with reduced drilling activity in Azerbaijan.
Middle East/Asia revenue in the second quarter of 2018 was $1.1
billion, a 6% increase sequentially, largely resulting from
increased drilling services, project management activity, and
completion tool sales in the Middle East, as well as higher project
management activity in India.
Selective Technology &
Highlights
- Halliburton acquired Athlon Solutions,
a manufacturer of chemicals for the upstream oil & gas industry
and a leading provider of specialty water and process treatment
chemicals, customized engineering solutions, and services. Athlon’s
chemicals manufacturing and water and process treatment business
add key complementary capabilities to accelerate growth of
Halliburton's Multi-Chem product service line and enhances the
Company's ability to deliver superior customer service and custom
chemistry to more customers.
- Halliburton United Arab Emirates (UAE)
facilities received the American Petroleum Institute (API)
Specification Q2, ISO 9001 and OHSAS 18001 certifications.
Halliburton facilities are the first in the oil services industry
to receive the three registrations in the UAE, and the first among
the company’s facilities in the Middle East to achieve this
standard of excellence.
- Saudi Aramco awarded Halliburton an
unconventional gas stimulation services contract to further improve
the economics of Saudi Aramco’s Unconventional Resources program.
Halliburton will utilize an integrated approach to support Saudi
Aramco’s increased recovery and production targets by providing
project management, hydraulic fracturing, coiled tubing, wireline
and perforating, completion tools and testing services.
- Halliburton launched several products
within various product service lines in our Drilling and Evaluation
division during the second quarter of 2018. New launches within
this division included EarthStar™ ultra-deep resistivity service, a
logging-while-drilling technology, and Stega™ efficient layout
design, an advanced drill bit that optimizes the placement of
back-up cutters. Additionally, e-cd™ Plus system is a new
technology that automates and enhances continuous circulation
connections during drilling and tipping operations.
- Halliburton introduced InnerVue™
Non-Intrusive Pipeline and Wellbore Diagnostics, a technology that
quickly and accurately detects blockages or leaks and profiles
deposits in pipelines and wellbores. InnerVue diagnostics
interprets pressure waves reflecting from internal features of the
pipeline or wellbore and extrapolates the pressure reflections into
deposit profiles or blockage and leak locations.
- Landmark launched DecisionSpace®
Production Engineering and DecisionSpace® Production Insights. This
software helps operators better utilize data to reduce costs and
unlock production potential.
- Halliburton acquired the technology
behind the BaraOmni™ hybrid separation system, a next-level
separation technology that removes ultrafine low-gravity solids
(LGS) effectively, resulting in better performing, longer-lasting
fluid systems with significantly reduced costs for operators.
About Halliburton
Founded in 1919, Halliburton is one of the world's largest
providers of products and services to the energy industry. With
over 55,000 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 offshore 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 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, 2017, Form 10-Q for the quarter ended March 31, 2018,
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
2018 2017 2018
Revenue: Completion and
Production $ 4,164 $ 3,132 $ 3,807 Drilling and Evaluation
1,983 1,825 1,933
Total revenue $ 6,147
$ 4,957 $ 5,740
Operating
income: Completion and Production $ 669 $ 397 $ 500 Drilling
and Evaluation 191 125 188 Corporate and other (71 ) (114 ) (69 )
Impairments and other charges (a) —
(262 ) (265 )
Total operating income
$ 789 $ 146
$ 354 Interest expense, net (137 ) (121 ) (140 ) Other, net
(19 ) (26 ) (25 )
Income (loss) from continuing operations before income taxes
$ 633 $ (1 ) $ 189 Income tax (provision) benefit (b)
(125 ) 29 (142 )
Net
income $ 508 $ 28
$ 47 Net (income) loss attributable to
noncontrolling interest 3 —
(1 )
Net income attributable to company
$ 511 $ 28
$ 46 Basic and diluted net income per share $ 0.58 $ 0.03 $
0.05 Basic weighted average common shares outstanding 877 869 875
Diluted weighted average common shares outstanding
880 871 878 (a)
During the three months ended March 31, 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. During the three months ended June 30, 2017,
Halliburton recognized a $262 million fair market value adjustment
related to Venezuela. (b) Includes $47 million of accrued taxes in
Venezuela for the charge taken during the three months ended March
31, 2018. 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)
Six Months Ended June 30 2018
2017
Revenue:
Completion and Production $ 7,971 $ 5,736 Drilling
and Evaluation 3,916
3,500
Total revenue
$ 11,887 $ 9,236
Operating income: Completion and Production $ 1,169 $ 544
Drilling and Evaluation 379 247 Corporate and other (140 ) (180 )
Impairments and other charges (a) (265 )
(262 )
Total operating income
$ 1,143 $
349 Interest expense, net (b) (277 ) (363 ) Other, net
(44 ) (44 )
Income (loss) from continuing operations before income taxes
$ 822 $ (58 ) Income tax (provision) benefit
(267 ) 54
Net income
(loss) $ 555
$ (4 ) Net loss attributable to noncontrolling interest
2 —
Net income (loss) attributable to company
$ 557 $ (4 ) Basic net
income per share $ 0.64 $ — Diluted net income per share $ 0.63 $ —
Basic weighted average common shares outstanding 876 868 Diluted
weighted average common shares outstanding 879
868 (a) 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. During the six months ended June
30, 2017, Halliburton recognized a $262 million fair market value
adjustment related to Venezuela. (b) Includes $104 million of costs
related to the early extinguishment of $1.4 billion of senior notes
in the six months ended June 30, 2017.
HALLIBURTON COMPANY
Condensed Consolidated Balance Sheets
(Millions of dollars)
(Unaudited)
June 30 December
31 2018 2017
Assets
Current assets: Cash and equivalents $ 2,058 $ 2,337
Marketable securities 414 70 Receivables, net 5,403 5,036
Inventories 2,637 2,396 Other current assets 924
938
Total current assets 11,436 10,777
Property, plant and equipment, net 8,825 8,521 Goodwill
2,824 2,693 Deferred income taxes 1,117 1,230 Other assets
1,563 1,864
Total assets
$ 25,765 $ 25,085
Liabilities
and Shareholders’ Equity Current liabilities: Accounts
payable $ 3,029 $ 2,554 Accrued employee compensation and benefits
635 746 Short-term borrowings and current maturities of long-term
debt 444 512 Other current liabilities 999
1,050
Total current liabilities 5,107 4,862
Long-term debt 10,427 10,430 Employee compensation and
benefits 585 609 Other liabilities 803
835
Total liabilities 16,922 16,736 Company
shareholders’ equity 8,823 8,322 Noncontrolling interest in
consolidated subsidiaries 20 27
Total shareholders’ equity 8,843
8,349
Total liabilities and shareholders’ equity
$ 25,765 $ 25,085
HALLIBURTON COMPANY
Condensed Consolidated Statements of Cash
Flows
(Millions of dollars)
(Unaudited)
Six Months Ended June 30
2018 2017
Cash flows
from operating activities: Net income
(loss) $ 555 $ (4 ) Adjustments to reconcile net income (loss) to
cash flows from operating activities: Depreciation, depletion and
amortization 784 769 Impairments and other charges 312 262 Working
capital (a) (163 ) (222 ) Other 40
(454 )
Total cash flows provided by
operating activities 1,528
351
Cash flows from investing
activities: Capital expenditures (1,066 ) (592 ) Purchases of
investment securities, net of sales (307 ) (10 ) Payments to
acquire businesses (148 ) — Proceeds from sales of property, plant
and equipment 121 76 Other investing activities
(37 ) (19 )
Total cash flows used in
investing activities (1,437 )
(545 )
Cash flows from financing
activities: Dividends to shareholders (316 ) (312 ) Payments on
long-term borrowings (26 ) (1,623 ) Other financing activities
12 294
Total cash flows used in financing activities
(330 ) (1,641 ) Effect of
exchange rate changes on cash (40 )
(35 ) Decrease in cash and equivalents (279 ) (1,870
) Cash and equivalents at beginning of period
2,337 4,009
Cash and
equivalents at end of period $ 2,058
$ 2,139 (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 2018 2017
2018 By operating segment:
Completion and Production $ 4,164 $
3,132 $ 3,807 Drilling and Evaluation 1,983
1,825 1,933
Total revenue $
6,147 $ 4,957
$ 5,740 By
geographic region: North America $ 3,834 $ 2,770 $ 3,517 Latin
America 479 508 457 Europe/Africa/CIS 726 679 716 Middle East/Asia
1,108 1,000
1,050
Total revenue
$ 6,147
$ 4,957 $
5,740 Operating Income
By operating segment: Completion and Production $ 669 $ 397
$ 500 Drilling and Evaluation 191
125 188
Total 860 522
688 Corporate and other (71 )
(114 ) (69 ) Impairments and other charges —
(262 ) (265 )
Total operating income $
789 $ 146
$ 354 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
2018 2017 By operating segment:
Completion and Production $ 7,971 $ 5,736 Drilling and Evaluation
3,916 3,500
Total revenue $ 11,887
$ 9,236 By
geographic region: North America $ 7,351 $ 5,001 Latin America 936
971 Europe/Africa/CIS 1,442 1,283 Middle East/Asia
2,158 1,981
Total revenue
$ 11,887
$ 9,236 Operating Income
By operating segment:
Completion and Production $ 1,169 $ 544 Drilling and Evaluation
379 247 Total
1,548 791
Corporate and other (140 ) (180 ) Impairments and other charges
(265 ) (262 )
Total operating
income $ 1,143
$ 349
FOOTNOTE TABLE 1
HALLIBURTON COMPANY
Reconciliation of As Reported Operating
Income to Adjusted Operating Income
(Millions of dollars)
(Unaudited)
Three Months Ended June 30, 2018
March 31, 2018 As reported operating income $ 789
$ 354 Impairments and other charges — 265
Adjusted operating income (a)
$ 789 $ 619 (a)
Management believes that operating income adjusted for impairments
and other charges for the three months ended March 31, 2018 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 March 31, 2018. There were no such operating
charges for the three months ended June 30, 2018.
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 March 31, 2018 As reported
income from continuing operations attributable to company $ 46
Adjustments: Impairments and other charges 265 Total
adjustments, before taxes (a) 265 Tax provision (b) 47 Total
adjustments, net of taxes $ 312 Adjusted income from
continuing operations attributable to company $ 358 Diluted
weighted average common shares outstanding 878 As reported
income from continuing operations per diluted share (c) $ 0.05
Adjusted income from continuing operations per diluted share (c)
$ 0.41 (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 taxes" for
the three months ended March 31, 2018. There were no such operating
charges for the three months ended June 30, 2018. (b)
Represents $47 million of accrued taxes in Venezuela for the charge
taken during the three months ended March 31, 2018. (c) 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, July 23,
2018, to discuss the second quarter 2018 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 6883878.
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version on businesswire.com: https://www.businesswire.com/news/home/20180723005090/en/
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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