Market Overview

Halliburton Earnings Miss on Soft Brazil, Venezuela Business


Major oilfield services provider, Halliburton Company (NYSE: HAL) reported lower-than-expected second-quarter 2014 earnings owing to lesser activities in Venezuela and decreased drilling work in Brazil.

Earnings per share from continuing operations came in at 91 cents, missing the Zacks Consensus Estimate by a penny.

However, the bottom line improved from the second-quarter 2013 adjusted earnings of 69 cents. Increased cementing work in Mexico, and stepped-up drilling operations in Norway and Saudi Arabia led to the improvement.

Halliburton, along with Baker Hughes Inc. (NYSE: BHI), Schlumberger Ltd (NYSE: SLB) and Weatherford International Ltd (NYSE: WFT), is the big four oil service companies in the world. Schlumberger's second-quarter bottom line disappointed consensus estimates, while Baker Hughes posted an earnings beat. Weatherford International Ltd is scheduled to report on Jul 23 after the closing bell.

Halliburton's revenues of $8.1 billion reflected a 10.0% year-over-year improvement. The top line also beat the Zacks Consensus Estimate by 2.5% mainly on superior stimulation work in the U.S. land market along with improved wireline and fluid operations in the Eastern Hemisphere.

During the quarter, North America accounted for approximately 54.0% of Halliburton's total revenues and 60.7% of its operating income.

Segmental Performance

Completion & Production: Revenues at Halliburton's Completion and Production segment were up by 13.3% year over year. The figure also increased 11.8% sequentially. Increased stimulation work in the U.S. land market along with improved international activities aided the results.

The segment's operating income came in at $887.0 million, exhibiting a 21.2% year-over-year increase. Moreover, the profit improved 34.2% from the first quarter. Better cementing work in Mexico in addition to higher seasonal activities in Russia and Europe has led to the improvement. The positives were slightly offset by reduced activities in Venezuela.

Drilling & Evaluation: Revenues at Halliburton's Drilling & Evaluation business were 5.3% higher than the second-quarter 2013 level. The segment's revenues also increased 6.2% sequentially. Better results can be attributed to improved wireline and fluid operations in the U.S. and Eastern Hemisphere.

The segment's operating income fell marginally from the year-ago quarter. Lower drilling work in Brazil and soft sale of software in the U.S. acted as dampeners.

However the profit increased 4.0% from the previous quarter owing to superior drilling operations in Norway, Angola and Saudi Arabia.

Share Buyback

Halliburton revealed that its board of directors has given permission to raise its share buyback program to $6.0 billion from $5.0 billion.

Balance Sheet

Halliburton's capital expenditure in the second quarter totaled $732.0 million. As of Jun 30, 2014, the company had approximately $2.4 billion in cash/cash equivalents and $7.8 billion in long-term debt, representing a debt-to-capitalization ratio of 34.9%.

Zacks Rank

Halliburton currently carries a Zacks Rank #2 (Buy), implying that it is expected to outperform the broader U.S. equity market over the next one to three months.


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