Market Overview

Halliburton Announces Third Quarter 2019 Results

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  • Reported net income of $0.34 per diluted share
  • Cash flows from operating activities of $871 million and free cash flow of $526 million

Halliburton Company (NYSE:HAL) announced today net income of $295 million, or $0.34 per diluted share, for the third quarter of 2019. This compares to reported net income for the second quarter of 2019 of $75 million, or $0.09 per diluted share, and adjusted net income for the second quarter of 2019 of $303 million, or $0.35 per diluted share, excluding impairments and other charges. Operating income was $536 million during the third quarter of 2019, compared to reported operating income of $303 million and adjusted operating income of $550 million for the second quarter of 2019.

"Our organization executed effectively in the third quarter. We managed the market dynamics and delivered our financial results as per expectations," commented Jeff Miller, Chairman, President and CEO.

"Total company revenue was $5.6 billion and operating income was $536 million, representing decreases of 6% and 3%, respectively, compared to revenue and adjusted operating income in the second quarter of 2019.

"International revenue, which was flat sequentially, was up 10% year to date and we remain confident that we will achieve high single-digit international growth for all of 2019. International growth continues across multiple regions, benefitting both our Drilling and Evaluation and Completion and Production divisions.

"Our North America revenue decreased 11% sequentially driven by customer activity declines and the execution of our new playbook. I am proud of how our team performed in this challenging market. We are successfully implementing our new strategy and are focused on taking the right actions to deliver returns and cash flow for our shareholders.

"As the international recovery continues and the North American market matures, our strategy is allowing us to thrive in this dynamic environment, generate strong free cash flow and produce industry-leading returns," concluded Miller.

Operating Segments

Completion and Production

Completion and Production revenue in the third quarter of 2019 was $3.5 billion, a decrease of $299 million, or 8%, when compared to the second quarter of 2019, while operating income was $446 million, a decrease of $24 million, or 5%. These results were primarily driven by lower pressure pumping activity and pricing in North America land, coupled with decreased completion tool sales in Latin America and reduced stimulation activity in Middle East/Asia. These declines were partially offset by increased cementing activity in the Eastern Hemisphere, improved completion tool sales in Europe/Africa/CIS, and higher stimulation activity in Latin America.

Drilling and Evaluation

Drilling and Evaluation revenue in the third quarter of 2019 was $2.0 billion, a decrease of $81 million, or 4%, when compared to the second quarter of 2019, while operating income was $150 million, an increase of $5 million, or 3%. These results were driven by reduced drilling and wireline activity in North America and lower project management activity in Middle East/Asia. These declines were partially offset by higher drilling activity in the Eastern Hemisphere, fluids activity in Latin America and higher testing and software sales globally resulting in better overall margins.

Geographic Regions

North America

North America revenue in the third quarter of 2019 was $2.9 billion, an 11% decrease when compared to the second quarter of 2019, primarily associated with lower activity and pricing in pressure pumping and well construction services in North America land.

International

International revenue in the third quarter of 2019 was $2.6 billion, essentially flat when compared to the second quarter of 2019, with increased cementing activity in the Eastern Hemisphere and activity increases in Argentina offset by lower project management and stimulation activity in Middle East/Asia.

Latin America revenue in the third quarter of 2019 was $608 million, a 6% increase sequentially, resulting primarily from higher activity in multiple product service lines in Argentina, increased testing activity and artificial lift sales across the region and improved fluids activity in Mexico. These improvements were partially offset by lower completion tool sales in Brazil.

Europe/Africa/CIS revenue in the third quarter of 2019 was $831 million, essentially flat when compared to the second quarter of 2019. Higher activity across multiple product service lines in Russia, Caspian and the North Sea offset lower activity in West Africa.

Middle East/Asia revenue in the third quarter of 2019 was $1.2 billion, a 4% decrease sequentially, largely resulting from reduced project management and stimulation activity across the region. These declines were partially offset by increased activity in multiple product service lines in Indonesia.

Selective Technology & Highlights

  • Halliburton announced the execution of an integrated services contract with Petrobras for pre-salt development in the Santos Basin. The thirty-month contract will provide drilling and completion services to drive greater efficiency by applying pre-salt expertise and integrating multiple product offerings.
  • Woodside Energy (Senegal) BV awarded Halliburton nine contracts, conditional on the final project FID, for drilling and completion services for SNE Field Development Phase 1 offshore Senegal. Halliburton will provide drilling, logging, cementing, lower completions, e-line/slick line, coiled tubing and well testing services for the drilling campaign, which is due to start in late 2020 or early 2021.
  • Halliburton introduced 3D reservoir mapping, a new logging-while-drilling (LWD) capability that provides a detailed representation of subsurface structures to improve well placement in complex reservoirs.
  • Ten new DecisionSpace® 365 E&P cloud-native applications were released, leveraging advances in digital technology to help operators reduce exploration risk, improve reservoir characterization and boost drilling efficiency. DecisionSpace® 365 is an integrated suite of E&P cloud applications that empowers customers to be creative and realize their business objectives.
  • Halliburton unveiled the Commander™ Full Bore Cement Head, a product that enables rotation and reciprocation of 4½ - 6 inch production strings to help increase reliability and reduce risk during the well cementing process. Advanced wireless functionality and faster rig-up time help increase efficiency and improve safety for land-based cement jobs, particularly in unconventional formations.
  • QuickPulse™ Automated Directional Gamma Service, a new measurement while drilling (MWD) technology, was launched, providing quick and reliable downhole information at extended depths to deliver wells faster. This capability helps operators drill longer laterals, make improved geosteering decisions and reduce well time to maximize their asset value.
  • Halliburton announced an asset acquisition of electromechanical downhole cutting tools and tubing punches from Westerton (UK) Ltd. These services provide operators with a safe and reliable alternative to traditional pipe recovery and intervention across the well lifecycle from exploration to abandonment. This new technology complements Halliburton's extensive well intervention portfolio, helping operators reduce the cost to construct new wells and extend the life of old wells.

About Halliburton

Founded in 1919, Halliburton celebrates its 100 years of service as one of the world's largest providers of products and services to the energy industry. With approximately 60,000 employees, representing 140 nationalities in more than 80 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, Instagram 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 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 and infrastructure issues 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, 2018, Form 10-Q for the quarter ended June 30, 2019, 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

 

2019

 

2018

 

2019

Revenue:

 

 

 

 

 

Completion and Production

$

3,506

 

 

$

4,170

 

 

$

3,805

 

Drilling and Evaluation

2,044

 

 

2,002

 

 

2,125

 

Total revenue

$

5,550

 

 

$

6,172

 

 

$

5,930

 

Operating income:

 

 

 

 

 

Completion and Production

$

446

 

 

$

613

 

 

$

470

 

Drilling and Evaluation

150

 

 

181

 

 

145

 

Corporate and other

(60

)

 

(78

)

 

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