Halliburton Announces Third Quarter 2017 Results
- Income from continuing operations of $0.42 per diluted share
HOUSTON–(BUSINESS WIRE)–Halliburton Company (NYSE:HAL) announced today income from continuing
operations of $365 million, or $0.42 per diluted share, for the third
quarter of 2017. This compares to income from continuing operations for
the second quarter of 2017 of $28 million, or $0.03 per diluted share,
and adjusted income from continuing operations for the second quarter of
2017 of $201 million, or $0.23 per diluted share, excluding a fair
market value adjustment related to Venezuela.
“We had a strong quarter and I am very pleased with our results.
Our North American business is hitting on all cylinders and our
international business proved resilient in a challenging environment.
These results demonstrate why Halliburton is the execution company,”
remarked Jeff Miller, President and CEO.
“Total company revenue was $5.4 billion, representing a 10% increase
compared to the second quarter of this year. Total operating income was
over $630 million, primarily driven by continued strengthening of market
conditions in North America and improved profitability in our Drilling
and Evaluation product lines. We outgrew our peers on a global basis
demonstrating that we are taking market share globally, and we generated
industry leading returns.
“The Drilling and Evaluation division revenue increased 4% and operating
margins expanded by 260 basis points to approximately 9%, demonstrating
solid execution in our international franchise.
“The Completion and Production division revenue increased by 13% in the
third quarter and operating margins improved by 215 basis points,
despite the approximately 50 basis point negative impact of hurricane
Harvey. This was driven by improved activity and pricing throughout
North America land in our pressure pumping, completion tools and
cementing product service lines.
“Our North American revenue increased by 14%, significantly
outperforming the average sequential U.S. land rig count growth of 6%. I
am pleased with the progress we made this quarter towards our goal of
normalized margins in North America, demonstrating that our strategy is
working.
“Outside North America, our conservative outlook for the last several
quarters is proving accurate. Our international organization has shown
impressive control over their costs and their commitment to making the
toughest of markets sustainable.
“Halliburton is proud to be a service company and we believe our
investors and customers appreciate that. I am confident we are working
on the right things that create the most value and generate the highest
returns. Our strong competitive position is not purely a function of
geographic footprint. It is demonstrated in the depth of the products
and services that we provide to our customers and use to generate
industry leading returns for our shareholders,” concluded Miller.
Operating Segments
Completion and Production
Completion and Production revenue in the third quarter of 2017 was $3.5
billion, an increase of $405 million, or 13%, from the second quarter of
2017, while operating income was $525 million, an increase of $128
million. These increases were primarily due to improved utilization and
pricing throughout the United States land sector in the majority of our
product service lines, as well as contributions from our recent
artificial lift acquisition. Additionally, spring break-up recovery and
activity in pressure pumping and completion tools benefitted Canada.
Internationally, new contracts in Brazil and increased activity in the
Middle East improved results.
Drilling and Evaluation
Drilling and Evaluation revenue in the third quarter of 2017 was $1.9
billion, an increase of $82 million, or 4%, from the second quarter of
2017, while operating income was $180 million, an increase of $55
million. These increases were primarily due to increased drilling
activity in the Middle East, North America and Latin America. In the
Eastern Hemisphere, growth in our Consulting and Project Management
product line was partially offset by activity declines across Asia
Pacific.
Geographic Regions
North America
North America revenue in the third quarter of 2017 was $3.2 billion, a
14% increase sequentially, relative to a 6% increase in average U.S. rig
count. This improvement was driven primarily by increased utilization
and pricing throughout the United States land sector in the majority of
our product service lines, primarily pressure pumping, as well as higher
well completion and pressure pumping activity in Canada.
International
International revenue in the third quarter of 2017 was $2.3 billion, a
4% increase sequentially, resulting primarily from increased activity
across multiple product services lines in Latin America, and increased
pressure pumping services and drilling activity in the Eastern
Hemisphere.
Latin America revenue in the third quarter of 2017 was $530 million, a
4% increase sequentially, driven by increased activity in Argentina,
higher production group activity in Brazil and increased drilling
activity in Mexico. These results were partially offset by reduced well
completion activity in Venezuela.
Europe/Africa/CIS revenue in the third quarter of 2017 was $722 million,
a 6% increase sequentially, primarily due to improved utilization in the
majority of our product services lines in the North Sea and improved
drilling and well completion services in Russia and Nigeria. These
results were partially offset by reduced activity in Angola.
Middle East/Asia revenue in the third quarter of 2017 was $1.0 billion,
a 3% increase sequentially, primarily resulting from increased drilling
activity in the Middle East and project management activity in
Indonesia, partially offset by reduced activity and pricing across
Southeast Asia and lower project management activity in Iraq.
Selective Technology & Highlights
-
Halliburton announced the release of GeoTech HE™, a robust drill bit
that incorporates new features and materials to deliver enhanced
performance and increased reliability in today's high energy drilling
systems characterized by very high weight-on-bit and drilling torque.
Recent years have seen advances in drilling equipment and practices
that have enabled operators to significantly increase energy and
drilling speed to reduce costs. As a result, drill bits experience
higher forces that challenge traditional design and significantly
increase risk of damage. GeoTech HE bits are built to function in
these challenging conditions. -
In August 2017, Halliburton held its annual LIFE event, the oil and
gas industry's premier business and technology conference, attracting
super majors, independents, national oil companies, service companies
and other participants from across the global exploration and
production value chain. This year's forum addressed the challenges
that companies face as they navigate a rapidly evolving landscape and
how digital technologies such as Internet of Things (IoT), cloud and
big data analytics are transforming the way business is done. -
Halliburton and Microsoft announced plans to enter into a strategic
alliance to drive digital transformation across the oil and gas
industry. The relationship will combine the expertise of global
leaders in cloud and digital transformation and exploration and
production science, software and services. Both companies will
leverage and optimize Microsoft technologies in machine learning,
augmented reality, user interactions and Industrial IoT, as well as
Azure's high-performance infrastructure and built-in computing
capabilities to deliver tightly integrated solutions across the energy
value chain. As a first step in the alliance, Halliburton has made
DecisionSpace® 365 available on Azure, enabling real-time data
streaming from IoT edge devices in oilfields and the ability to apply
deep-learning models to optimize drilling and production to lower
costs for customers. -
Sperry Drilling announced the release of Radian™ Azimuthal Gamma Ray
and Inclination Service, a geosteering solution that provides
real-time, high quality borehole images and continuous inclination
measurements. This information provides operators with enhanced data
to assist in the decision making of optimal well placement and better
reservoir contact for increased production and lower costs per BOE.
About Halliburton
Founded in 1919, Halliburton is one of the world's largest providers of
products and services to the energy industry. With over 50,000
employees, representing 140 nationalities in approximately 70 countries,
the company helps its customers maximize value throughout the lifecycle
of the reservoir – from locating hydrocarbons and managing geological
data, to drilling and formation evaluation, well construction and
completion, and optimizing production throughout the life of the asset.
Visit the company’s website at www.halliburton.com.
Connect with Halliburton on Facebook,
Twitter,
LinkedIn,
and YouTube.
NOTE: The statements in this press release that are not historical
statements, including statements regarding future financial performance,
are forward-looking statements within the meaning of the federal
securities laws. These statements are subject to numerous risks and
uncertainties, many of which are beyond the company's control, which
could cause actual results to differ materially from the results
expressed or implied by the statements. These risks and uncertainties
include, but are not limited to: the resolution of class action
lawsuits; indemnification and insurance matters; with respect to
repurchases of Halliburton common stock, the continuation or suspension
of the repurchase program, the amount, the timing and the trading prices
of Halliburton common stock, and the availability and alternative uses
of cash; changes in the demand for or price of oil and/or natural gas
can be significantly impacted by weakness in the worldwide economy;
consequences of audits and investigations by domestic and foreign
government agencies and legislative bodies and related publicity and
potential adverse proceedings by such agencies; protection of
intellectual property rights and against cyber-attacks; compliance with
environmental laws; changes in government regulations and regulatory
requirements, particularly those related to offshore oil and natural gas
exploration, radioactive sources, explosives, chemicals, hydraulic
fracturing services, and climate-related initiatives; compliance with
laws related to income taxes and assumptions regarding the generation of
future taxable income; risks of international operations, including
risks relating to unsettled political conditions, war, the effects of
terrorism, foreign exchange rates and controls, international trade and
regulatory controls and sanctions, and doing business with national oil
companies; weather-related issues, including the effects of hurricanes
and tropical storms; changes in capital spending by customers; delays or
failures by customers to make payments owed to us; execution of
long-term, fixed-price contracts; structural changes in the oil and
natural gas industry; maintaining a highly skilled workforce;
availability and cost of raw materials; agreement with respect to and
completion of potential acquisitions and integration and success of
acquired businesses and operations of joint ventures. Halliburton's Form
10-K for the year ended December 31, 2016, Form 10-Q for the quarter
ended June 30, 2017, recent Current Reports on Form 8-K, and other
Securities and Exchange Commission filings discuss some of the important
risk factors identified that may affect Halliburton's business, results
of operations, and financial condition. Halliburton undertakes no
obligation to revise or update publicly any forward-looking statements
for any reason.
|
HALLIBURTON COMPANY Condensed Consolidated Statements of Operations (Millions of dollars and shares except per share data) (Unaudited) |
||||||
| Three Months Ended | ||||||
| September 30 | June 30 | |||||
| 2017 | 2016 | 2017 | ||||
| Revenue: | ||||||
| Completion and Production | $ | 3,537 | $ | 2,176 | $ | 3,132 |
| Drilling and Evaluation | 1,907 | 1,657 | 1,825 | |||
| Total revenue | $ | 5,444 | $ | 3,833 | $ | 4,957 |
| Operating income: | ||||||
| Completion and Production | $ | 525 | $ | 24 | $ | 397 |
| Drilling and Evaluation | 180 | 151 | 125 | |||
| Corporate and other (a) | (71 | ) | (47 | ) | (114 | ) |
| Impairments and other charges (b) |
– |
– |
(262 | ) | ||
| Total operating income | 634 | 128 | 146 | |||
| Interest expense, net | (115 | ) | (141 | ) | (121 | ) |
| Other, net | (23 | ) | (39 | ) | (26 | ) |
| Income (loss) before income taxes | 496 | (52 | ) | (1 | ) | |
| Income tax (provision) benefit | (135 | ) | 59 | 29 | ||
| Net income | $ | 361 | $ | 7 | $ | 28 |
| Net (income) loss attributable to noncontrolling interest | 4 | (1 | ) |
– |
||
| Net income attributable to company | $ | 365 | $ | 6 | $ | 28 |
| Basic and diluted net income per share | $ | 0.42 | $ | 0.01 | $ | 0.03 |
| Basic weighted average common shares outstanding | 872 | 862 | 869 | |||
| Diluted weighted average common shares outstanding | 873 | 864 | 871 |
|
(a) Includes an aggregate $42 million of litigation settlements and one-time executive compensation charges in the three months ended June 30, 2017. |
|
(b) During the three months ended June 30, 2017, Halliburton recognized a $262 million fair market value adjustment relating to Venezuela. |
|
See Footnote Table 1 for Reconciliation of As Reported Operating Income to Adjusted Operating Income. |
|
See Footnote Table 2 for Reconciliation of As Reported Income from Continuing Operations to Adjusted Income from Continuing Operations. |
|
HALLIBURTON COMPANY Condensed Consolidated Statements of Operations (Millions of dollars and shares except per share data) (Unaudited) |
|||||
|
Nine Months Ended |
|||||
| 2017 | 2016 | ||||
| Revenue: | |||||
| Completion and Production | $ | 9,273 | $ | 6,614 | |
| Drilling and Evaluation | 5,407 | 5,252 | |||
| Total revenue | $ | 14,680 | $ | 11,866 | |
| Operating income (loss): | |||||
| Completion and Production | $ | 1,069 | $ | 22 | |
| Drilling and Evaluation | 427 | 546 | |||
| Corporate and other | (251 | ) | (153 | ) | |
| Impairments and other charges (a) | (262 | ) | (3,189 | ) | |
| Merger termination fee and related costs (b) |
– |
(4,057 | ) | ||
| Total operating income (loss) | 983 | (6,831 | ) | ||
| Interest expense, net (c) | (478 | ) | (502 | ) | |
| Other, net | (67 | ) | (117 | ) | |
| Income (loss) before income taxes | 438 | (7,450 | ) | ||
| Income tax (provision) benefit | (81 | ) | 1,836 | ||
| Income (loss) from continuing operations | 357 | (5,614 | ) | ||
| Loss from discontinued operations, net |
– |
(2 | ) | ||
| Net income (loss) | $ | 357 | $ | (5,616 | ) |
| Net loss attributable to noncontrolling interest | 4 | 2 | |||
| Net income (loss) attributable to company | $ | 361 | $ | (5,614 | ) |
| Amounts attributable to company shareholders: | |||||
| Income (loss) from continuing operations | $ | 361 | $ | (5,612 | ) |
| Loss from discontinued operations, net |
– |
(2 | ) | ||
| Net income (loss) attributable to company | $ | 361 | $ | (5,614 | ) |
| Basic net income (loss) per share | $ | 0.42 | $ | (6.53 | ) |
| Diluted net income (loss) per share | 0.41 | (6.53 | ) | ||
| Basic weighted average common shares outstanding | $ | 869 | $ | 860 | |
| Diluted weighted average common shares outstanding | 872 | 860 |
|
(a) During the nine months ended September 30, 2017, Halliburton recognized a $262 million fair market value adjustment relating to Venezuela. |
|
(b) During the nine months ended September 30, 2016, Halliburton recognized a $3.5 billion merger termination fee and an aggregate $464 million of charges for the reversal of assets held for sale accounting. |
|
(c) Includes $104 million of costs related to the early extinguishment of $1.4 billion of senior notes in the nine months ended September 30, 2017, as well as $41 million of debt redemption fees and associated expenses in the nine months ended September 30, 2016. |
|
HALLIBURTON COMPANY Condensed Consolidated Balance Sheets (Millions of dollars) (Unaudited) |
||||
| September 30 | December 31 | |||
| 2017 | 2016 | |||
| Assets | ||||
| Current assets: | ||||
| Cash and equivalents | $ | 1,898 | $ | 4,009 |
| Receivables, net | 4,852 | 3,922 | ||
| Inventories | 2,444 | 2,275 | ||
| Prepaid income taxes | 53 | 585 | ||
| Other current assets | 897 | 886 | ||
| Total current assets | 10,144 | 11,677 | ||
| Property, plant and equipment, net | 8,432 | 8,532 | ||
| Goodwill | 2,685 | 2,414 | ||
| Deferred income taxes | 2,191 | 1,960 | ||
| Other assets | 2,338 | 2,417 | ||
| Total assets | $ | 25,790 | $ | 27,000 |
| Liabilities and Shareholders’ Equity | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 2,416 | $ | 1,764 |
| Accrued employee compensation and benefits | 706 | 544 | ||
| Short-term borrowings and current maturities of long-term debt | 515 | 170 | ||
| Other current liabilities | 964 | 1,545 | ||
| Total current liabilities | 4,601 | 4,023 | ||
| Long-term debt | 10,423 | 12,214 | ||
| Employee compensation and benefits | 571 | 574 | ||
| Other liabilities | 949 | 741 | ||
| Total liabilities | 16,544 | 17,552 | ||
| Company shareholders’ equity | 9,217 | 9,409 | ||
| Noncontrolling interest in consolidated subsidiaries | 29 | 39 | ||
| Total shareholders’ equity | 9,246 | 9,448 | ||
| Total liabilities and shareholders’ equity | $ | 25,790 | $ | 27,000 |
|
HALLIBURTON COMPANY Condensed Consolidated Statements of Cash Flows (Millions of dollars) (Unaudited) |
|||||
|
Nine Months Ended |
|||||
| 2017 | 2016 | ||||
| Cash flows from operating activities: | |||||
| Net income (loss) | $ | 357 | $ | (5,616 | ) |
|
Adjustments to reconcile net income (loss) to cash flows from |
|||||
| Depreciation, depletion and amortization | 1,163 | 1,117 | |||
| Working capital (a) | (502 | ) | 609 | ||
| Tax refund (b) | 478 | 430 | |||
| Payment related to the Macondo well incident | (368 | ) | (33 | ) | |
| Impairments and other charges | 262 | 3,189 | |||
| Deferred income tax benefit, continuing operations | (183 | ) | (1,511 | ) | |
| Other | 250 | (947 | ) | ||
| Total cash flows provided by (used in) operating activities (c) | 1,457 | (2,762 | ) | ||
| Cash flows from investing activities: | |||||
| Capital expenditures | (934 | ) | (625 | ) | |
| Payments to acquire businesses | (628 | ) |
– |
||
| Proceeds from sales of property, plant and equipment | 111 | 176 | |||
| Other investing activities | (56 | ) | (73 | ) | |
| Total cash flows used in investing activities | (1,507 | ) | (522 | ) | |
| Cash flows from financing activities: | |||||
| Payments on long-term borrowings | (1,633 | ) | (3,149 | ) | |
| Dividends to shareholders | (469 | ) | (465 | ) | |
| Other financing activities | 92 | 163 | |||
| Total cash flows used in financing activities | (2,010 | ) | (3,451 | ) | |
| Effect of exchange rate changes on cash | (51 | ) | (53 | ) | |
| Decrease in cash and equivalents | (2,111 | ) | (6,788 | ) | |
| Cash and equivalents at beginning of period | 4,009 | 10,077 | |||
| Cash and equivalents at end of period | $ | 1,898 | $ | 3,289 |
|
(a) Working capital includes receivables, inventories and accounts payable. |
|
(b) We received $478 million and $430 million in U.S. tax refunds during the third quarter of 2017 and 2016, respectively, primarily as a result of our carry back of net operating losses we recognized in previous periods. |
|
(c) Includes a $3.5 billion merger termination fee paid during the second quarter of 2016. |
|
HALLIBURTON COMPANY Revenue and Operating Income Comparison By Operating Segment and Geographic Region (Millions of dollars) (Unaudited) |
||||||
| Three Months Ended | ||||||
| September 30 | June 30 | |||||
| Revenue | 2017 | 2016 | 2017 | |||
| By operating segment: | ||||||
| Completion and Production | $ | 3,537 | $ | 2,176 | $ | 3,132 |
| Drilling and Evaluation | 1,907 | 1,657 | 1,825 | |||
| Total revenue | $ | 5,444 | $ | 3,833 | $ | 4,957 |
| By geographic region: | ||||||
| North America | $ | 3,163 | $ | 1,658 | $ | 2,770 |
| Latin America | 530 | 415 | 508 | |||
| Europe/Africa/CIS | 722 | 744 | 679 | |||
| Middle East/Asia | 1,029 | 1,016 | 1,000 | |||
| Total revenue | $ | 5,444 | $ | 3,833 | $ | 4,957 |
| Operating Income | ||||||
| By operating segment: | ||||||
| Completion and Production | $ | 525 | $ | 24 | $ | 397 |
| Drilling and Evaluation | 180 | 151 | 125 | |||
| Total | 705 | 175 | 522 | |||
| Corporate and other | (71 | ) | (47 | ) | (114 | ) |
| Impairments and other charges |
– |
– |
(262 | ) | ||
| Total operating income | $ | 634 | $ | 128 | $ | 146 |
|
See Footnote Table 1 for Reconciliation of As Reported Operating Income to Adjusted Operating Income. |
|
HALLIBURTON COMPANY Revenue and Operating Income (Loss) Comparison By Operating Segment and Geographic Region (Millions of dollars) (Unaudited) |
|||||
|
Nine Months Ended September 30 |
|||||
| Revenue | 2017 | 2016 | |||
| By operating segment: | |||||
| Completion and Production | $ | 9,273 | $ | 6,614 | |
| Drilling and Evaluation | 5,407 | 5,252 | |||
| Total revenue | $ | 14,680 | $ | 11,866 | |
| By geographic region: | |||||
| North America | $ | 8,164 | $ | 4,968 | |
| Latin America | 1,501 | 1,432 | |||
| Europe/Africa/CIS | 2,005 | 2,317 | |||
| Middle East/Asia | 3,010 | 3,149 | |||
| Total revenue | $ | 14,680 | $ | 11,866 | |
| Operating Income (Loss) | |||||
| By operating segment: | |||||
| Completion and Production | $ | 1,069 | $ | 22 | |
| Drilling and Evaluation | 427 | 546 | |||
| Total | 1,496 | 568 | |||
| Corporate and other | (251 | ) | (153 | ) | |
| Impairments and other charges | (262 | ) | (3,189 | ) | |
| Merger termination fee and related costs |
– |
(4,057 | ) | ||
| Total operating income (loss) | $ | 983 | $ | (6,831 | ) |
|
FOOTNOTE TABLE 1 HALLIBURTON COMPANY
Reconciliation of As Reported Operating Income to Adjusted (Millions of dollars) (Unaudited) |
||||
| Three Months Ended | ||||
| September 30, 2017 | June 30, 2017 | |||
| As reported operating income | $ | 634 | $ | 146 |
| Impairments and other charges (a) |
– |
262 | ||
| Adjusted operating income (b) | $ | 634 | $ | 408 |
| (a) |
During the three months ended June 30, 2017, Halliburton recognized a $262 million fair market value adjustment relating to Venezuela. |
| (b) |
Management believes that operating income adjusted for impairments and other charges for the three months ended June 30, 2017 is useful to investors to assess and understand operating performance, especially when comparing those results with previous and subsequent periods or forecasting performance for future periods, primarily because management views this excluded item to be outside of the company's normal operating results. Management analyzes operating income without the impact of this item as an indicator of performance, to identify underlying trends in the business, and to establish operational goals. The adjustments remove the effect of this item. Adjusted operating income is calculated as: “As reported operating income” plus "Impairments and other charges" for the three months ended June 30, 2017. There were no such operating charges for the three months ended September 30, 2017. |
|
FOOTNOTE TABLE 2 HALLIBURTON COMPANY Reconciliation of As Reported Income from Continuing Operations to Adjusted Income from Continuing Operations (Millions of dollars and shares except per share data) (Unaudited) |
||
| Three Months Ended | ||
| June 30, 2017 | ||
| As reported income from continuing operations attributable to company | $ | 28 |
| Adjustments: | ||
| Impairments and other charges | 262 | |
| Total adjustments, before taxes (a) | 262 | |
|
Income tax benefit |
(89 | ) |
| Total adjustments, net of tax | $ | 173 |
| Adjusted income from continuing operations attributable to company | $ | 201 |
| Diluted weighted average common shares outstanding | 871 | |
| As reported income from continuing operations per diluted share (b) | $ | 0.03 |
| Adjusted income from continuing operations per diluted share (b) | $ | 0.23 |
| (a) |
Management believes that income from continuing operations adjusted for impairments and other charges is useful to investors to assess and understand operating performance, especially when comparing those results with previous and subsequent periods or forecasting performance for future periods, primarily because management views the excluded items to be outside of the company's normal operating results. Management analyzes income from continuing operations without the impact of these items as an indicator of performance, to identify underlying trends in the business and to establish operational goals. The adjustment removes the effect of these items. Adjusted income from continuing operations attributable to company is calculated as: “As reported income from continuing operations attributable to company” plus "Total adjustments, net of tax" for the three months ended June 30, 2017. There were no such operating charges for the three months ended September 30, 2017. |
| (b) |
As reported income from continuing operations per diluted share is calculated as: "As reported income from continuing operations attributable to company" divided by "Diluted weighted average common shares outstanding." Adjusted income from continuing operations per diluted share is calculated as: "Adjusted income from continuing operations attributable to company" divided by "Diluted weighted average common shares outstanding." |
Contacts
Halliburton
For Investors:
Lance Loeffler,
281-871-2688
Halliburton, Investor Relations
Investors@Halliburton.com
or
For
Media:
Emily Mir, 281-871-2601
Halliburton, Public
Relations
PR@Halliburton.com
