- Reported net income of $0.17 per
diluted share
- Adjusted net income of $0.23 per
diluted share, excluding impairments and other charges
Halliburton Company (NYSE:HAL) announced today net income of
$152 million, or $0.17 per diluted share, for the first quarter of
2019. This compares to net income for the first quarter of 2018 of
$46 million, or $0.05 per diluted share. Adjusted net income for
the first quarter of 2019, excluding impairments and other charges,
was $201 million, or $0.23 per diluted share. This compares to
adjusted net income for the first quarter of 2018, excluding
impairments and other charges, of $358 million, or $0.41 per
diluted share. Halliburton’s total revenue in the first quarter of
2019 was $5.7 billion, essentially flat year over year. Reported
operating income was $365 million during the first quarter of 2019,
a 3% increase compared to reported operating income of $354 million
in the first quarter of 2018. Excluding impairments and other
charges, adjusted operating income was $426 million for the first
quarter of 2019 and $619 million for the first quarter of 2018.
“Our results for the first quarter played out as we expected and
I’m pleased with how our organization executed both in North
America and internationally. We continued to collaborate with our
customers to engineer solutions that maximize their asset value,”
commented Jeff Miller, Chairman, President and CEO.
“Total company revenue of $5.7 billion was essentially flat
compared to the first quarter of 2018, and adjusted operating
income was $426 million.
“As expected, the first quarter activity levels in North America
were modestly higher compared to the first quarter of 2018, and we
experienced pricing headwinds throughout the quarter. We believe
the worst in the pricing deterioration is now behind us. For the
next couple of quarters, I see demand for our services progressing
modestly.
“International revenue increased 11% year over year, which was a
great first step towards our expectation of high single-digit
international growth for all of 2019. Broad-based recovery
continues across all regions, and we expect this momentum to build
going into 2020.
“Halliburton is well positioned to navigate the near-term and
thrive in the long run. We will achieve that through responsible
capital stewardship, prioritizing capital efficiency, investing in
the technologies that deliver differentiation, and generating
strong cash flow and returns,” concluded Miller.
Operating Segments
Completion and Production
Completion and Production revenue in the first quarter of 2019
was $3.7 billion, a decrease of $145 million, or 4%, when compared
to the first quarter of 2018, while operating income was $368
million, a decrease of $132 million, or 26%. These decreases were
primarily driven by lower pricing for stimulation services in U.S.
land, partially offset by higher artificial lift and cementing
activity in U.S. land, increased stimulation activity in Latin
America, and higher completion tool sales in Middle East/Asia and
Latin America.
Drilling and Evaluation
Drilling and Evaluation revenue in the first quarter of 2019 was
$2.1 billion, an increase of $142 million, or 7%, when compared to
the first quarter of 2018, with activity improvements across all
geographic regions. These increases primarily related to higher
logging and project management activity globally and improved
fluids activity in Latin America. Operating income was $123
million, a decrease of $65 million, or 35%, resulting primarily
from mobilization costs that we incurred on multiple drilling
projects internationally, coupled with reduced project management
activity and lower pricing in the Middle East.
Geographic Regions
North America
North America revenue in the first quarter of 2019 was $3.3
billion, a 7% decrease compared to the first quarter of 2018. This
decrease was primarily driven by lower pricing for stimulation
services in U.S. land, partially offset by higher artificial lift,
cementing and stimulation services activity.
International
International revenue in the first quarter of 2019 was $2.5
billion, an 11% increase year over year, resulting primarily from
increased stimulation and fluids activity in Latin America, coupled
with higher completion tool sales in the Middle East/Asia and
improved logging activity in Europe/Africa/CIS. These improvements
were partially offset by reduced fluids activity in the Middle
East.
Latin America revenue in the first quarter of 2019 was $587
million, a 28% increase year over year, resulting primarily from
higher activity for the majority of Halliburton's product service
lines in Mexico, higher stimulation activity in Argentina and
improved fluids activity throughout the region. This was partially
offset by reduced drilling and testing activity in Brazil.
Europe/Africa/CIS revenue in the first quarter of 2019 was $748
million, a 4% increase year over year, primarily driven by higher
activity across multiple product service lines in Ghana and the
United Kingdom. These results were partially offset by lower
drilling related activity in Azerbaijan.
Middle East/Asia revenue in the first quarter of 2019 was $1.1
billion, a 7% increase year over year, largely resulting from
higher completion tool sales across the region, coupled with
increased project management activity in India and improved
drilling activity in the Middle East. These improvements were
partially offset by reduced fluids activity and lower pricing in
the Middle East.
Selective Technology &
Highlights
- Halliburton announced it will build the
first oilfield chemical manufacturing plant in Saudi Arabia. Upon
the plant’s completion in 2020, Halliburton will begin local
manufacturing of a broad slate of specialty chemicals for
stimulation, production, midstream and downstream engineering
treatment programs to help customers achieve production and
reliability goals in applications from the reservoir to the
refinery.
- Halliburton signed a Memorandum of
Understanding with the Egyptian Ministry of Petroleum & Mineral
Resources to support a specialized development program for Egypt’s
middle management and young professional employees. The Memorandum
is a collaborative agreement under which Halliburton will utilize
its strength in human capital development to provide on-the-job
training for Egyptians who show the potential to be future leaders
in the oil and gas industry. Additionally, Halliburton will
customize a development program for select participants to enhance
their capabilities and assist Egypt in its role as a leading
regional oil and gas hub.
- Halliburton introduced a Motors Center
of Excellence, a new approach to drilling motor development that
combines specialized engineering and manufacturing capabilities to
customize motor designs for specific basin challenges. By
establishing a dedicated team of scientists in polymer chemistry,
materials, bearing and power section design, Halliburton can
accelerate research and development activities to deliver leading
drilling motors to the industry.
- Halliburton announced the execution of
an integrated services contract with Royal Dutch Shell for
post-salt development and pre-salt exploration in Brazil’s Campos
and Santos Basins. Under the contract, which includes a three-year
term with a two-year extension, Halliburton will provide drilling
services to drive greater efficiency by integrating multiple
product offerings and technologies. Halliburton has an established
track record in Brazil’s pre-salt fields, which have some of the
most complex wells ever drilled and require a broad scope of
technologies and capabilities to achieve economical and operational
success.
- Dr. M. Katherine Banks and Ms. Patricia
Hemingway Hall have been named to the Company’s board of directors.
The appointments were effective February 13, 2019, and both will
stand for election by shareholders at the annual meeting on May 15,
2019. "With Katherine and Pat, we strengthen our board with one
leader who has extensive experience in engineering and technology
and another who served as a CEO in the rapidly changing healthcare
industry and has substantial corporate governance experience," said
Jeff Miller, Halliburton chairman, president and CEO.
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, 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 March 31 December 31
2019 2018 2018
Revenue:
Completion and Production $ 3,662 $ 3,807 $ 3,832 Drilling and
Evaluation 2,075 1,933
2,104
Total revenue $ 5,737
$ 5,740 $ 5,936
Operating
income: Completion and Production $ 368 $ 500 $ 496 Drilling
and Evaluation 123 188 185 Corporate and other (65 ) (69 ) (73 )
Impairments and other charges (a) (61 ) (265 )
—
Total operating income 365
354 608 Interest expense, net
(143 ) (140 ) (137 ) Other, net (30 ) (25 )
(13 )
Income from continuing operations before income
taxes 192 189 458 Income tax (provision) benefit (b)
(40 ) (142 ) 210
Net income
$ 152 $ 47 $ 668
Net income attributable to noncontrolling interest —
(1 ) (4 )
Net income attributable to
company $ 152 $ 46 $
664 Basic and diluted net income per share $ 0.17 $
0.05 $ 0.76 Basic weighted average common shares outstanding 873
875 873 Diluted weighted average common shares outstanding
873 878 873 (a) During
the three months ended March 31, 2019, Halliburton recorded $61
million of impairments and other charges, primarily related to an
impairment of legacy sand delivery equipment. 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. (b) Includes $47
million of accrued taxes in Venezuela for the charge taken during
the three months ended March 31, 2018. Includes a $306 million tax
benefit during the three months ended December 31, 2018 related to
a strategic change in Halliburton's corporate structure. 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 Balance Sheets
(Millions of dollars)
(Unaudited)
March 31 December 31 2019
2018
Assets Current assets: Cash and
equivalents $ 1,380 $ 2,008 Receivables, net 5,622 5,234
Inventories 3,264 3,028 Other current assets 922
881
Total current assets 11,188 11,151
Property, plant and equipment, net 8,853 8,873 Goodwill
2,824 2,825 Deferred income taxes 1,348 1,384 Operating lease
right-of-use assets (a) 1,019 — Other assets 1,757
1,749
Total assets $
26,989 $ 25,982
Liabilities and
Shareholders’ Equity Current liabilities: Accounts
payable $ 3,080 $ 3,018 Accrued employee compensation and benefits
683 714 Current portion of operating lease liabilities (a) 255 —
Other current liabilities 1,029
1,070
Total current liabilities 5,047 4,802 Long-term
debt 10,307 10,312 Operating lease liabilities (a) 758 — Employee
compensation and benefits 454 483 Other liabilities
798 841
Total liabilities 17,364 16,438
Company shareholders’ equity 9,605 9,522 Noncontrolling
interest in consolidated subsidiaries 20
22
Total shareholders’ equity
9,625 9,544
Total liabilities and
shareholders’ equity $ 26,989
$ 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 March
31, 2019.
HALLIBURTON COMPANY
Condensed Consolidated Statements of Cash
Flows
(Millions of dollars)
(Unaudited)
Three Months Ended March 31 2019
2018
Cash flows from operating activities: Net
income $ 152 $ 47 Adjustments to reconcile net income to cash flows
from operating activities: Working capital (a) (515 ) (88 )
Depreciation, depletion and amortization 416 394 Impairments and
other charges 61 265 Other (158 ) (46 )
Total cash flows provided by (used in) operating activities
(44 ) 572
Cash flows from
investing activities: Capital expenditures (437 ) (501 )
Proceeds from sales of property, plant and equipment 43 47 Other
investing activities (17 ) 80
Total
cash flows provided by (used in) investing activities
(411 ) (374 )
Cash flows from financing
activities: Dividends to shareholders (157 ) (158 ) Other
financing activities 2 (21 )
Total
cash flows provided by (used in) financing activities
(155 ) (179 ) Effect of exchange rate changes
on cash (18 ) (24 ) Decrease in cash and
equivalents (628 ) (5 ) Cash and equivalents at beginning of period
2,008 2,337
Cash and
equivalents at end of period $ 1,380
$ 2,332
(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 March 31 December 31
Revenue 2019 2018 2018 By
operating segment: Completion and Production $ 3,662
$ 3,807 $ 3,832 Drilling and Evaluation 2,075
1,933 2,104
Total revenue
$ 5,737 $ 5,740
$ 5,936 By geographic
region: North America $ 3,275 $ 3,517 $ 3,341 Latin America 587 457
607 Europe/Africa/CIS 748 716 746 Middle East/Asia
1,127 1,050 1,242
Total
revenue $ 5,737
$ 5,740 $ 5,936
Operating Income
By operating segment: Completion and Production $ 368
$ 500 $ 496 Drilling and Evaluation 123
188 185 Total 491
688 681 Corporate and other (65 ) (69 ) (73 )
Impairments and other charges (61 ) (265 )
—
Total operating income
$ 365 $ 354
$ 608
See Footnote Table 1 for Reconciliation of
As Reported Operating Income to Adjusted Operating Income.
FOOTNOTE TABLE 1
HALLIBURTON COMPANY
Reconciliation of As Reported Operating
Income to Adjusted Operating Income
(Millions of dollars)
(Unaudited)
Three Months Ended
March 31,2019
March 31,2018
As reported operating income $ 365 $ 354 Impairments
and other changes (a) 61 265 Adjusted
operating income (b) $ 426 $ 619 (a) During
the three months ended March 31, 2019, Halliburton recorded $61
million of impairments and other charges, primarily related to an
impairment of legacy sand delivery equipment. 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. (b) Management believes
that operating income adjusted for impairments and other charges
for the three months ended March 31, 2019 and 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, 2019 and March 31, 2018.
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 March 31, 2019 March 31,
2018 As reported net income attributable to company $ 152
$ 46 Adjustments: Impairments and other charges (a)
61 265 Total adjustments, before taxes 61 265
Tax provision (benefit) (b) (12 ) 47 Total
adjustments, net of taxes (c) $ 49 $ 312
Adjusted net income attributable to company $ 201
$ 358 Diluted weighted average common shares
outstanding 873 878 As reported net income per diluted share
(d) $ 0.17 $ 0.05 Adjusted net income per diluted share (d)
$ 0.23 $ 0.41 (a) During the
three months ended March 31, 2019, Halliburton recorded $61 million
of impairments and other charges, primarily related to an
impairment of legacy sand delivery equipment. 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. (b) Represents tax
effect of impairments and other charges during the three months
ended March 31, 2019 and $47 million of accrued taxes in Venezuela
for the charge taken during the three months ended March 31, 2018.
(c) 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 March 31, 2019 and March 31, 2018. (d) 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, April 22, 2019, to discuss its first 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.
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 until April 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
4537829.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190422005131/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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