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Halliburton Announces Second Quarter Earnings of $0.52 Per Diluted Share from Continuing Operations

HOUSTON, Jul 19, 2010 (BUSINESS WIRE) --

Halliburton (NYSE:HAL) announced today that income from continuing operations for the second quarter of 2010 was $474 million, or $0.52 per diluted share. Net income for the second quarter of 2010 was $480 million, or $0.53 per diluted share. This compares to net income for the first quarter of 2010 of $206 million, or $0.23 per diluted share.

Consolidated revenue in the second quarter of 2010 was $4.4 billion, compared to $3.8 billion in the first quarter of 2010. All product service lines and geographic regions experienced sequential revenue growth from the first quarter, driven by strong demand in the United States and seasonal activity improvements internationally.

Consolidated operating income was $762 million in the second quarter of 2010, compared to $449 million in the first quarter of 2010. All product service lines contributed to this increase, with production enhancement exhibiting especially strong sequential growth followed by completion tools, cementing, and directional drilling.

The first quarter of 2010 results were negatively impacted by the devaluation of the Venezuelan Bolívar Fuerte, resulting in a $31 million, non-tax deductible, foreign currency loss and $10 million of additional income tax expense in Venezuela on the company's United States dollar-denominated monetary assets and liabilities.

"I am very pleased with our second quarter results. Total revenue grew 17% and operating income grew 70% sequentially, driven by increased activity in the unconventional natural gas and oil basins in North America. In addition, our international results reflect the anticipated seasonal recovery of markets in the eastern hemisphere and improved activity in Latin America. Overall, second quarter operating margins improved by over 500 basis points to 17%," said Dave Lesar, chairman, president and chief executive officer.

"Revenue in North America increased 24% sequentially, outpacing the 13% growth in United States land rig count. Operating income grew over 90% sequentially as equipment utilization surpassed peak 2008 levels, further accelerating opportunities for pricing improvement. Increased horizontal drilling and the development of liquids-rich reservoirs amplified service intensity, as longer horizontal laterals increased the demand for premium tools, more sophisticated fluid systems, and the amount of horsepower needed for completions work.

"Going forward, we believe North America land rig count growth may moderate as activity in the dry gas basins may slow due to weak natural gas fundamentals, which should be partially offset by the continued growth of oil- and liquids- rich reservoirs.

"International revenue increased 11%, and operating income increased 35% from the prior quarter. Markets such as Russia and Asia Pacific experienced a seasonal rebound while Latin America posted solid improvement due to activity increases. We continue to expect growth in international revenue and margins, but the rate of improvement may be more weighted toward the end of the year as customers look at their spending plans in light of current economic conditions as well as ensuring they incorporate any lessons learned from the situation in the Gulf of Mexico.

"The tragic incident that occurred in the Gulf of Mexico and the subsequent suspension of deepwater drilling, we believe, will usher in a new regulatory climate and will have a profound impact on how deepwater drilling is performed.

"We are taking appropriate actions to mitigate the impact of the reduced activity in our Gulf of Mexico business, including redeploying our people and equipment to other areas of stable or increasing activity. Despite these moves, we estimate that the deepwater drilling suspension will negatively impact our earnings by $0.05-$0.08 per quarter for the remainder of 2010.

"The events in the Gulf of Mexico have not stifled our enthusiasm for increased deepwater activity in the coming years. Deepwater will continue to serve as an important source of hydrocarbons necessary to meet future energy demand.

"Contributions from the service sector can play a valuable role in developing new technological innovations and best practices to help customers operate safely and efficiently in these challenging conditions and will generate a corresponding increase in service intensity," Lesar concluded.

2010 Second Quarter Results

Completion and Production

Completion and Production (C&P) revenue in the second quarter of 2010 was $2.4 billion, an increase of $429 million from the first quarter of 2010. Sequential revenue growth was seen in all regions, with the most significant impact coming from increased activity in North America.

C&P operating income in the second quarter of 2010 was $497 million, an increase of $259 million over the first quarter of 2010. North America C&P operating income increased $173 million due to strong results in United States Land. Service intensity has continued to increase and has led to greater absorption of equipment capacity and further pricing improvements. Latin America C&P operating income increased $5 million, primarily due to improved performance in Mexico and Colombia. Europe/Africa/CIS C&P operating income increased $56 million, due to strong demand for production enhancement services in Congo, Algeria, and the North Sea and increased demand for completion tools in Nigeria and Norway. Middle East/Asia C&P operating income increased $25 million, primarily due to strong completions and production enhancement activity across the region.

Drilling and Evaluation

Drilling and Evaluation (D&E) revenue in the second quarter of 2010 was $2 billion, an increase of $197 million from the first quarter of 2010, with higher activity in North America, Latin America, and Middle East/Asia.

D&E operating income in the second quarter of 2010 was $318 million, an increase of $48 million from the first quarter of 2010. North America D&E operating income increased by $38 million, benefiting from higher horizontal drilling activity in United States Land. Latin America D&E operating income increased $38 million primarily due to increased drilling activity in Mexico and higher testing activity in Brazil. Europe/Africa/CIS D&E operating income decreased $38 million, primarily due to lower activity in the North Sea and certain locations in West Africa, which was partially offset by the seasonal recovery in Russia. Middle East/Asia D&E operating income increased $10 million as higher drilling activity in Saudi Arabia and Indonesia and increased fluids revenues in Australia helped bolster the region.

Significant Recent Events and Achievements

  • Halliburton has announced the successful completion of field tests for the GeoTap(R) IDS fluid identification and sampling sensor for BG Norge. The test was performed on the Bredford Dolphin drilling rig for the 34/5-1 S Blåbær exploration well in offshore Norway. Application of the technology saves operators rig costs and significantly reduces the industry's requirement for time-consuming, post-well wireline sampling.

    The GeoTap(R) IDS sensor revolutionizes subsurface hydrocarbon fluid sampling. For the first time, reservoir formation fluids can be sampled during short stops in the drilling process with a tool placed in the logging-while-drilling (LWD) assembly. This makes the technology ideal for high-cost drilling environments such as deepwater exploration wells, where conventional wireline-based sampling programs often cost several million dollars more in rig time and increase well risk. The GeoTap(R) IDS system also allows operators to acquire multiple fluid samples within just hours of drilling the formation instead of days, reducing the likelihood of borehole damage and producing a less contaminated sample.
  • Halliburton has announced the opening of a new test facility at its manufacturing center in Duncan, Oklahoma that is capable of safely testing Halliburton's proprietary oil and gas field services equipment under the most strenuous simulated conditions.

Founded in 1919, Halliburton is one of the world's largest providers of products and services to the energy industry. With more than 50,000 employees in approximately 70 countries, the company serves the upstream oil and gas industry 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 through the life of the field. Visit the company's Web site at www.halliburton.com.

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: results of litigation and investigations; actions by third parties, including governmental agencies; changes in the demand for or price of oil and/or natural gas which has been significantly impacted by the worldwide recession and by the worldwide financial and credit crisis; consequences of audits and investigations by domestic and foreign government agencies and legislative bodies and related publicity and potential adverse proceedings by such agencies; indemnification and insurance matters; protection of intellectual property rights; compliance with environmental laws; changes in government regulations and regulatory requirements, particularly those related to offshore oil and 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, and foreign exchange rates and controls, 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; impairment of oil and gas properties; structural changes in the oil and natural gas industry; maintaining a highly skilled workforce; availability of raw materials; and integration of acquired businesses and operations of joint ventures. Halliburton's Form 10-K for the year ended December 31, 2009, Form 10-Q for the quarter ended March 31, 2010, recent Current Reports on Form 8-K, and other Securities and Exchange Commission (SEC) 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
June 30 March 31
2010 2009 2010
Revenue:
Completion and Production $ 2,393 $ 1,752 $ 1,964
Drilling and Evaluation 1,994 1,742 1,797
Total revenue $ 4,387 $ 3,494 $ 3,761
Operating income:
Completion and Production $ 497 $ 243 $ 238
Drilling and Evaluation 318 284 270
Corporate and other (53 ) (51 ) (59 )
Total operating income 762 476 449
Interest expense, net of interest income of $3, $3, and $3 (76 ) (79 ) (76 )
Other, net (9 ) (14 ) (40 )(a)
Income from continuing operations before income taxes 677 383 333
Provision for income taxes (200 ) (117 ) (121 )(b)
Income from continuing operations 477 266 212
Income (loss) from discontinued operations, net 6 (1 ) (5 )
Net income $ 483 $ 265 $ 207
Noncontrolling interest in net income of subsidiaries (3 ) (3 ) (1 )
Net income attributable to company $ 480 $ 262 $ 206
Amounts attributable to company shareholders:
Income from continuing operations $ 474 $ 263 $ 211
Income (loss) from discontinued operations, net 6 (1 ) (5 )
Net income attributable to company $ 480 $ 262 $ 206
Basic income per share attributable to company
shareholders:
Income from continuing operations $ 0.52 $ 0.29 $ 0.23
Income (loss) from discontinued operations, net 0.01 - -
Net income per share $ 0.53 $ 0.29 $ 0.23
Diluted income per share attributable to company
shareholders:
Income from continuing operations $ 0.52 $ 0.29 $ 0.23
Income (loss) from discontinued operations, net 0.01 - -
Net income per share $ 0.53 $ 0.29 $ 0.23
Basic weighted average common shares outstanding 906 898 905
Diluted weighted average common shares outstanding 909 900 908

(a) Includes, among other items, a $31 million non-tax deductible, foreign currency loss associated with the devaluation of the Venezuelan Bolívar Fuerte.

(b) Includes $10 million of additional tax expense for local Venezuelan income tax purposes as a result of a taxable gain created by the devaluation of the Bolívar Fuerte on Halliburton's net United States dollar-denominated monetary assets and liabilities in Venezuela.

See Footnote Table 1 for a list of significant items included in operating income.

HALLIBURTON COMPANY

Condensed Consolidated Statements of Operations

(Millions of dollars and shares except per share data)

(Unaudited)

Six Months Ended June 30
2010 2009
Revenue:
Completion and Production $ 4,357 $ 3,780
Drilling and Evaluation 3,791 3,621
Total revenue $ 8,148 $ 7,401
Operating income:
Completion and Production $ 735 $ 606
Drilling and Evaluation 588 588
Corporate and other (112 ) (102 )
Total operating income 1,211 1,092
Interest expense, net of interest income of $6 and $5 (152 ) (130 )
Other, net (49 )(a) (19 )
Income from continuing operations before income taxes 1,010 943
Provision for income taxes (321 )(b) (296 )
Income from continuing operations 689 647
Income (loss) from discontinued operations, net 1 (2 )
Net income $ 690 $ 645
Noncontrolling interest in net income of subsidiaries (4 ) (5 )
Net income attributable to company $ 686 $ 640
Amounts attributable to company shareholders:
Income from continuing operations $ 685 $ 642
Income (loss) from discontinued operations, net 1 (2 )
Net income attributable to company $ 686 $ 640
Basic income per share attributable to company
shareholders:
Income from continuing operations $ 0.76 $ 0.71
Income (loss) from discontinued operations, net - -
Net income per share $ 0.76 $ 0.71
Diluted income per share attributable to company
shareholders:
Income from continuing operations $ 0.75 $ 0.71
Income (loss) from discontinued operations, net 0.01 -
Net income per share $ 0.76 $ 0.71
Basic weighted average common shares outstanding 906 898
Diluted weighted average common shares outstanding 908 899

(a) Includes, among other items, a $31 million non-tax deductible, foreign currency loss associated with the devaluation of the Venezuelan Bolívar Fuerte.

(b) Includes $10 million of additional tax expense for local Venezuelan income tax purposes as a result of a taxable gain created by the devaluation of the Bolívar Fuerte on Halliburton's net United States dollar-denominated monetary assets and liabilities in Venezuela.

See Footnote Table 1 for a list of significant items included in operating income.

HALLIBURTON COMPANY

Condensed Consolidated Balance Sheets

(Millions of dollars)

(Unaudited)

June 30 December 31
2010 2009
Assets
Current assets:
Cash and equivalents $ 1,160 $ 2,082
Receivables, net 3,304 2,964
Inventories, net 1,767 1,598
Investments in marketable securities 1,935 1,312
Other current assets

1,037

682
Total current assets

9,203

8,638
Property, plant, and equipment, net 6,175 5,759
Goodwill 1,132 1,100
Other assets

1,030

1,041
Total assets $ 17,540 $ 16,538
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 1,069 $ 787
Current maturities of long-term debt 750 750
Accrued employee compensation and benefits 583 514
Other current liabilities 913 838
Total current liabilities 3,315 2,889
Long-term debt 3,824 3,824
Other liabilities 1,017 1,068
Total liabilities 8,156 7,781
Company's shareholders' equity 9,353 8,728
Noncontrolling interest in consolidated subsidiaries 31 29
Total shareholders' equity 9,384 8,757
Total liabilities and shareholders' equity $ 17,540 $ 16,538

HALLIBURTON COMPANY

Condensed Consolidated Statements of Cash Flows

(Millions of dollars)

(Unaudited)

Six Months Ended
June 30
2010 2009
Cash flows from operating activities:
Net income $ 690 $ 645
Adjustments to reconcile net income to net cash from operations:
Depreciation, depletion, and amortization 533 439
Payments of Department of Justice and Securities and Exchange Commission
settlement and indemnity (94 ) (322 )
Other (321 ) 256
Total cash flows from operating activities 808 1,018
Cash flows from investing activities:
Purchases of investments in marketable securities (1,182 ) (1,518 )
Sales of investments in marketable securities 550 -
Capital expenditures (855 ) (950 )
Other (108 ) 48
Total cash flows from investing activities (1,595 ) (2,420 )
Cash flows from financing activities:
Proceeds from long-term borrowings, net of offering costs - 1,975
Payment of dividends to shareholders (163 ) (162 )
Other 45 47
Total cash flows from financing activities (118 ) 1,860
Effect of exchange rate changes on cash (17 ) (14 )
Increase (decrease) in cash and equivalents (922 ) 444
Cash and equivalents at beginning of period 2,082 1,124
Cash and equivalents at end of period $ 1,160 $ 1,568

HALLIBURTON COMPANY

Revenue and Operating Income Comparison

By Segment and Geographic Region

(Millions of dollars)

(Unaudited)

Three Months Ended
June 30 March 31
Revenue by geographic region: 2010 2009 2010
Completion and Production:
North America $ 1,434 $ 795 $ 1,125
Latin America 212 227 202
Europe/Africa/CIS 459 439 385
Middle East/Asia 288 291 252
Total 2,393 1,752 1,964
Drilling and Evaluation:
North America 677 464 579
Latin America 355 317 293
Europe/Africa/CIS 522 532 535
Middle East/Asia 440 429 390
Total 1,994 1,742 1,797
Total revenue by region:
North America 2,111 1,259 1,704
Latin America 567 544 495
Europe/Africa/CIS 981 971 920
Middle East/Asia 728 720 642
Operating income by geographic region
(excluding Corporate and other):
Completion and Production:
North America $ 310 $ 52 $ 137
Latin America 34 53 29
Europe/Africa/CIS 95 69 39
Middle East/Asia 58 69 33
Total 497 243 238
Drilling and Evaluation:
North America 131 28 93
Latin America 55 53 17
Europe/Africa/CIS 53 86 91
Middle East/Asia 79 117 69
Total 318 284 270
Total operating income by region:
North America 441 80 230
Latin America 89 106 46
Europe/Africa/CIS 148 155 130
Middle East/Asia 137 186 102

See Footnote Table 1 for a list of significant items included in operating income.

HALLIBURTON COMPANY

Revenue and Operating Income Comparison

By Segment and Geographic Region

(Millions of dollars)

(Unaudited)

Six Months Ended June 30
Revenue by geographic region: 2010 2009
Completion and Production:
North America $ 2,559 $ 1,866
Latin America 414 459
Europe/Africa/CIS 844 865
Middle East/Asia 540 590
Total 4,357 3,780
Drilling and Evaluation:
North America 1,256 1,076
Latin America 648 641
Europe/Africa/CIS 1,057 1,074
Middle East/Asia 830 830
Total 3,791 3,621
Total by revenue by region:
North America 3,815 2,942
Latin America 1,062 1,100
Europe/Africa/CIS 1,901 1,939
Middle East/Asia 1,370 1,420
Operating income by geographic region
(excluding Corporate and other):
Completion and Production:
North America $ 447 $ 218
Latin America 63 107
Europe/Africa/CIS 134 146
Middle East/Asia 91 135
Total 735 606
Drilling and Evaluation:
North America 224 92
Latin America 72 107
Europe/Africa/CIS 144 177
Middle East/Asia 148 212
Total 588 588
Total operating income by region:
North America 671 310
Latin America 135 214
Europe/Africa/CIS 278 323
Middle East/Asia 239 347

See Footnote Table 1 for a list of significant items included in operating income.

FOOTNOTE TABLE 1

HALLIBURTON COMPANY

Items Included in Operating Income

(Millions of dollars except per share data)

(Unaudited)

Three Months Ended

June 30, 2009

Operating After Tax
Income per Share
Completion and Production:
Employee separation costs

$

(10

)

$

(0.01

)

Drilling and Evaluation:
Employee separation costs

(7

)

-
Corporate and other:
Employee separation costs - -
Six Months Ended

June 30, 2009

Operating After Tax
Income per Share
Completion and Production:
Employee separation costs

$

(21

)

$

(0.02

)

Drilling and Evaluation:
Employee separation costs

(19

)

(0.01

)

Corporate and other:
Employee separation costs

(5

)

-

SOURCE: Halliburton

Halliburton
Investor Relations
Christian Garcia, 281-871-2688
or
Corporate Affairs
Cathy Mann, 281-871-2601
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