- Reported income from continuing
operations of $0.76 per diluted share
- Adjusted income from continuing
operations of $0.41 per diluted share, excluding a tax benefit
related to a strategic change in the company’s corporate
structure
Halliburton Company (NYSE: HAL) announced today income from
continuing operations of $664 million, or $0.76 per diluted share,
for the fourth quarter of 2018. This compares to income from
continuing operations for the third quarter of 2018 of $435
million, or $0.50 per diluted share. Adjusted income from
continuing operations for the fourth quarter of 2018, excluding a
tax benefit related to a strategic change in the company’s
corporate structure, was $358 million, or $0.41 per diluted share.
Halliburton's total revenue in the fourth quarter of 2018 was $5.9
billion, a 4% decrease from revenue of $6.2 billion in the third
quarter of 2018. Operating income was $608 million during the
fourth quarter of 2018, a 15% decrease compared to operating income
of $716 million in the third quarter of 2018.
Total revenue for the full year of 2018 was $24.0 billion, an
increase of $3.4 billion, or 16%, from 2017. Reported operating
income for 2018 was $2.5 billion, compared to a reported operating
income of $1.4 billion for 2017. Excluding special items, adjusted
operating income for 2018 was $2.7 billion, a 35% improvement from
adjusted operating income of $2.0 billion for 2017.
“I am pleased with our overall financial results for the year
and for the fourth quarter. Our team optimized our performance in
North America as the market softened, and the recovery of our
international business continued,” commented Jeff Miller, Chairman,
President and CEO.
“The trajectory of this cycle has been far from smooth. As
expected, in North America, the demand for completion services
decreased during the fourth quarter, leading to lower pricing for
hydraulic fracturing services.
“Our international business continues to show signs of a steady
recovery, with revenue increasing 7% sequentially, underscoring the
versatility and global reach of our business portfolio.
“As North American oil production reaches historic highs,
operators focus on returns over growth, and the international
recovery continues, Halliburton is well prepared to thrive. We
intend to dynamically respond to the changing market environment,
reduce capital spending, develop differentiating technologies, and
generate strong cash flow.
“Halliburton celebrates 100 years of service in 2019. As we
enter our next century, we will remain focused on collaborating
with our customers and engineering solutions to maximize their
asset value, and on delivering strong cash flow and
industry-leading returns for our shareholders,” concluded
Miller.
Operating Segments
Completion and Production
Completion and Production revenue in the fourth quarter of 2018
was $3.8 billion, a decrease of $338 million, or 8%, when compared
to the third quarter of 2018, while operating income was $496
million, a sequential decrease of $117 million, or 19%. These
declines were primarily driven by lower activity and pricing for
stimulation services in North America, partially offset by
stimulation activity increases in Argentina and year-end completion
tool sales internationally.
Drilling and Evaluation
Drilling and Evaluation revenue in the fourth quarter of 2018
was $2.1 billion, an increase of $102 million, or 5%, when compared
to the third quarter of 2018, while operating income was $185
million, a sequential increase of $4 million, or 2%. These
increases were primarily due to year-end software sales, increased
fluids activity in the Gulf of Mexico, and improved project
management activity in Latin America. These improvements were
partially offset by reduced drilling activity in the Western
Hemisphere.
Geographic Regions
North America
North America revenue in the fourth quarter of 2018 was $3.3
billion, an 11% decrease sequentially. This decrease was primarily
driven by lower activity and pricing in stimulation services,
partially offset by higher fluids activity in the Gulf of
Mexico.
International
International revenue in the fourth quarter of 2018 was $2.6
billion, a 7% increase sequentially, resulting primarily from
increased year-end product and software sales in Middle East/Asia
and Latin America, partially offset by a seasonal decline in
pipeline services in Europe/Africa/CIS.
Latin America revenue in the fourth quarter of 2018 was $607
million, a 16% increase sequentially, resulting primarily from
year-end software and completion tool sales and higher stimulation
activity across the region, coupled with improved activity across
multiple product service lines in Mexico.
Europe/Africa/CIS revenue in the fourth quarter of 2018 was $746
million, relatively flat sequentially, primarily driven by a
seasonal decline in pipeline services across the region, coupled
with decreased activity across multiple product service lines in
the North Sea. These results were partially offset by year-end
completion tool sales in Ghana and Nigeria.
Middle East/Asia revenue in the fourth quarter of 2018 was $1.2
billion, an 8% increase sequentially, largely resulting from
year-end completion tool sales in the Middle East, coupled with
higher project management activity throughout the region.
Corporate and Other
Events
During the fourth quarter of 2018, Halliburton recognized the
impact of a strategic change in the company’s corporate structure,
which resulted in a net tax benefit of $306 million, or $0.35 per
diluted share.
During the fourth quarter of 2018, Halliburton repurchased $200
million of common stock.
Selective Technology &
Highlights
- Halliburton won three World Oil Awards
in 2018. Its Voice of the Oilfield™ solution won the "Best Digital
Transformation Award," while its BaraOmni™ Hybrid Separation System
and Global Rapid Intervention Package (GRIP™) won "Best Health,
Safety, Environment/Sustainable Development Award" for both the
onshore and offshore categories, respectively. In addition,
Halliburton was a finalist in five other award categories.
- Halliburton unveiled Cerebro™ in-bit
sensor package, a new technology that obtains performance data
directly from the drill bit and analyzes it to optimize cutter
engagement, reduce uncertainty, and increase drilling efficiency.
This new service improves data measurement and overall drilling
performance.
- Halliburton released the Illusion®
Spire, the first fluid efficient dissolvable frac plug. The
Illusion Spire plug is designed with a water saving element, so
that operators can pump faster and reduce completion time.
- In December 2018, Halliburton acquired
SmartFibres, an industry leader in the development, design and
manufacturing of downhole fiber optic pressure gauges. The addition
of SmartFibres strengthens Halliburton’s production enhancement
portfolio, providing a distinct advantage within the fiber optic
space in both unconventional and mature fields.
- Halliburton announced it has signed two
contracts with Eni Iraq BV (Eni) to provide integrated drilling
services at Eni’s Zubair Oil Field in Southern Iraq. Under the
contracts, Halliburton will mobilize four to six rigs to drill
development wells over the next two years.
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 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, 2017, Form 10-Q for the
quarter ended September 30, 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 December 31 September 30
2018 2017
2018
Revenue: Completion and Production $ 3,832 $ 3,804 $
4,170 Drilling and Evaluation 2,104
2,136 2,002
Total revenue $ 5,936
$ 5,940 $ 6,172
Operating income: Completion and Production $ 496 $ 554 $
613 Drilling and Evaluation 185 293 181 Corporate and other (73 )
(79 ) (78 ) Impairments and other charges (a)
— (385 ) —
Total operating income $ 608
$ 383 $ 716
Interest expense, net (137 ) (115 ) (140 ) Other, net
(13 ) (24 ) (42 )
Income from continuing operations before income taxes $ 458
$ 244 $ 534 Income tax (provision) benefit (b)
210 (1,050 ) (100
)
Income (loss) from continuing operations 668 (806 ) 434
Loss from discontinued operations, net —
(19 ) —
Net income (loss) $ 668
$ (825 ) $ 434 Net Income
(loss) attributable to noncontrolling interest
(4 ) 1 1
Net income (loss) attributable to company
$ 664 $ (824 )
$ 435
Amounts attributable to company
shareholders: Income (loss) from continuing operations $ 664 $
(805 ) $ 435 Loss from discontinued operations, net
— (19 ) —
Net income (loss) attributable to company
$ 664 $ (824 )
$ 435
Basic and diluted income (loss) per
share attributable to company shareholders: Income (loss) from
continuing operations $ 0.76 $ (0.92 ) $ 0.50 Loss from
discontinued operations, net —
(0.02 ) —
Basic and
diluted net income (loss) per share $ 0.76
$ (0.94 ) $ 0.50
Basic weighted average common shares outstanding 873 873 877
Diluted weighted average common shares outstanding
873 873
878 (a) During the three months ended December 31,
2017, Halliburton recognized an aggregate charge of $385 million,
representing a fair market value adjustment on its existing
promissory note with its primary customer in Venezuela and a full
reserve against other accounts receivables with this customer. (b)
Includes a $306 million tax benefit during the three months ended
December 31, 2018 related to a strategic change in Halliburton's
corporate structure, as well as an aggregate $882 million of
discrete tax charges during the three months ended December 31,
2017 primarily related to tax reform as well as other discrete tax
items. 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 (loss) 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)
Year Ended December 31 2018
2017
Revenue: Completion and
Production $ 15,973 $ 13,077 Drilling and Evaluation
8,022 7,543
Total
revenue $ 23,995
$ 20,620
Operating income: Completion and
Production $ 2,278 $ 1,625 Drilling and Evaluation 745 726
Corporate and other (291 ) (330 ) Impairments and other charges (a)
(265 ) (647 )
Total
operating income $ 2,467
$ 1,374 Interest expense, net (b) (554 ) (593
) Other, net (99 ) (99 )
Income from continuing operations before income taxes $
1,814 $ 682 Income tax provision (c) (157 )
(1,131 )
Income (loss) from continuing
operations 1,657 (449 ) Loss from discontinued operations, net
— (19 )
Net
income (loss) $ 1,657
$ (468 ) Net Income (loss) attributable to noncontrolling
interest (1 ) 5
Net income (loss) attributable to company
$ 1,656 $ (463 )
Amounts
attributable to company shareholders: Income (loss) from
continuing operations $ 1,656 $ (444 ) Loss from discontinued
operations, net —
(19 )
Net income (loss) attributable to company
$ 1,656 $ (463 )
Basic
and diluted income (loss) per share attributable to company
shareholders: Income (loss) from continuing operations $ 1.89 $
(0.51 ) Loss from discontinued operations, net
— (0.02 )
Basic and diluted net
income (loss) per share $ 1.89
$ (0.53 ) Basic weighted average common shares
outstanding 875 870 Diluted weighted average common shares
outstanding 877
870 (a) During the year ended December 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 year ended December 31, 2017, Halliburton
recognized an aggregate charge of $647 million, representing a fair
market value adjustment related to Venezuela receivables. (b)
Includes $104 million of costs related to the early extinguishment
of $1.4 billion of senior notes in the year ended December 31,
2017. (c) Includes a $306 million tax benefit during the year ended
December 31, 2018 related to a strategic change in Halliburton's
corporate structure and $47 million of accrued taxes in Venezuela
for the charge taken during the first quarter of 2018. Also
includes an aggregate $882 million of non-cash discrete tax charges
during the year ended December 31, 2017 primarily related to tax
reform as well as other discrete tax items. 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 (loss) from Continuing Operations to Adjusted
Income from Continuing Operations.
HALLIBURTON COMPANY
Condensed Consolidated Balance Sheets
(Millions of dollars)
(Unaudited)
December 31
December 31 2018
2017
Assets Current assets: Cash and
equivalents $ 2,008 $ 2,337 Receivables, net 5,234 5,036
Inventories 3,028 2,396 Other current assets
881 1,008
Total current assets
11,151 10,777 Property, plant and equipment, net 8,961 8,521
Goodwill 2,825 2,693 Deferred income taxes 1,465 1,230 Other assets
1,661 1,864
Total assets $ 26,063
$ 25,085
Liabilities and Shareholders’
Equity Current liabilities: Accounts payable $ 3,018 $
2,554 Accrued employee compensation and benefits 714 746 Short-term
borrowings and current maturities of long-term debt 36 512 Other
current liabilities 1,081
1,050
Total current liabilities 4,849 4,862
Long-term debt 10,421 10,430 Employee compensation and benefits 483
609 Other liabilities 766
835
Total liabilities 16,519 16,736 Company
shareholders’ equity 9,522 8,322 Noncontrolling interest in
consolidated subsidiaries 22
27
Total shareholders’ equity
9,544 8,349
Total liabilities
and shareholders’ equity $ 26,063
$ 25,085
HALLIBURTON COMPANY
Condensed Consolidated Statements of Cash
Flows
(Millions of dollars)
(Unaudited)
Year Ended December 31 2018
2017
Cash flows from operating
activities: Net income (loss) $ 1,657 $ (468 ) Adjustments to
reconcile net income (loss) to cash flows from operating
activities: Depreciation, depletion and amortization 1,606 1,556
Working capital (a) (384 ) (626 ) Deferred income tax provision
(benefit), continuing operations (267 ) 734 Impairments and other
charges 265 647 Other 280
625
Total cash flows provided by (used in)
operating activities 3,157
2,468
Cash flows from investing
activities: Capital expenditures (2,026 ) (1,373 ) Proceeds
from sales of property, plant and equipment 218 158 Payments to
acquire businesses (187 ) (628 ) Other investing activities
2 (84 )
Total cash
flows provided by (used in) investing activities
(1,993 ) (1,927 )
Cash flows
from financing activities: Dividends to shareholders (630 )
(626 ) Payments on long-term borrowings (445 ) (1,641 ) Stock
repurchase program (400 ) — Other financing activities
56 106
Total
cash flows provided by (used in) financing activities
(1,419 ) (2,161 ) Effect
of exchange rate changes on cash (74 )
(52 ) Decrease in cash and equivalents (329 ) (1,672
) Cash and equivalents at beginning of period
2,337 4,009
Cash and
equivalents at end of period $ 2,008
$ 2,337 (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 December 31 September 30
Revenue 2018 2017
2018 By operating segment: Completion and Production $ 3,832
$ 3,804 $ 4,170 Drilling and Evaluation 2,104
2,136 2,002
Total revenue $ 5,936
$ 5,940
$ 6,172 By geographic region: North
America $ 3,341 $ 3,400 $ 3,739 Latin America 607 615 522
Europe/Africa/CIS 746 776 757 Middle East/Asia
1,242 1,149 1,154
Total revenue $ 5,936
$ 5,940
$ 6,172 Operating Income
By
operating segment: Completion and Production $ 496 $ 554 $ 613
Drilling and Evaluation 185
293 181 Total
681 847 794
Corporate and other (73 ) (79 ) (78 ) Impairments and other charges
— (385 ) —
Total operating income $
608 $ 383
$ 716
HALLIBURTON COMPANY
Revenue and Operating Income
Comparison
By Operating Segment and Geographic
Region
(Millions of dollars)
(Unaudited)
Year Ended December 31
Revenue
2018 2017 By operating segment: Completion and
Production $ 15,973 $ 13,077 Drilling and Evaluation
8,022 7,543
Total
revenue $ 23,995
$ 20,620 By
geographic region: North America $ 14,431 $ 11,564 Latin America
2,065 2,116 Europe/Africa/CIS 2,945 2,781 Middle East/Asia
4,554 4,159
Total revenue $ 23,995
$ 20,620
Operating Income
By operating segment: Completion and Production $
2,278 $ 1,625 Drilling and Evaluation 745
726 Total
3,023 2,351 Corporate and other
(291 ) (330 ) Impairments and other charges
(265 ) (647 )
Total operating income
$ 2,467
$ 1,374
FOOTNOTE TABLE 1
HALLIBURTON COMPANY
Reconciliation of As Reported Operating
Income to Adjusted Operating Income
(Millions of dollars)
(Unaudited)
Three Months Ended Year Ended
December 31,2018
December 31,2017
December 31,2018
December 31,2017
As reported operating income $ 608 $ 383 $ 2,467 $ 1,374
Impairments and other changes — 385 265 647
Adjusted operating
income (a) $ 608 $ 768
$ 2,732 $ 2,021 (a)
Management believes that operating income adjusted for impairments
and other charges for the three months ended December 31, 2017 and
the years ended December 31, 2018 and December 31, 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 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 December 31, 2017 and the years ended
December 31, 2018 and December 31, 2017. There were no such charges
for the three months ended December 31, 2018.
FOOTNOTE TABLE 2
HALLIBURTON COMPANY
Reconciliation of As Reported Income
(Loss) from Continuing Operations to
Adjusted Income from Continuing
Operations
(Millions of dollars and shares except per
share data)
(Unaudited)
Three Months Ended Year
Ended
December 31,2018
December 31,2017
December 31,2018
December 31,2017
As reported income (loss) from continuing operations attributable
to company $ 664 $ (805 ) $ 1,656 $ (444 ) Adjustments:
Impairments and other charges — 385 265 647 Costs related to early
extinguishment of debt — —
— 104 Total
adjustments, before taxes — 385 265 751 Tax provision (benefit) (a)
(306 ) 882 (259 )
755 Total adjustments, net of taxes (b)
$ (306 ) $ 1,267 $
6 $ 1,506 Adjusted income
from continuing operations attributable to company $ 358
$ 462 $ 1,662
$ 1,062 As reported
diluted weighted average common shares outstanding (c) 873 873 877
870 Adjusted diluted weighted average common shares outstanding (c)
873 874 877 872 As reported income (loss) from continuing
operations per diluted share (d) $ 0.76 $ (0.92 ) $ 1.89 $ (0.51 )
Adjusted income from continuing operations per diluted share (d)
$ 0.41 $ 0.53
$ 1.90 $
1.22 (a) During the fourth quarter of 2018,
Halliburton recognized a $306 million tax benefit related to a
strategic change in Halliburton's corporate structure. During the
fourth quarter of 2017, Halliburton recognized an aggregate $882
million of discrete tax charges primarily related to tax reform as
well as other discrete tax items. Also included in the year ended
December 31, 2018 is $47 million of accrued taxes in Venezuela for
the charge taken during the first quarter of 2018. Also included is
the tax effect of the total adjustments during the respective
periods. (b) Management believes that income (loss) from continuing
operations adjusted for impairments and other charges and costs
related to early extinguishment of debt, including the related tax
effects and other tax adjustments, 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. Total adjustments remove the effect of
these items. Adjusted income from continuing operations
attributable to company is calculated as: “As reported income
(loss) from continuing operations attributable to company” plus
"Total adjustments, net of taxes" for the three months ended
December 31, 2018 and December 31, 2017 and the years ended
December 31, 2018 and December 31, 2017. (c) As reported diluted
weighted average common shares outstanding for the three months
ended December 31, 2017 and year ended December 31, 2017 excludes
options to purchase one million and two million shares of common
stock, respectively, as their impact would be antidilutive because
Halliburton's reported income from continuing operations
attributable to company was in a loss position during the period.
When adjusting income from continuing operations attributable to
company in the period for the adjustments discussed above, these
shares become dilutive. (d) As reported income (loss) from
continuing operations per diluted share is calculated as: "As
reported income (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."
Conference Call Details
Halliburton Company (NYSE: HAL) will host a conference call on
Tuesday, January 22, 2019, to discuss its fourth 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 via live webcast.
In addition, you may 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 for seven days following the call. 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 5964108.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190122005211/en/
For Investors:Abu ZeyaHalliburton, Investor
RelationsInvestors@Halliburton.com281-871-2688
For Media:Emily MirHalliburton, Public
RelationsPR@Halliburton.com281-871-2601
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