Halliburton Beats Q3 Earnings, Ups Dividend - Shares Rise

Major oilfield services provider, Halliburton Company HAL reported strong third-quarter 2014 results courtesy of stepped up North American completion and production activities and increased consultation services in Mexico. The company also cheered its investors with a raise in its fourth-quarter dividend. The stock buoyed up as a result with the share price rising 3.8% on the NYSE, in pre-market-trade hours.

Earnings per share from continuing operations – excluding items related to Macondo incident − came in at $1.19, beating the Zacks Consensus Estimate of $1.10. The bottom line also improved from the year-ago adjusted figure of 83 cents.

After Schlumberger Ltd SLB, Halliburton is the second member of the ‘big 4 oil service companies' to post above consensus results. The third member, Baker Hughes failed to report above consensus earnings, while Weatherford International Ltd WFT – the fourth member − is scheduled to report earnings on Oct 23.

Halliburton's revenues of $8.7 billion reflected a 16.5% year-over-year improvement. The top line also beat the Zacks Consensus Estimate of $8.5 billion.

During the quarter, North America accounted for approximately 54.3% of Halliburton's total revenues and 59.5% of its operating income.

Segmental Performance

Completion & Production: Revenues at Halliburton's Completion and Production segment were up 20.4% year over year. The figure also increased 9.7% sequentially. Increased North American activities aided the results. The improvement was also favored by significant growth in most of the company's product lines in Europe, Africa and Latin America.

The segment's operating income came in at $1.1 billion, exhibiting a 40.4% year-over-year increase. Moreover, the profit improved 20.7% from the second quarter. The increase was primarily owing to Halliburton's higher completion and production activities in North America. Better stimulation work along with increased well intervention activities in Mexico and Venezuela also led to the improvement.

Drilling & Evaluation: Revenues at Halliburton's Drilling & Evaluation business were 10.4% higher than the third-quarter 2013 level. The segment's revenues also increased 5.5% sequentially. Better results can be attributed to higher consulting and fluid activities in the Eastern Hemisphere and considerable growth of the company's product lines in Latin America.

The segment's operating income improved marginally from the year-ago quarter and also increased 8.9% sequentially. Improved software sales and Mexico's higher consulting services aided the results, which were however partially offset by lower drilling work in the Gulf of Mexico.

Dividend Increase & Share Buyback

Halliburton declared its fourth-quarter dividend of 18 cents, reflecting a sequential hike of 20%. The increased dividend will likely be paid on Dec 26, 2014, to shareholders of record as of Dec 5. The company also announced that it repurchased roughly 4.4 million shares during the third quarter.

Balance Sheet

Halliburton's capital expenditure in the third quarter totaled $909 million. As of Sep 30, 2014, the company had more than $2 billion in cash/cash equivalents and $7.8 billion in long-term debt, representing a debt-to-capitalization ratio of 33.5%.

Zacks Rank

Halliburton currently carries 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.

Meanwhile, one can consider Exterran Partners LP EXLP, which is a better-ranked player in the energy sector. The stock sports a Zacks Rank #1 (Strong Buy).