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Halliburton Announces Fourth Quarter 2017 Results
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Reported loss from continuing operations of $0.92 per diluted share,
reflecting charges related to U.S. tax reform and Venezuela receivables - Adjusted income from continuing operations of $0.53 per diluted share
HOUSTON–(BUSINESS WIRE)–Halliburton Company (NYSE:HAL) announced today a loss from continuing
operations of $805 million, or $0.92 per diluted share, for the fourth
quarter of 2017. Adjusted income from continuing operations for the
fourth quarter of 2017, excluding charges related to United States tax
reform and Venezuela receivables, was $462 million, or $0.53 per diluted
share. This compares to income from continuing operations for the third
quarter of 2017 of $365 million, or $0.42 per diluted share.
Halliburton's total revenue in the fourth quarter of 2017 was $5.9
billion, a 9% increase from revenue of $5.4 billion in the third quarter
of 2017. Reported operating income was $379 million during the fourth
quarter of 2017, compared to operating income of $634 million in the
third quarter of 2017. Excluding special items, adjusted operating
income for the fourth quarter of 2017 was $764 million.
Total revenue for the full year of 2017 was $20.6 billion, an increase
of $4.7 billion, or 30%, from 2016. Reported operating income for 2017
was $1.4 billion, compared to a reported operating loss of $6.8 billion
for 2016. Excluding special items, adjusted operating income for 2017
was $2.0 billion, a three-fold improvement from adjusted operating
income of $690 million for 2016.
“Outstanding execution resulted in an excellent fourth quarter and we
are well positioned to take advantage of opportunities presented by a
growing North America market and improving international outlook. I
continue to believe we are on the path to normalized margins in North
America in 2018,” remarked Jeff Miller, President and CEO.
“2017 was a dynamic year for the oil and gas sector that marked another
step on the road to recovery for our industry. I am pleased with the way
our team executed on our value proposition, maintained strong service
quality, and generated superior results and industry leading returns.
“Our Drilling and Evaluation division delivered an impressive
performance over the second half of 2017, achieving nearly 50%
incrementals in the fourth quarter. These results demonstrate the
strength and diversity of our portfolio.
“Our Completion and Production division revenue grew 8% sequentially,
outperforming the change in average United States land rig count. The
North America completions market is tight, and demand for our
completions equipment and our service quality remains strong.
“I am optimistic about what I see in 2018. Commodity prices are
supportive of increasing activity in North America and I am encouraged
by the increase in tender activity and the positive discussions we are
having with our international customers,” concluded Miller.
Operating Segments
Completion and Production
Completion and Production revenue in the fourth quarter of 2017 was $3.8
billion, an increase of $267 million, or 8%, from the third quarter of
2017, while operating income was $552 million, a sequential increase of
$27 million, or 5%. In the United States land sector, higher pressure
pumping activity and pricing led to increased revenue while higher costs
and seasonality hindered profitability. Additionally, results improved
due to year-end completion tool sales in the Gulf of Mexico, higher
software sales in Latin America and increased stimulation activity in
the Eastern Hemisphere.
Drilling and Evaluation
Drilling and Evaluation revenue in the fourth quarter of 2017 was $2.1
billion, an increase of $229 million, or 12%, from the third quarter of
2017, while operating income was $291 million, an increase of $111
million, or 62%. These increases were primarily due to increased
drilling activity in the Middle East and North America and higher
software sales and services in Latin America.
Corporate and Other Events
On December 22, 2017, the Tax Cuts and Jobs Act of 2017 was signed into
law, effective January 1, 2018. Halliburton recorded an aggregate $882
million of non-cash discrete tax charges in the fourth quarter of 2017,
primarily as a result of preliminary tax provisions for the net impact
of this tax law. Halliburton is continuing its analysis of tax reform
impact on the company, and this provisional amount is subject to change.
Regarding Venezuela, Halliburton continues to experience delays in
collecting payments on receivables from our primary customer. These
delayed payments, combined with recent credit rating downgrades and
deteriorating market condition in Venezuela, required Halliburton to
record an aggregate charge of $385 million during the fourth quarter
under GAAP. This charge represents a fair market value adjustment on its
existing promissory note and a full reserve against other accounts
receivables with this customer. Halliburton actively manages its
strategic relationship with this customer and will continue to
vigorously pursue collections as it does business going forward.
Geographic Regions
North America
North America revenue in the fourth quarter of 2017 was $3.4 billion, a
7% increase sequentially. This improvement was driven primarily by
increased utilization and pricing throughout the United States land
sector in the majority of Halliburton’s product service lines, primarily
pressure pumping, as well as higher drilling activity and completion
tool sales in the Gulf of Mexico.
International
International revenue in the fourth quarter of 2017 was $2.5 billion, an
11% increase sequentially, resulting primarily from increased activity
across multiple product services lines in Latin America, and increases
in drilling and stimulation activity in the Eastern Hemisphere.
Latin America revenue in the fourth quarter of 2017 was $615 million, a
16% increase sequentially, driven by increased drilling activity and
higher software sales in Brazil, higher software sales in Mexico and
increased stimulation activity in Argentina. These results were
partially offset by reduced drilling activity in Venezuela.
Europe/Africa/CIS revenue in the fourth quarter of 2017 was $776
million, a 7% increase sequentially, primarily due to higher drilling
activity in the North Sea, coupled with increased activity in Algeria
and Egypt. These results were partially offset by a reduction in
completion tool sales in Nigeria.
Middle East/Asia revenue in the fourth quarter of 2017 was $1.1 billion,
a 12% increase sequentially, primarily resulting from increased drilling
and stimulation activity in the Middle East and year-end sales in China.
Selective Technology & Highlights
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Halliburton announced the release of Geometrix™ 4D Shaped Cutters, a
line of four distinct geometric profiles to help improve cutting
efficiency and increase control to reduce drilling costs. Halliburton
now offers the largest portfolio of shaped cutters in the oil and gas
industry. -
Sperry Drilling announced the release of JetPulse™ high-speed
telemetry service, which provides consistent, high-data rate
transmission of drilling and formation evaluation measurements. This
new telemetry system helps operators make faster decisions to optimize
well placement and improve well control while increasing drilling
efficiency. It provides the highest lost circulation material (LCM)
tolerance of any high-speed telemetry system, helping the operator
pump the required LCM concentration to cure mud losses without
changing or plugging the bottom hole assembly. The system also reduced
flat time in the drilling curve, maximizes rate of penetration and
optimizes reservoir contact by combining new telemetry technology with
measurement/logging-while-drilling (M/LWD) services. -
In October 2017, Halliburton announced the release of Marine Sentry™
3000, a rotating control device that provides a pressure control
solution by creating a seal around the drill string and tool joints
for safer containment of fluids during conventional or controlled
pressure drilling operations. The device is mounted on a rig’s surface
blowout preventer and monitors key functions to help reduce cost and
environmental impact while improving overall well safety in pressure
critical locations. -
Halliburton announced the release of BaraShale™ Lite Fluid System, a
high performance water-based fluid designed to maintain full salt
saturation with reduced density, help prevent lost circulation and
minimize waste disposal costs. Operators in formations containing salt
layers and low fracture pressure face major challenges while drilling.
BaraShale Lite fluid helps operators overcome these challenges using a
proprietary additive that tightly combines the base fluid, which
consists of brine to prevent salt washout, and oil to lighten the mud
weight. Operators can mix the fluid quickly on-site instead of in
large batches and reuse fluids for maximizing their operational
efficiency. It also helps ensure proper zonal isolation to increase
completion efficiency and prevent the loss of cement in the formation. -
Halliburton announced the release of the Electromagnetic Pipe Xaminer®
V (EPX™ V) service – the industry’s first technology allowing
operators to pinpoint casing defects and metal corrosion in up to five
tubular strings within the well. This innovative new service utilizes
proprietary sensor technologies and customized processing algorithms
to accurately identify potential well integrity issues and reduce the
likelihood of production disruptions for operators. The EPX V
complements Halliburton’s growing portfolio of corrosion inspection
tools and other industry-leading well integrity diagnostic services,
including the Acoustic Conformation Xaminer® (ACX™) service, which
accurately identifies the location of wellbore leaks. -
In November 2017, Halliburton announced that it worked with the Akwa
Ibom state government to inaugurate and open Nigeria's first oil and
gas training center fully-equipped with oilfield operations tools. The
Akwa Ibom Oil and Gas Training and Research Center will provide
courses in field development, drilling and completions engineering,
well intervention solutions and digital technologies to local energy
employees and students. Halliburton Landmark will provide the training
curriculum, instructors, software, workstations and tools to be used
in the classroom.
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 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, 2016, Form 10-Q for the quarter ended September 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.
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HALLIBURTON COMPANY Condensed Consolidated Statements of Operations (Millions of dollars and shares except per share data) (Unaudited) |
||||||||
| Three Months Ended | ||||||||
| December 31 | September 30 | |||||||
| 2017 | 2016 | 2017 | ||||||
| Revenue: | ||||||||
| Completion and Production | $ | 3,804 | $ | 2,268 | $ | 3,537 | ||
| Drilling and Evaluation | 2,136 | 1,753 | 1,907 | |||||
| Total revenue | $ | 5,940 | $ | 4,021 | $ | 5,444 | ||
| Operating income: | ||||||||
| Completion and Production | $ | 552 | $ | 85 | $ | 525 | ||
| Drilling and Evaluation | 291 | 248 | 180 | |||||
| Corporate and other (a) | (79 | ) | (111 | ) | (71 | ) | ||
| Impairments and other charges (b) | (385 | ) | (169 | ) | — | |||
| Total operating income | 379 | 53 | 634 | |||||
| Interest expense, net | (115 | ) | (137 | ) | (115 | ) | ||
| Other, net | (20 | ) | (91 | ) | (23 | ) | ||
| Income (loss) from continuing operations before income taxes | 244 | (175 | ) | 496 | ||||
| Income tax (provision) benefit (c) | (1,050 | ) | 22 | (135 | ) | |||
| Income (loss) from continuing operations | (806 | ) | (153 | ) | 361 | |||
| Loss from discontinued operations, net | (19 | ) | — | — | ||||
| Net income (loss) | $ | (825 | ) | $ | (153 | ) | $ | 361 |
| Net loss attributable to noncontrolling interest | 1 | 4 | 4 | |||||
| Net income (loss) attributable to company | $ | (824 | ) | $ | (149 | ) | $ | 365 |
| Amounts attributable to company shareholders: | ||||||||
| Income (loss) from continuing operations | $ | (805 | ) | $ | (149 | ) | $ | 365 |
| Loss from discontinued operations, net | (19 | ) | — | — | ||||
| Net income (loss) attributable to company | $ | (824 | ) | $ | (149 | ) | $ | 365 |
|
Basic income (loss) per share attributable to company shareholders: |
||||||||
| Income (loss) from continuing operations | $ | (0.92 | ) | $ | (0.17 | ) | $ | 0.42 |
| Loss from discontinued operations, net | (0.02 | ) | — | — | ||||
| Net income (loss) per share | $ | (0.94 | ) | $ | (0.17 | ) | $ | 0.42 |
|
Diluted income (loss) per share attributable to company shareholders: |
||||||||
| Income (loss) from continuing operations | $ | (0.92 | ) | $ | (0.17 | ) | $ | 0.42 |
| Loss from discontinued operations, net | (0.02 | ) | — | — | ||||
| Net income (loss) per share | $ | (0.94 | ) | $ | (0.17 | ) | $ | 0.42 |
| Basic weighted average common shares outstanding | 873 | 865 | 872 | |||||
| Diluted weighted average common shares outstanding | 873 | 865 | 873 |
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(a) Includes a $54 million charge related to a class action |
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(b) 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. |
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(c) Includes an aggregate $882 million of non-cash discrete tax charges during the three months ended December 31, 2017, primarily related to tax reform as well as other discrete tax items. |
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See Footnote Table 1 for Reconciliation of As Reported Operating |
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See Footnote Table 2 for Reconciliation of As Reported Loss from Continuing Operations to Adjusted Income (loss) from Continuing Operations. |
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HALLIBURTON COMPANY Condensed Consolidated Statements of Operations (Millions of dollars and shares except per share data) (Unaudited) |
||||||
| Year Ended December 31 | ||||||
| 2017 | 2016 | |||||
| Revenue: | ||||||
| Completion and Production | $ | 13,077 | $ | 8,882 | ||
| Drilling and Evaluation | 7,543 | 7,005 | ||||
| Total revenue | $ | 20,620 | $ | 15,887 | ||
| Operating income (loss): | ||||||
| Completion and Production | $ | 1,621 | $ | 107 | ||
| Drilling and Evaluation | 718 | 794 | ||||
| Corporate and other | (330 | ) | (265 | ) | ||
| Impairments and other charges (a) | (647 | ) | (3,357 | ) | ||
| Merger-related costs and termination fee (b) | — | (4,057 | ) | |||
| Total operating income (loss) | 1,362 | (6,778 | ) | |||
| Interest expense, net (c) | (593 | ) | (639 | ) | ||
| Other, net | (87 | ) | (208 | ) | ||
| Income (loss) from continuing operations before income taxes | 682 | (7,625 | ) | |||
| Income tax (provision) benefit (d) | (1,131 | ) | 1,858 | |||
| Loss from continuing operations | (449 | ) | (5,767 | ) | ||
| Loss from discontinued operations, net | (19 | ) | (2 | ) | ||
| Net loss | $ | (468 | ) | $ | (5,769 | ) |
| Net loss attributable to noncontrolling interest | 5 | 6 | ||||
| Net loss attributable to company | $ | (463 | ) | $ | (5,763 | ) |
| Amounts attributable to company shareholders: | ||||||
| Loss from continuing operations | $ | (444 | ) | $ | (5,761 | ) |
| Loss from discontinued operations, net | (19 | ) | (2 | ) | ||
| Net loss attributable to company | $ | (463 | ) | $ | (5,763 | ) |
| Basic loss per share attributable to company shareholders: | ||||||
| Loss from continuing operations | $ | (0.51 | ) | $ | (6.69 | ) |
| Loss from discontinued operations, net | (0.02 | ) | — | |||
| Net loss per share | $ | (0.53 | ) | $ | (6.69 | ) |
| Diluted loss per share attributable to company shareholders: | ||||||
| Loss from continuing operations | $ | (0.51 | ) | $ | (6.69 | ) |
| Loss from discontinued operations, net | (0.02 | ) | — | |||
| Net loss per share | $ | (0.53 | ) | $ | (6.69 | ) |
| Basic weighted average common shares outstanding | 870 | 861 | ||||
| Diluted weighted average common shares outstanding | 870 | 861 |
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(a) During the year ended December 31, 2017, Halliburton recognized an aggregate charge of $647 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. For further details of impairments and other charges for the year ended December 31, 2016, see Footnote Table 1. |
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(b) During the year ended December 31, 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. |
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(c) Includes $104 million of costs related to the early extinguishment of $1.4 billion of senior notes in the year ended December 31, 2017, as well as $41 million of debt redemption fees and associated expenses in the year ended December 31, 2016. |
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(d) 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. |
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See Footnote Table 1 for Reconciliation of As Reported Operating Income (Loss) to Adjusted Operating Income. |
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See Footnote Table 2 for Reconciliation of As Reported Loss from Continuing Operations to Adjusted Income (Loss) from Continuing Operations. |
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HALLIBURTON COMPANY Condensed Consolidated Balance Sheets (Millions of dollars) (Unaudited) |
||||
| December 31 | ||||
| 2017 | 2016 | |||
| Assets | ||||
| Current assets: | ||||
| Cash and equivalents | $ | 2,337 | $ | 4,009 |
| Receivables, net | 5,036 | 3,922 | ||
| Inventories | 2,396 | 2,275 | ||
| Prepaid income taxes | 133 | 585 | ||
| Other current assets | 875 | 886 | ||
| Total current assets | 10,777 | 11,677 | ||
| Property, plant and equipment, net | 8,521 | 8,532 | ||
| Goodwill | 2,693 | 2,414 | ||
| Deferred income taxes | 1,230 | 1,960 | ||
| Other assets | 1,864 | 2,417 | ||
| Total assets | $ | 25,085 | $ | 27,000 |
| Liabilities and Shareholders’ Equity | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 2,554 | $ | 1,764 |
| Accrued employee compensation and benefits | 746 | 544 | ||
| Short-term borrowings and current maturities of long-term debt | 512 | 170 | ||
| Other current liabilities | 1,050 | 1,545 | ||
| Total current liabilities | 4,862 | 4,023 | ||
| Long-term debt | 10,430 | 12,214 | ||
| Employee compensation and benefits | 609 | 574 | ||
| Other liabilities | 835 | 741 | ||
| Total liabilities | 16,736 | 17,552 | ||
| Company shareholders’ equity | 8,322 | 9,409 | ||
| Noncontrolling interest in consolidated subsidiaries | 27 | 39 | ||
| Total shareholders’ equity | 8,349 | 9,448 | ||
| Total liabilities and shareholders’ equity | $ | 25,085 | $ | 27,000 |
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HALLIBURTON COMPANY Condensed Consolidated Statements of Cash Flows (Millions of dollars) (Unaudited) |
||||||
| Year Ended December 31 | ||||||
| 2017 | 2016 | |||||
| Cash flows from operating activities: | ||||||
| Net loss | $ | (468 | ) | $ | (5,769 | ) |
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Adjustments to reconcile net loss to cash flows from operating |
||||||
| Depreciation, depletion and amortization |
1,556 |
1,503 | ||||
| Deferred income tax provision (benefit), continuing operations | 734 | (1,501 | ) | |||
| Impairments and other charges | 647 | 3,357 | ||||
| Working capital (a) |
(626 |
) | 1,232 | |||
| Income tax refund (b) | 478 | 430 | ||||
| Payment related to the Macondo well incident | (368 | ) | (33 | ) | ||
| Other | 515 | (922 | ) | |||
| Total cash flows provided by (used in) operating activities (c) | 2,468 | (1,703 | ) | |||
| Cash flows from investing activities: | ||||||
| Capital expenditures | (1,373 | ) | (798 | ) | ||
| Payments to acquire businesses | (628 | ) | — | |||
| Proceeds from sales of property, plant and equipment | 158 | 222 | ||||
| Other investing activities | (84 | ) | (134 | ) | ||
| Total cash flows used in investing activities | (1,927 | ) | (710 | ) | ||
| Cash flows from financing activities: | ||||||
| Payments on long-term borrowings | (1,641 | ) | (3,171 | ) | ||
| Dividends to shareholders | (626 | ) | (620 | ) | ||
| Other financing activities | 106 | 251 | ||||
| Total cash flows used in financing activities | (2,161 | ) | (3,540 | ) | ||
| Effect of exchange rate changes on cash | (52 | ) | (115 | ) | ||
| Decrease in cash and equivalents | (1,672 | ) | (6,068 | ) | ||
| Cash and equivalents at beginning of period | 4,009 | 10,077 | ||||
| Cash and equivalents at end of period | $ | 2,337 | $ | 4,009 |
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(a) Working capital includes receivables, inventories and accounts payable. |
|
(b) Halliburton 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 the carry back of net operating losses recognized in previous periods. |
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(c) Includes a $3.5 billion merger termination fee paid during the second quarter of 2016. |
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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 | 2017 | 2016 | 2017 | |||
| By operating segment: | ||||||
| Completion and Production | $ | 3,804 | $ | 2,268 | $ | 3,537 |
| Drilling and Evaluation | 2,136 | 1,753 | 1,907 | |||
| Total revenue | $ | 5,940 | $ | 4,021 | $ | 5,444 |
| By geographic region: | ||||||
| North America | $ | 3,400 | $ | 1,802 | $ | 3,163 |
| Latin America | 615 | 428 | 530 | |||
| Europe/Africa/CIS | 776 | 676 | 722 | |||
| Middle East/Asia | 1,149 | 1,115 | 1,029 | |||
| Total revenue | $ | 5,940 | $ | 4,021 | $ | 5,444 |
| Operating Income | ||||||
| By operating segment: | ||||||
| Completion and Production | $ | 552 | $ | 85 | $ | 525 |
| Drilling and Evaluation | 291 | 248 | 180 | |||
| Total | 843 | 333 | 705 | |||
| Corporate and other | (79 | ) | (111 | ) | (71 | ) |
| Impairments and other charges | (385 | ) | (169 | ) | — | |
| Total operating income | $ | 379 | $ | 53 | $ | 634 |
Contacts
Halliburton
For Investors:
Lance Loeffler,
281-871-2688
Halliburton, Investor Relations
[email protected]
or
For
Media:
Emily Mir, 281-871-2601
Halliburton, Public
Relations
[email protected]
