Halliburton Announces Third Quarter 2016 Results
“I am pleased with our third quarter results given the devastation our
industry has faced over the last two years. These results reflect the
hard work and determination of our organization. While the recent cycle
has provided its fair share of challenges, we out-executed even against
the very high expectations we place on our organization,” said
“Total company revenue was flat at
“During the quarter,
“As we look forward, we expect an increased commodity price to stimulate rig count growth. In the near term, we remain cautious around fourth quarter customer activity due to holiday and seasonal weather-related downtimes. However, it does not change our view that things are getting better for us and our customers.
“The Eastern Hemisphere continued to experience activity and pricing
headwinds throughout the quarter, which was offset by our focus on cost
management. As a result, revenue declined by 5%, while operating income
margins increased 3%. In the
“Latin America revenue and operating income declined by 13% and 50%
respectively, as a result of declining activity levels in
“For our international business, we believe the seasonal year-end sales will be minimal and customer pricing pressure will continue; however, these will likely be offset by continued cost management. As such, we expect fourth quarter results to come in flat compared to the third quarter.
“Globally, we will continue to expand our portfolio in unconventionals, mature fields and deepwater. We believe the underlying fundamentals driving our industry are strengthening, and I am optimistic about Halliburton’s relative performance as we move into the new year,” concluded Lesar.
Geographic Regions
International
International revenue in the third quarter of 2016 was
Operating Segments
Completion and Production
Completion and Production (C&P) revenue in the third quarter of 2016 was
C&P operating income in the third quarter was
Drilling and Evaluation
Drilling and Evaluation (D&E) revenue in the third quarter of 2016 was
Selective Technology & Highlights
- Sperry Drilling announced the release of GeoForce® Endure™ and StrataForce™ Endure™ motors, the latest additions to the drilling motor product line focused on increasing reliability in harsh drilling environments. Challenging drilling operations can cause elastomers to degrade and motors to fail, resulting in nonproductive time. The Endure motor technology is designed to overcome this with a proprietary metal helix that controls vibration and prevents overloading the stator elastomer.
-
Halliburton developed the Global Rapid Intervention Package™ (GRIP), a suite of services to help reduce costs and deployment time in the event of subsea well control events. GRIP provides well planning and well kill capabilities facilitated by the company’s global logistics infrastructure and existing product service lines. This includes both an inventory of well test packages, coiled tubing units and relief well ranging tools. In addition, GRIP features the new high temperature, 15,000 psi RapidCap™ Air-Mobile Capping Stack. RapidCap incorporates a specially designed gate valve-based system making it significantly lighter, less expensive and more mobile than options currently on the market. -
Halliburton announced the release of the Acoustic Conformance Xaminer® (ACX) service, a technology to help operators identify and pinpoint costly wellbore leaks by analyzing sound waves that describe flow patterns in the formation and casing. The ACX service saves time by providing a continuous flow of data to the surface, allowing real-time identification of areas with possible leaks in the wellbore. The ACX service is effective in a variety of environments, including mature fields and unconventionals.
About
Founded in 1919,
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: with respect to the Macondo well
incident, final court approval of, and the satisfaction of the
conditions in,
HALLIBURTON COMPANY Condensed Consolidated Statements of Operations (Millions of dollars and shares except per share data) (Unaudited) |
|||||||||||||||||||
Three Months Ended | |||||||||||||||||||
September 30 | June 30 | ||||||||||||||||||
2016 | 2015 | 2016 | |||||||||||||||||
Revenue: | |||||||||||||||||||
Completion and Production | $ | 2,176 | $ | 3,200 | $ | 2,114 | |||||||||||||
Drilling and Evaluation | 1,657 | 2,382 | 1,721 | ||||||||||||||||
Total revenue | $ | 3,833 | $ | 5,582 | $ | 3,835 | |||||||||||||
Operating income (loss): | |||||||||||||||||||
Completion and Production | $ | 24 | $ | 163 | $ | (32 | ) | ||||||||||||
Drilling and Evaluation | 151 | 401 | 154 | ||||||||||||||||
Corporate and other | (47 | ) | (58 | ) | (60 | ) | |||||||||||||
Baker Hughes related costs and termination fee (a) | — | (82 | ) | (3,519 | ) | ||||||||||||||
Impairments and other charges (b) | — | (381 | ) | (423 | ) | ||||||||||||||
Total operating income (loss) | 128 | 43 | (3,880 | ) | |||||||||||||||
Interest expense, net (c) | (141 | ) | (99 | ) | (196 | ) | |||||||||||||
Other, net | (39 | ) | (34 | ) | (31 | ) | |||||||||||||
Loss before income taxes | (52 | ) | (90 | ) | (4,107 | ) | |||||||||||||
Income tax benefit | 59 | 37 | 902 | ||||||||||||||||
Net income (loss) | $ | 7 | $ | (53 | ) | $ | (3,205 | ) | |||||||||||
Net income attributable to noncontrolling interest | (1 | ) | (1 | ) | (3 | ) | |||||||||||||
Net income (loss) attributable to company | $ | 6 | $ | (54 | ) | $ | (3,208 | ) | |||||||||||
Basic and diluted net income (loss) per share | $ | 0.01 | $ | (0.06 | ) | $ | (3.73 | ) | |||||||||||
Basic weighted average common shares outstanding | 862 | 855 | 860 | ||||||||||||||||
Diluted weighted average common shares outstanding | 864 | 855 | 860 | ||||||||||||||||
(a) Includes a $3.5 billion termination fee recognized in the three months ended June 30, 2016. |
(b) For further details of impairments and other charges for the three months ended September 30, 2015 and June 30, 2016, see Footnote Table 1. |
(c) Includes $41 million of debt redemption fees and associated expenses in the three months ended June 30, 2016 related to the $2.5 billion of debt mandatorily redeemed during the second quarter, as well as interest expense associated with the $7.5 billion debt issued in late 2015. |
See Footnote Table 1 for Reconciliation of As Reported Operating Income (Loss) to Adjusted Operating Income. |
See Footnote Table 2 for Reconciliation of As Reported Loss from Continuing Operations to Adjusted Loss from Continuing Operations. |
HALLIBURTON COMPANY Condensed Consolidated Statements of Operations (Millions of dollars and shares except per share data) (Unaudited) |
||||||||||||
Nine Months Ended September 30 | ||||||||||||
2016 | 2015 | |||||||||||
Revenue: | ||||||||||||
Completion and Production | $ | 6,614 | $ | 10,890 | ||||||||
Drilling and Evaluation | 5,252 | 7,661 | ||||||||||
Total revenue | $ | 11,866 | $ | 18,551 | ||||||||
Operating income (loss): | ||||||||||||
Completion and Production | $ | 22 | $ | 938 | ||||||||
Drilling and Evaluation | 546 | 1,107 | ||||||||||
Corporate and other | (153 | ) | (198 | ) | ||||||||
Baker Hughes related costs and termination fee (a) | (4,057 | ) | (203 | ) | ||||||||
Impairments and other charges | (3,189 | ) | (1,895 | ) | ||||||||
Total operating loss | (6,831 | ) | (251 | ) | ||||||||
Interest expense, net (b) | (502 | ) | (311 | ) | ||||||||
Other, net (c) | (117 | ) | (281 | ) | ||||||||
Loss from continuing operations before income taxes | (7,450 | ) | (843 | ) | ||||||||
Income tax benefit | 1,836 | 207 | ||||||||||
Loss from continuing operations | (5,614 | ) | (636 | ) | ||||||||
Loss from discontinued operations, net | (2 | ) | (5 | ) | ||||||||
Net loss | $ | (5,616 | ) | $ | (641 | ) | ||||||
Net (income) loss attributable to noncontrolling interest | 2 | (2) | ||||||||||
Net loss attributable to company | $ | (5,614 | ) | $ | (643 | ) | ||||||
Amounts attributable to company shareholders: | ||||||||||||
Loss from continuing operations | $ | (5,612 | ) | $ | (638 | ) | ||||||
Loss from discontinued operations, net | (2 | ) | (5 | ) | ||||||||
Net loss attributable to company | $ | (5,614 | ) | $ | (643 | ) | ||||||
Basic loss per share attributable to company shareholders: | ||||||||||||
Loss from continuing operations | $ | (6.53 | ) | $ | (0.75 | ) | ||||||
Loss from discontinued operations, net | — | (0.01 | ) | |||||||||
Net loss per share | $ | (6.53 | ) | $ | (0.76 | ) | ||||||
Diluted loss per share attributable to company shareholders: | ||||||||||||
Loss from continuing operations | $ | (6.53 | ) | $ | (0.75 | ) | ||||||
Loss from discontinued operations, net | — | (0.01 | ) | |||||||||
Net loss per share | $ | (6.53 | ) | $ | (0.76 | ) | ||||||
Basic weighted average common shares outstanding | 860 | 852 | ||||||||||
Diluted weighted average common shares outstanding | 860 | 852 | ||||||||||
(a) During the nine months ended September 30, 2016, we recognized a $3.5 billion termination fee and an aggregate $464 million of charges for the reversal of assets held for sale accounting effective March 31, 2016. |
(b) For the nine months ended September 30, 2016, includes $41 million of debt redemption fees and associated expenses related to the $2.5 billion of debt mandatorily redeemed during the second quarter, as well as interest expense associated with the $7.5 billion debt issued in late 2015. |
(c) Includes a foreign currency loss of $199 million due to a currency devaluation in Venezuela in the nine months ended September 30, 2015. |
HALLIBURTON COMPANY Condensed Consolidated Balance Sheets (Millions of dollars) (Unaudited) |
||||||||||||
September 30 | December 31 | |||||||||||
2016 | 2015 | |||||||||||
Assets | ||||||||||||
Current assets: | ||||||||||||
Cash and equivalents | $ | 3,289 | $ | 10,077 | ||||||||
Receivables, net | 4,360 | 5,317 | ||||||||||
Inventories | 2,475 | 2,993 | ||||||||||
Prepaid income taxes | 703 | 527 | ||||||||||
Other current assets | 933 | 1,156 | ||||||||||
Total current assets | 11,760 | 20,070 | ||||||||||
Property, plant and equipment, net | 8,741 | 12,117 | ||||||||||
Goodwill | 2,383 | 2,385 | ||||||||||
Deferred income taxes | 1,944 | 552 | ||||||||||
Other assets | 1,927 | 1,818 | ||||||||||
Total assets | $ | 26,755 | $ | 36,942 | ||||||||
Liabilities and Shareholders’ Equity | ||||||||||||
Current liabilities: | ||||||||||||
Accounts payable | $ | 1,543 | $ | 2,019 | ||||||||
Accrued employee compensation and benefits | 535 | 862 | ||||||||||
Liabilities for Macondo well incident | 369 | 400 | ||||||||||
Current maturities of long-term debt | 152 | 659 | ||||||||||
Other current liabilities | 1,032 | 1,397 | ||||||||||
Total current liabilities | 3,631 | 5,337 | ||||||||||
Long-term debt | 12,163 | 14,687 | ||||||||||
Employee compensation and benefits | 449 | 479 | ||||||||||
Other liabilities | 786 | 944 | ||||||||||
Total liabilities | 17,029 | 21,447 | ||||||||||
Company shareholders’ equity | 9,682 | 15,462 | ||||||||||
Noncontrolling interest in consolidated subsidiaries | 44 | 33 | ||||||||||
Total shareholders’ equity | 9,726 | 15,495 | ||||||||||
Total liabilities and shareholders’ equity | $ | 26,755 | $ | 36,942 | ||||||||
HALLIBURTON COMPANY Condensed Consolidated Statements of Cash Flows (Millions of dollars) (Unaudited) |
|||||||||||||
Nine Months Ended | |||||||||||||
September 30 | |||||||||||||
2016 | 2015 | ||||||||||||
Cash flows from operating activities: | |||||||||||||
Net loss | $ | (5,616 | ) | $ | (641 | ) | |||||||
Adjustments to reconcile net loss to cash flows from operating activities: | |||||||||||||
Impairments and other charges | 3,189 | 1,895 | |||||||||||
Deferred income tax benefit, continuing operations | (1,511 | ) | (411 | ) | |||||||||
Depreciation, depletion and amortization | 1,117 | 1,433 | |||||||||||
Working capital (a) | 609 | 904 | |||||||||||
Tax refund (b) | 430 | — | |||||||||||
Payment related to the Macondo well incident | (33 | ) | (333 | ) | |||||||||
Other | (947 | ) | (826 | ) | |||||||||
Total cash flows provided by (used in) operating activities (c) | (2,762 | ) | 2,021 | ||||||||||
Cash flows from investing activities: | |||||||||||||
Capital expenditures | (625 | ) | (1,748 | ) | |||||||||
Proceeds from sales of property, plant and equipment | 176 | 133 | |||||||||||
Other investing activities | (73 | ) | (109 | ) | |||||||||
Total cash flows used in investing activities | (522 | ) | (1,724 | ) | |||||||||
Cash flows from financing activities: | |||||||||||||
Payments on long-term borrowings | (3,149 | ) | (8 | ) | |||||||||
Dividends to shareholders | (465 | ) | (460 | ) | |||||||||
Other financing activities | 163 | 146 | |||||||||||
Total cash flows used in financing activities | (3,451 | ) | (322 | ) | |||||||||
Effect of exchange rate changes on cash | (53 | ) | (17 | ) | |||||||||
Decrease in cash and equivalents | (6,788 | ) | (42 | ) | |||||||||
Cash and equivalents at beginning of period | 10,077 | 2,291 | |||||||||||
Cash and equivalents at end of period | $ | 3,289 | $ | 2,249 | |||||||||
|
(a) Working capital includes receivables, inventories and accounts payable. |
(b) We received $430 million in U.S. tax refunds during the third quarter of 2016 primarily as a result of our carry back of net operating losses we recognized in previous periods. |
(c) Includes a $3.5 billion termination fee paid to Baker Hughes during the second quarter of 2016. |
HALLIBURTON COMPANY Revenue and Operating Income (Loss) Comparison By Operating Segment and Geographic Region (Millions of dollars) (Unaudited) |
|||||||||||||||||||
Three Months Ended | |||||||||||||||||||
September 30 | June 30 | ||||||||||||||||||
Revenue | 2016 | 2015 | 2016 | ||||||||||||||||
By operating segment: | |||||||||||||||||||
Completion and Production | $ | 2,176 | $ | 3,200 | $ | 2,114 | |||||||||||||
Drilling and Evaluation | 1,657 | 2,382 | 1,721 | ||||||||||||||||
Total revenue | $ | 3,833 | $ | 5,582 | $ | 3,835 | |||||||||||||
By geographic region: | |||||||||||||||||||
North America | $ | 1,658 | $ | 2,488 | $ | 1,516 | |||||||||||||
Latin America | 415 | 739 | 476 | ||||||||||||||||
Europe/Africa/CIS | 744 | 1,021 | 795 | ||||||||||||||||
Middle East/Asia | 1,016 | 1,334 | 1,048 | ||||||||||||||||
Total revenue | $ | 3,833 | $ | 5,582 | $ | 3,835 | |||||||||||||
Operating Income (Loss) | |||||||||||||||||||
By operating segment: | |||||||||||||||||||
Completion and Production | $ | 24 | $ | 163 | $ | (32 | ) | ||||||||||||
Drilling and Evaluation | 151 | 401 | 154 | ||||||||||||||||
Total | 175 | 564 | 122 | ||||||||||||||||
Corporate and other | (47 | ) | (58 | ) | (60 | ) | |||||||||||||
Baker Hughes related costs and termination fee | — | (82 | ) | (3,519 | ) | ||||||||||||||
Impairments and other charges | — | (381 | ) | (423 | ) | ||||||||||||||
Total operating income (loss) | $ | 128 | $ | 43 | $ | (3,880 | ) | ||||||||||||
By geographic region: | |||||||||||||||||||
North America | $ | (66 | ) | $ | 8 | $ | (124 | ) | |||||||||||
Latin America | 11 | 108 | 22 | ||||||||||||||||
Europe/Africa/CIS | 76 | 150 | 64 | ||||||||||||||||
Middle East/Asia | 154 | 298 | 160 | ||||||||||||||||
Total | $ | 175 | $ | 564 | $ | 122 | |||||||||||||
See Footnote Table 1 for Reconciliation of As Reported Operating Income (Loss) to Adjusted Operating Income. | |||||||||||||||||||
HALLIBURTON COMPANY Revenue and Operating Income (Loss) Comparison By Operating Segment and Geographic Region (Millions of dollars) (Unaudited) |
|||||||||||||
Nine Months Ended September 30 | |||||||||||||
Revenue | 2016 | 2015 | |||||||||||
By operating segment: | |||||||||||||
Completion and Production | $ | 6,614 | $ | 10,890 | |||||||||
Drilling and Evaluation | 5,252 | 7,661 | |||||||||||
Total revenue | $ | 11,866 | $ | 18,551 | |||||||||
By geographic region: | |||||||||||||
North America | $ | 4,968 | $ | 8,701 | |||||||||
Latin America | 1,432 | 2,455 | |||||||||||
Europe/Africa/CIS | 2,317 | 3,213 | |||||||||||
Middle East/Asia | 3,149 | 4,182 | |||||||||||
Total revenue | $ | 11,866 | $ | 18,551 | |||||||||
Operating Income (Loss) | |||||||||||||
By operating segment: | |||||||||||||
Completion and Production | $ | 22 | $ | 938 | |||||||||
Drilling and Evaluation | 546 | 1,107 | |||||||||||
Total | 568 | 2,045 | |||||||||||
Corporate and other | (153 | ) | (198 | ) | |||||||||
Baker Hughes related costs and termination fee | (4,057 | ) | (203 | ) | |||||||||
Impairments and other charges | (3,189 | ) | (1,895 | ) | |||||||||
Total operating loss | $ | (6,831 | ) | $ | (251 | ) | |||||||
By geographic region: | |||||||||||||
North America | $ | (229 | ) | $ | 417 | ||||||||
Latin America | 81 | 342 | |||||||||||
Europe/Africa/CIS | 197 | 400 | |||||||||||
Middle East/Asia | 519 | 886 | |||||||||||
Total | $ | 568 | $ | 2,045 | |||||||||
FOOTNOTE TABLE 1 | ||||||||||||
HALLIBURTON COMPANY | ||||||||||||
Reconciliation of As Reported Operating Income (Loss) to Adjusted Operating Income |
||||||||||||
(Millions of dollars) | ||||||||||||
(Unaudited) | ||||||||||||
Three Months Ended | ||||||||||||
September 30, 2015 | June 30, 2016 | |||||||||||
As reported operating income (loss) | $ | 43 | $ | (3,880 | ) | |||||||
Impairments and other charges: | ||||||||||||
Fixed asset impairments | 154 | 92 | ||||||||||
Severance costs | 96 | 126 | ||||||||||
Inventory write-downs | 64 | 64 | ||||||||||
Intangible asset impairments | 37 | — | ||||||||||
Venezuela promissory note loss | — | 148 | ||||||||||
Other | 30 | (7 | ) | |||||||||
Total Impairments and other charges | 381 | 423 | ||||||||||
Baker Hughes related costs and termination fee | 82 | 3,519 | ||||||||||
Adjusted operating income (a) | $ | 506 | $ | 62 | ||||||||
|
(a) | Management believes that operating income (loss) adjusted for impairments and other charges and Baker Hughes related costs and termination fee for the three months ended September 30, 2015 and June 30, 2016 is useful to investors to assess and understand operating performance, especially when comparing those results with previous and subsequent periods or forecasting performance for future periods, primarily because management views the excluded items to be outside of the company's normal operating results. Management analyzes operating income (loss) without the impact of these items as an indicator of performance, to identify underlying trends in the business, and to establish operational goals. The adjustments remove the effects of these items. Adjusted operating income is calculated as: “As reported operating income (loss)” plus "Total Impairments and other charges" and "Baker Hughes related costs and termination fee" for the three months ended September 30, 2015 and June 30, 2016. | |
FOOTNOTE TABLE 2 | ||||||
HALLIBURTON COMPANY | ||||||
Reconciliation of As Reported Loss from Continuing Operations to | ||||||
Adjusted Loss from Continuing Operations | ||||||
(Millions of dollars and shares except per share data) | ||||||
(Unaudited) | ||||||
Three Months Ended | ||||||
June 30, 2016 | ||||||
As reported loss from continuing operations attributable to company | $ | (3,208 | ) | |||
Baker Hughes related costs and termination fee (a) | 3,519 | |||||
Impairments and other charges (a) | 423 | |||||
Debt mandatory redemption fee and expenses (a) | 41 | |||||
Total adjustments, before taxes | 3,983 | |||||
Income tax benefit (b) | (896 | ) | ||||
Total adjustments, net of tax | $ | 3,087 | ||||
Adjusted loss from continuing operations attributable to company | $ | (121 | ) | |||
Diluted weighted average common shares outstanding | 860 | |||||
As reported loss from continuing operations per diluted share (c) | $ | (3.73 | ) | |||
Adjusted loss from continuing operations per diluted share (c) | $ | (0.14 | ) | |||
|
(a) | Management believes that income (loss) from continuing operations adjusted for Baker Hughes related costs and termination fee, impairments and other charges, and debt mandatory redemption fee and expenses is useful to investors to assess and understand operating performance, especially when comparing those results with previous and subsequent periods or forecasting performance for future periods, primarily because management views the excluded items to be outside of the company's normal operating results. Management analyzes income (loss) from continuing operations without the impact of these items as an indicator of performance, to identify underlying trends in the business, and to establish operational goals. The adjustments remove the effects of these items. Adjusted loss from continuing operations attributable to company is calculated as: “As reported loss from continuing operations attributable to company” plus "Total adjustments, net of tax" for the three months ended June 30, 2016. | |
(b) | Represents the tax effects of the aggregate adjustments during the period. Additionally, includes approximately $486 million of discrete tax adjustments recorded during the second quarter of 2016, primarily relating to deferred tax expenses associated with Halliburton's decision that it now may not permanently reinvest some of its foreign earnings, and tax expenses associated with the inability to utilize certain tax deductions resulting from the carryback of net operating losses to prior tax periods. | |
(c) | As reported loss from continuing operations per diluted share is calculated as: "As reported loss from continuing operations attributable to company" divided by "Diluted weighted average common shares outstanding." Adjusted loss from continuing operations per diluted share is calculated as: "Adjusted loss from continuing operations attributable to company" divided by "Diluted weighted average common shares outstanding." | |
Conference Call Details
Please visit the website to listen to the call live via webcast.
Interested parties may also participate in the call by dialing (866)
854-3163 within
A replay of the conference call will be available on Halliburton’s
website for seven days following the call. Also, a replay may be
accessed by telephone at (888) 266-2081 within
View source version on businesswire.com: http://www.businesswire.com/news/home/20161019005168/en/
Source:
Halliburton
For Investors:
Lance Loeffler,
281-871-2688
Halliburton, Investor Relations
Investors@Halliburton.com
or
For
Media:
Emily Mir, 281-871-2601
Halliburton, Public
Relations
PR@Halliburton.com