Halliburton Beats on Q1 Earnings, Revs - Analyst Blog

Major oilfield services provider Halliburton Company HAL reported strong first-quarter 2014 results, owing to improved stimulation work in the U.S. and increased profits from its pressure pumping business in Argentina. Augmented drilling operations in the Eastern Hemisphere also aided the results.   

Earnings per share from continuing operations came in at 73 cents, beating the Zacks Consensus Estimate of 71 cents. Moreover, the figure surpassed the first-quarter 2013 adjusted earnings of 67 cents.

Following Baker Hughes Inc. BHI and Schlumberger Ltd SLB, Halliburton stepped up as the third member of the ‘big 4 oil service companies' to post above consensus results. The fourth member Weatherford International Ltd WFT is scheduled to report later this month.

Revenues of $7.4 billion reflected a 5.4% year-over-year improvement. The figure also beat the Zacks Consensus Estimate by 1.7%.

During the quarter, North America accounted for approximately 53.1% of Halliburton's total revenue and 56.9% of its operating income.

Segmental Performance

Completion & Production: Revenues at Halliburton's Completion and Production segment were up by 7.8% year over year. Improved stimulation work in the U.S. and an increase in sales of completion tools favored the results.

However, the figure fell 2.7% sequentially owing to reduced sales of completion tools in Malaysia.

The segment's operating income stood at $661.0 million, exhibiting a 7.5% year-over-year increase, due to increased work of Boots and Coots at Algeria along with higher profits from the pressure pumping business in Argentina.

On the flip side, operating profits fell 13.6% sequentially. Reduced Boots and Coots works, particularly in Australia and India, hampered the results.

Drilling & Evaluation: Revenues at Halliburton's Drilling & Evaluation business were 1.9% above the first-quarter 2013 level. Eastern Hemisphere's improved drilling operations along with better testing activities supported the upside.

The figure, however, declined 5.5% from the previous quarter owing to reduced work in Latin America.

The segment's operating income fell 2.2% from the year-ago quarter and 20.1% from the December quarter to $398.0 million. Reduced drilling activity, mainly in Canada and Brazil, hampered the result.

Share Buyback

Halliburton reveals that it has repurchased roughly 9.0 million common shares for around $500.0 million in the first quarter of 2014.

Balance Sheet

Halliburton's capital expenditure in the first quarter came in at $643.0 million. As of Mar 31, 2014, the company had approximately $2.1 billion in cash/cash equivalents and $7.8 billion in long-term debt, representing a debt-to-capitalization ratio of 36.2%.

Zacks Rank

Halliburton currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in-line with the broader U.S equity market over the next one to three months.