Halliburton Announces First Quarter Earnings of $0.54 Per Diluted Share; Continuing Operations Contributed $0.52 Per Diluted Share
HOUSTON--(BUSINESS WIRE)--April 26, 2007--Halliburton (NYSE:HAL) announced today that net income for the first quarter of 2007 was $0.54 per diluted share, which includes the results of KBR, Inc. in discontinued operations. Income from continuing operations in the first quarter of 2007 was $529 million, or $0.52 per diluted share. This compares to income from continuing operations of $449 million, or $0.42 per diluted share, in the first quarter of 2006.
Halliburton's consolidated revenue in the first quarter of 2007 was $3.4 billion, up 17% from the first quarter of 2006. This increase was attributable to higher worldwide activity and the company's focus on investing in and expanding Eastern Hemisphere operations.
Consolidated operating income was $788 million in the first quarter of 2007 compared to $692 million in the first quarter of 2006. Results benefited from increased customer activity, pricing gains, and new international contract awards.
"This quarter marks the start of a new chapter in Halliburton's history as we completed the separation of KBR. I am encouraged by the prospects that await us," said Dave Lesar, chairman, president, and chief executive officer. "We are now completely focused on the global growth opportunities in our energy services business. The first quarter saw many positives for Halliburton. Sperry Drilling Services, Wireline and Perforating, Cementing Services, and Baroid Fluid Services all posted revenue that met or exceeded their best quarters ever. Also, we saw revenue growth in the Middle East of 20% year-over-year and 8% sequentially. However, this was overshadowed by a challenging market in the United States for our Production Enhancement business where a combination of weather delays and lower commodity prices had a negative impact. We believe that with the actions we have already taken, coupled with improving market conditions, Production Enhancement operations should improve later this year."
2007 First Quarter Results
Production Optimization operating income for the first quarter of 2007 was $325 million, a decrease of $8 million or 2% from the first quarter of 2006. Production Enhancement services operating income fell 11%, primarily in Canada and the United States Rocky Mountains. These markets were impacted by increased costs related to lower-than-anticipated activity in the first quarter of 2007, driven by decreases in natural gas prices and weather delays. Completion Tools operating income grew 40%, led by increased product sales in the United States and Africa. The company's intelligent well completions joint venture, however, experienced reduced results in the first quarter of 2007 due to manufacturing and supply chain constraints.
Fluid Systems operating income for the first quarter of 2007 was $214 million, a $25 million or 13% increase over the first quarter of 2006, with Eastern Hemisphere operating income increasing 38%. Cementing services operating income increased 10% compared to the prior year's first quarter. Cementing Services were negatively impacted in the first quarter of 2007 by the slowdown in Canada. Outside of North America, Cementing Services operating income grew 50% over the prior year's quarter, reflecting new contract awards and improved pricing. Baroid Fluid Services operating income grew 23% from participation on deeper wells, increased activity, and improved pricing, particularly in the United States, northern Africa, and Mexico.
Drilling and Formation Evaluation operating income for the first quarter of 2007 was $256 million, a $77 million or 43% increase over the prior year's first quarter. Sperry Drilling Services operating income increased 49%, with over 65% of the operating income growth coming from the Eastern Hemisphere. Sperry Drilling Services operating income in the United States grew 36%, benefiting from new contracts in Alaska and increased directional drilling activity throughout the lower 48 states. Wireline and Perforating Services operating income increased 44%, with increased activity in the United States and the Middle East, as well as new contract wins in Africa and Asia Pacific. Security DBS Drill Bits operating income improved 19% over the prior year's first quarter, reflecting strong fixed-cutter bit activity in the United States.
Digital and Consulting Solutions operating income in the first quarter of 2007 was $50 million, essentially flat as compared to the prior year's quarter. Landmark's operating income grew due to improved sales of software in Europe and Asia Pacific.
Technology and Significant Achievements
Halliburton made a number of advances in technology, expansion, and business structure changes.
-- Halliburton announced that it had completed the final
separation of KBR, Inc. on April 5, 2007. Halliburton accepted
85,273,184 shares of Halliburton common stock in exchange for
135,627,000 shares of KBR, Inc. common stock. KBR's results
are presented as discontinued operations for all periods
presented. Since the transaction occurred subsequent to the
first quarter of 2007, Halliburton's share count for purposes
of the first quarter 2007 earnings per share calculation does
not reflect the reduction in Halliburton shares.
-- Halliburton won the 2007 Offshore Energy Achievement Award in
Well Construction for its Sperry Drilling Services'
ReFlexRite(R) multilateral system. The ReFlexRite system
technology is an important step toward extending the
productive life of existing wells in mature fields in a
cost-effective manner. The system makes it possible to convert
a simple horizontal well into a multilateral well, while
simultaneously maintaining the production from the original
wellbore.
-- Security DBS Drill Bits announced it has added a breakthrough
technology to its suite of Hole Enlargement products and
solutions. The XR(TM) reamer line of tools is designed for
both conventional and rotary steerable applications, and it
provides the industry's only available concentric hole
enlargement technology that is also capable of enlarging a
pilot hole more than 40% while drilling. XR reamer tools offer
activation and deactivation capabilities that allow the hole
to be selectively enlarged based on existing casing-shoe and
well-design parameters.
-- Halliburton is opening a new manufacturing center in
Monterrey, Mexico, to meet its customers' increasing demands
for energy services products. The 9,290-square-meter leased
facility is expected to open in May 2007.
-- Halliburton has announced that it has entered into a
definitive agreement to purchase, subject to regulatory
approvals, PSL Energy Services, Limited (PSLES), a leading
Eastern Hemisphere provider of process, pipeline, and well
intervention services. PSLES is headquartered in the United
Kingdom and has approximately 1,000 employees with operations
in the United Kingdom, Norway, the Middle East, Azerbaijan,
Algeria, and Asia Pacific.
Founded in 1919, Halliburton is one of the world's largest providers of products and services to the energy industry. With more than 45,000 employees in nearly 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. The company's World Wide Web site can be accessed 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: consequences of audits and investigations by domestic and foreign government agencies and legislative bodies and related publicity; potential adverse proceedings by such agencies; protection of intellectual property rights; compliance with environmental laws; changes in government regulations and regulatory requirements, particularly those related to radioactive sources, explosives, and chemicals; compliance with laws related to income taxes and assumptions regarding the generation of future taxable income; unsettled political conditions, war, and the effects of terrorism, foreign operations, and foreign exchange rates and controls; weather-related issues including the effects of hurricanes and tropical storms; changes in capital spending by customers; changes in the demand for or price of oil and/or natural gas, structural changes in the oil and natural gas industry; increased competition for employees; 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, 2006, 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 the 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 Three Months
Ended Ended
March 31 December 31
---------------------------------------
2007 2006 2006
----------------------------------------------------------------------
Revenue:
Production Optimization $1,337 $1,196 $1,454
Fluid Systems 993 836 964
Drilling and Formation
Evaluation 917 725 877
Digital and Consulting
Solutions 175 181 214
----------------------------------------------------------------------
Total revenue $3,422 $2,938 $3,509
----------------------------------------------------------------------
Operating income (loss):
Production Optimization $325 $333 $455
Fluid Systems 214 189 217
Drilling and Formation
Evaluation 256 179 238
Digital and Consulting
Solutions 50 50 77
General corporate (57) (59) (64)
----------------------------------------------------------------------
Total operating income 788 692 923
----------------------------------------------------------------------
Interest expense (38) (42) (41)
Interest income 38 23 35
Foreign currency, net (3) (1) (8)
Other, net - 3 -
----------------------------------------------------------------------
Income from continuing
operations before income taxes
and minority interest 785 675 909
Provision for income taxes (259) (223) (278)
Minority interest in net
(income) loss of subsidiaries 3 (3) (4)
----------------------------------------------------------------------
Income from continuing
operations 529 449 627
Income from discontinued
operations, net 23 (a) 39 31
----------------------------------------------------------------------
Net income $552 $488 $658
----------------------------------------------------------------------
Basic income per share:
Income from continuing
operations $0.53 $0.44 $0.63
Income from discontinued
operations, net 0.02 (a) 0.04 0.03
----------------------------------------------------------------------
Net income $0.55 $0.48 $0.66
----------------------------------------------------------------------
Diluted income per share:
Income from continuing
operations $0.52 $0.42 $0.61
Income from discontinued
operations, net 0.02 (a) 0.04 0.03
----------------------------------------------------------------------
Net income $0.54 $0.46 $0.64
----------------------------------------------------------------------
Basic weighted average common
shares outstanding 992 1,024 996
Diluted weighted average common
shares outstanding 1,025 1,068 1,030
----------------------------------------------------------------------
(a) Income from discontinued operations, net, in the first quarter of
2007 included Halliburton's 81% share of KBR, Inc.'s $28 million in
net income in the first quarter of 2007.
See Footnote Table 1 for a list of significant items included in
operating income.
All periods presented reflect the reclassification of KBR, Inc. to
discontinued operations and the reclassification of certain expenses
that were previously allocated to the segments and are now included
in general corporate expenses.
HALLIBURTON COMPANY
Condensed Consolidated Balance Sheets
(Millions of dollars)
(Unaudited)
March 31, December 31,
2007 2006
----------------------------------------------------------------------
Assets
Current assets:
Cash and marketable investments $3,043 $2,938
Receivables, net 2,700 2,629
Inventories, net 1,430 1,235
Current assets of discontinued operations 4,012 3,898
Other current assets 560 490
----------------------------------------------------------------------
Total current assets 11,745 11,190
Property, plant, and equipment, net 2,758 2,557
Noncurrent assets of discontinued operations 1,441 1,497
Other assets 1,771 1,616
----------------------------------------------------------------------
Total assets $17,715 $16,860
----------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $739 $655
Current maturities of long-term debt 11 26
Current liabilities of discontinued operations 2,909 2,831
Other current liabilities 1,450 1,222
----------------------------------------------------------------------
Total current liabilities 5,109 4,734
Long-term debt 2,785 2,783
Noncurrent liabilities of discontinued
operations 1,000 981
Other liabilities 864 917
----------------------------------------------------------------------
Total liabilities 9,758 9,415
----------------------------------------------------------------------
Minority interest in consolidated subsidiaries 65 69
Shareholders' equity (a) 7,892 7,376
----------------------------------------------------------------------
Total liabilities and shareholders' equity $17,715 $16,860
----------------------------------------------------------------------
(a) Effective January 1, 2007, the company adopted Financial
Accounting Standards Board Interpretation No. 48 (FIN 48),
"Accounting for Uncertainty in Income Taxes, an interpretation of
FASB Statement No. 109." As a result of the adoption of FIN 48, the
company recognized a $4 million decrease in the liability for
unrecognized tax benefits and a $34 million increase in accrued
interest and penalties, which were accounted for as a net reduction
of $30 million to the January 1, 2007 balance of retained earnings.
Of the $34 million increase in accrued interest and penalties, $10
million was attributable to KBR, Inc., which is reported as
discontinued operations in the condensed consolidated financial
statements for all periods presented.
HALLIBURTON COMPANY
Selected Cash Flow Information
(Millions of dollars)
(Unaudited)
Three
Months Year
Ended Three Months Ended Ended
--------------------------------------
September December December
March 31, March 31, June 30, 30, 31, 31,
2007 2006 2006 2006 2006 2006
----------------------------------------------------------------------
Capital
expenditures $303 $138 $201 $230 $265 $834
----------------------------------------------------------------------
----------------------------------------------------------------------
Depreciation,
depletion,
and
amortization $131 $117 $117 $122 $124 $480
----------------------------------------------------------------------
Year
Three Months Ended Ended
------------------------------------------
2005 March 31 June 30 September 30 December 31 December 31
----------------------------------------------------------------------
Capital
expenditures $131 $129 $164 $151 $575
----------------------------------------------------------------------
----------------------------------------------------------------------
Depreciation,
depletion, and
amortization $110 $112 $111 $115 $448
----------------------------------------------------------------------
All periods presented reflect the reclassification of KBR, Inc. to
discontinued operations.
HALLIBURTON COMPANY
Revenue and Operating Income
By Operating Segment
(Millions of dollars)
(Unaudited)
Year
Three Months Ended Ended
------------------------------------------
2006 March 31 June 30 September 30 December 31 December 31
----------------------------------------------------------------------
Revenue:
Production
Optimization $1,196 $1,292 $1,418 $1,454 $5,360
Fluid Systems 836 870 928 964 3,598
Drilling and
Formation
Evaluation 725 774 845 877 3,221
Digital and
Consulting
Solutions 181 180 201 214 776
----------------------------------------------------------------------
Total revenue $2,938 $3,116 $3,392 $3,509 $12,955
----------------------------------------------------------------------
Operating income:
Production
Optimization $333 $368 $417 $455 $1,573
Fluid Systems 189 201 217 217 824
Drilling and
Formation
Evaluation 179 194 233 238 844
Digital and
Consulting
Solutions 50 51 63 77 241
General corporate (59) (54) (60) (64) (237)
----------------------------------------------------------------------
Total operating
income $692 $760 $870 $923 $3,245
----------------------------------------------------------------------
Year
Three Months Ended Ended
------------------------------------------
2005 March 31 June 30 September 30 December 31 December 31
----------------------------------------------------------------------
Revenue:
Production
Optimization $834 $971 $1,032 $1,154 $3,991
Fluid Systems 631 699 731 776 2,837
Drilling and
Formation
Evaluation 555 641 663 693 2,552
Digital and
Consulting
Solutions 164 160 171 225 720
----------------------------------------------------------------------
Total revenue $2,184 $2,471 $2,597 $2,848 $10,100
----------------------------------------------------------------------
Operating income:
Production
Optimization $290 $240 $259 $306 $1,095
Fluid Systems 120 142 146 165 573
Drilling and
Formation
Evaluation 96 146 150 168 560
Digital and
Consulting
Solutions 29 16 36 66 147
General corporate (54) (59) (50) (48) (211)
----------------------------------------------------------------------
Total operating
income $481 $485 $541 $657 $2,164
----------------------------------------------------------------------
See Footnote Table 1 for a list of significant items included in
operating income.
All periods presented reflect the reclassification of KBR, Inc. to
discontinued operations and the reclassification of certain expenses
that were previously allocated to the segments and are now included
in general corporate expenses.
HALLIBURTON COMPANY
Revenue and Operating Income Comparison
By Geographic Region
(Millions of dollars)
(Unaudited)
Three
Months Year
Ended Three Months Ended Ended
------------------------------------
September December December
March 31,March 31,June 30, 30, 31, 31,
2007 2006 2006 2006 2006 2006
----------------------------------------------------------------------
Revenue:
North America $1,672 $1,513 $1,541 $1,738 $1,666 $6,458
Latin America 404 351 355 390 418 1,514
Europe/Africa/CIS 783 607 694 721 838 2,860
Middle East/Asia 563 467 526 543 587 2,123
----------------------------------------------------------------------
Total revenue $3,422 $2,938 $3,116 $3,392 $3,509 $12,955
----------------------------------------------------------------------
Operating income:
North America $494 $493 $481 $571 $539 $2,084
Latin America 75 55 68 82 95 300
Europe/Africa/CIS 149 100 135 138 214 587
Middle East/Asia 127 103 130 139 139 511
General corporate (57) (59) (54) (60) (64) (237)
----------------------------------------------------------------------
Total operating
income $788 $692 $760 $870 $923 $3,245
----------------------------------------------------------------------
Year
Three Months Ended Ended
------------------------------------------
2005 March 31 June 30 September 30 December 31 December 31
----------------------------------------------------------------------
Revenue:
North America $1,059 $1,136 $1,270 $1,354 $4,819
Latin America 314 334 323 373 1,344
Europe/Africa/CIS 469 570 595 640 2,274
Middle East/Asia 342 431 409 481 1,663
----------------------------------------------------------------------
Total revenue $2,184 $2,471 $2,597 $2,848 $10,100
----------------------------------------------------------------------
Operating income:
North America $364 $299 $359 $400 $1,422
Latin America 48 42 43 70 203
Europe/Africa/CIS 66 110 107 127 410
Middle East/Asia 57 93 82 108 340
General corporate (54) (59) (50) (48) (211)
----------------------------------------------------------------------
Total operating
income $481 $485 $541 $657 $2,164
----------------------------------------------------------------------
See Footnote Table 2 for a list of significant items included in
operating income.
All periods presented reflect the reclassification of certain expenses
that were previously allocated to the segments and are now included
in general corporate expenses. Also, the results for Sakhalin have
been reclassified from Middle East/Asia to Europe/Africa/CIS.
FOOTNOTE TABLE 1
HALLIBURTON COMPANY
Items Included in Income by Operating Segment
(Millions of dollars except per share data)
(Unaudited)
Three Months Three Months Three Months
Ended Ended Ended
Dec. 31, 2006 Dec. 31, 2005 March 31, 2005
---------------- ---------------- ----------------
After After After
Tax Tax Tax
Operating per Operating per Operating per
Income Share Income Share Income Share
---------------- ---------------- ----------------
Production
Optimization:
Gain on sale of
lift boats $48 $0.03 $- $- $- $-
Subsea 7, Inc.
gain on sale - - - - 110 0.08
Drilling and
Formation
Evaluation:
Intellectual
property
settlement - - 24 0.02 - -
----------------------------------------------------------------------
FOOTNOTE TABLE 2
HALLIBURTON COMPANY
Items Included in Income by Geographic Region
(Millions of dollars except per share data)
(Unaudited)
Three Months Three Months Three Months
Ended Ended Ended
Dec. 31, 2006 Dec. 31, 2005 March 31, 2005
---------------- ---------------- ----------------
After After After
Tax Tax Tax
Operating per Operating per Operating per
Income Share Income Share Income Share
---------------- ---------------- ----------------
North America:
Intellectual
property
settlement $- $- $12 $0.01 $- $-
Subsea 7, Inc.
gain on sale - - - - 107 0.08
Latin America:
Intellectual
property
settlement - - 2 - - -
Europe/Africa/CIS:
Gain on sale of
lift boats 48 0.03 - - - -
Intellectual
property
settlement - - 6 0.01 - -
Subsea 7, Inc.
gain on sale - - - - 3 -
Middle East/Asia:
Intellectual
property
settlement - - 4 - - -
----------------------------------------------------------------------
CONTACT:
Halliburton, Houston
Vice President, Investor Relations
Evelyn Angelle, 713-759-2688
or
Director, Communications
Cathy Mann, 713-759-2605
SOURCE:
Halliburton