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Halliburton Announces Fourth Quarter Income From Continuing Operations Of $0.63 Per Diluted Share

Stocks in this article: HAL

Significant Recent Events and Achievements

  • Halliburton was selected by TNK-BP to provide an integrated services solution to increase production from the complex and challenging tight oil reserves in the Em-Yoga license area of Russia's Krasnoleninskoe oil and natural gas field in Nyagan, Western Siberia. The two-year contract calls for Halliburton to provide subsurface consulting, project management, well construction, and completion services, including directional drilling, logging-while-drilling, fluids, bits, cementing, completion tools, coiled tubing, and multistage fracturing stimulation services, for multiple wells in Nyagan.
  • Halliburton, Apache Corporation, and Caterpillar have developed innovative dual-fuel technology capable of safely and efficiently powering the pumping equipment used for fracturing treatments with a mixture of natural gas and diesel.
  • Halliburton was recognized at the 11th Annual World Oil Awards with “Best” awards for its Frac of the Future equipment suite in the Best Health, Safety, Environment/Sustainable Development Onshore category and for its DecisionSpace® well planning software in the Best Visualization and Collaboration category.

Founded in 1919, Halliburton is one of the world’s largest providers of products and services to the energy industry. With more than 72,000 employees, representing 140 nationalities in approximately 80 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 website 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, settlements, and investigations; actions by third parties, including governmental agencies; changes in the demand for or price of oil and/or natural gas can be significantly impacted by weakness in the worldwide economy; 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 and against cyber attacks; compliance with environmental laws; changes in government regulations and regulatory requirements, particularly those related to offshore oil and natural 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, foreign exchange rates and controls, international trade and regulatory 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 natural gas properties; structural changes in the oil and natural gas industry; maintaining a highly skilled workforce; availability and cost of raw materials; and integration of acquired businesses and operations of joint ventures. Halliburton’s Form 10-K for the year ended December 31, 2011, Form 10-Q for the quarter ended September 30, 2012, 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 COMPANYCondensed Consolidated Statements of Operations(Millions of dollars and shares except per share data)(Unaudited)

 
 

Three Months Ended

December 31

 

September 30

    2012   2011   2012

Revenue:

 
Completion and Production $ 4,337 $ 4,328 $ 4,293
Drilling and Evaluation   2,953     2,736     2,818  

Total revenue

  $ 7,290     $ 7,064     $ 7,111  
Operating income:
Completion and Production $ 603 $ 1,087 $ 591
Drilling and Evaluation 484 480 430
Corporate and other   (106 )   (137 )   (67 )
Total operating income   981     1,430     954  
Interest expense, net (73 ) (69 ) (71 )
Other, net   (9 )   (7 )   (6 )

Income from continuing operations before income taxes

899 1,354 877
Provision for income taxes   (307 )   (447 )   (267 )
Income from continuing operations 592 907 610

Income (loss) from discontinued operations, net (a)

  80         (6 )

Net income

  $ 672     $ 907     $ 604  
Noncontrolling interest in net income of subsidiaries   (3 )   (1 )   (2 )
Net income attributable to company   $ 669     $ 906     $ 602  

Amounts attributable to company shareholders:

Income from continuing operations $ 589 $ 906 $ 608

Income (loss) from discontinued operations, net (a)

  80         (6 )

Net income attributable to company

  $ 669     $ 906     $ 602  

Basic income per share attributable to company shareholders:

Income from continuing operations $ 0.63 $ 0.98 $ 0.66

Income (loss) from discontinued operations, net (a)

  0.09         (0.01 )

Net income per share

  $ 0.72     $ 0.98     $ 0.65  

Diluted income per share attributable to company shareholders:

Income from continuing operations $ 0.63 $ 0.98 $ 0.65

Income (loss) from discontinued operations, net (a)

  0.09        

 

Net income per share

  $ 0.72     $ 0.98     $ 0.65  
Basic weighted average common shares outstanding 928 921 928
Diluted weighted average common shares outstanding   931     923     930  

(a)

 

Includes an $80 million tax benefit in the three months ended December 31, 2012 related to a payment to Petrobras under a guarantee relating to work performed on the Barracuda-Caratinga project by KBR, Inc.

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

See Footnote Table 3 for adjusted total operating income excluding certain items.

 

HALLIBURTON COMPANYCondensed Consolidated Statements of Operations(Millions of dollars and shares except per share data)(Unaudited)

 
 
  Year Ended December 31
    2012   2011

Revenue:

 
Completion and Production $

17,380

$ 15,143
Drilling and Evaluation   11,123     9,686  
Total revenue   $ 28,503     $ 24,829  

Operating income:

Completion and Production $ 3,144 $ 3,733
Drilling and Evaluation 1,675 1,403

Corporate and other (a)

  (660 )   (399 )

Total operating income

  4,159     4,737  
Interest expense, net (298 ) (263 )
Other, net   (39 )   (25 )
Income from continuing operations before income taxes 3,822 4,449
Provision for income taxes   (1,235 )   (1,439 )
Income from continuing operations

2,587

3,010

Income (loss) from discontinued operations, net (b) (c)

  58     (166 )
Net income   $ 2,645     $ 2,844  
Noncontrolling interest in net income of subsidiaries   (10 )   (5 )
Net income attributable to company   $ 2,635     $ 2,839  
Amounts attributable to company shareholders:
Income from continuing operations $ 2,577 $ 3,005

Income (loss) from discontinued operations, net (b) (c)

  58     (166 )
Net income attributable to company   $ 2,635     $ 2,839  

Basic income per share attributable to company shareholders:

Income from continuing operations $ 2.78 $ 3.27

Income (loss) from discontinued operations, net (b) (c)

  0.07     (0.18 )
Net income per share   $ 2.85     $ 3.09  

Diluted income per share attributable to company shareholders:

Income from continuing operations $ 2.78 $ 3.26

Income (loss) from discontinued operations, net (b) (c)

  0.06     (0.18 )
Net income per share   $ 2.84     $ 3.08  
Basic weighted average common shares outstanding 926 918
Diluted weighted average common shares outstanding   928     922  

(a)

  Includes, among other items, a $300 million, pre-tax, charge in 2012 related to the Macondo well incident.

(b)

Includes an $80 million tax benefit in 2012 related to a payment to Petrobras under a guarantee relating to work performed on the Barracuda-Caratinga project by KBR, Inc.

(c)

Includes, among other items, a $163 million loss in 2011 for an arbitration award against KBR, Inc. relating to the Barracuda-Caratinga project, a project for which Halliburton had provided a guarantee.

 

See Footnote Table 2 for a list of significant items included in operating income.

 

HALLIBURTON COMPANYCondensed Consolidated Balance Sheets(Millions of dollars)(Unaudited)

 
 

December 31

   

2012

  2011
Assets
Current assets:  
Cash and equivalents $ 2,484 $ 2,698
Receivables, net 5,787 5,084
Inventories 3,186 2,570

Other current assets (a)

  1,629     1,225
Total current assets 13,086 11,577
 
Property, plant, and equipment, net 10,257 8,492
Goodwill 2,135 1,776

Other assets (b)

  1,932     1,832
Total assets   $ 27,410     $ 23,677
 
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable $ 2,041 $ 1,826
Accrued employee compensation and benefits 930 862
Other current liabilities   1,781     1,433
Total current liabilities 4,752 4,121
 
Long-term debt 4,820 4,820
Other liabilities   2,048     1,520
Total liabilities 11,620 10,461
 
Company shareholders’ equity 15,765 13,198
Noncontrolling interest in consolidated subsidiaries   25     18
Total shareholders’ equity   15,790     13,216
Total liabilities and shareholders’ equity   $ 27,410     $ 23,677

(a)

  Includes $270 million of investments in fixed income securities at December 31, 2012 and $150 million of fixed income securities at December 31, 2011.

(b)

Includes $128 million of investments in fixed income securities at December 31, 2012.
 

HALLIBURTON COMPANYCondensed Consolidated Statements of Cash Flows(Millions of dollars)(Unaudited)

 
  Year Ended
December 31
    2012   2011
Cash flows from operating activities:  
Net income $ 2,645 $ 2,844
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation, depletion, and amortization 1,628 1,359
Loss contingency for Macondo well incident 300
(Income) loss from discontinued operations (58 ) 166
Other, primarily working capital   (861 )  

(685

)
Total cash flows from operating activities   3,654    

3,684

 
 
Cash flows from investing activities:
Capital expenditures (3,566 ) (2,953 )
Purchases of investment securities (506 ) (501 )
Sales of property, plant, and equipment 395 160
Sales of investment securities 258 1,001
Acquisitions, net of cash acquired (214 ) (880 )
Other   (55 )   (17 )
Total cash flows from investing activities   (3,688 )   (3,190 )
 
Cash flows from financing activities:
Dividends to shareholders (333 ) (330 )
Proceeds from long-term borrowings, net of offering costs 978
Other   161     185  
Total cash flows from financing activities   (172 )   833  
 
Effect of exchange rate changes on cash   (8 )   (27 )
Increase (decrease) in cash and equivalents (214 )

1,300

Cash and equivalents at beginning of year   2,698     1,398  
Cash and equivalents at end of year   $ 2,484     $

2,698

 
 

HALLIBURTON COMPANYRevenue and Operating Income ComparisonBy Segment and Geographic Region(Millions of dollars)(Unaudited)

 
  Three Months Ended
December 31   September 30

Revenue by geographic region:

  2012   2011   2012
Completion and Production:    
North America $ 2,830 $ 3,148 $ 2,978
Latin America 396 312 373
Europe/Africa/CIS 569 497 523
Middle East/Asia   542     371     419  
Total   4,337     4,328     4,293  
Drilling and Evaluation:
North America 923 962 965
Latin America 687 565 579
Europe/Africa/CIS 645 588 605
Middle East/Asia   698     621     669  
Total   2,953     2,736     2,818  
Total revenue by region:
North America 3,753 4,110 3,943
Latin America 1,083 877 952
Europe/Africa/CIS 1,214 1,085 1,128
Middle East/Asia   1,240     992     1,088  
 

Operating income by geographic region:

           
Completion and Production:
North America $ 315 $ 940 $ 383
Latin America 57 51 40
Europe/Africa/CIS 107 44 88
Middle East/Asia   124     52     80  
Total   603     1,087     591  
Drilling and Evaluation:
North America 150 178 174
Latin America 136 119 106
Europe/Africa/CIS 79 65 63
Middle East/Asia   119     118     87  
Total   484     480     430  
Total operating income by region:
North America 465 1,118 557
Latin America 193 170 146
Europe/Africa/CIS 186 109 151
Middle East/Asia   243     170     167  
Corporate and other   (106 )   (137 )   (67 )
Total operating income   $ 981     $ 1,430     $ 954  
See Footnote Table 1 for a list of significant items included in operating income.
See Footnote Table 3 for adjusted total operating income excluding certain items.
 

HALLIBURTON COMPANYRevenue and Operating Income ComparisonBy Segment and Geographic Region(Millions of dollars)(Unaudited)

 
  Year Ended December 31
Revenue by geographic region:   2012   2011
Completion and Production:  
North America $ 12,157 $ 10,907
Latin America 1,415 1,117
Europe/Africa/CIS 2,099 1,746
Middle East/Asia   1,709     1,373  
Total   17,380     15,143  
Drilling and Evaluation:
North America 3,847 3,506
Latin America 2,279 1,865
Europe/Africa/CIS 2,411 2,210
Middle East/Asia   2,586    

2,105

 
Total   11,123     9,686  
Total revenue by region:
North America 16,004 14,413
Latin America 3,694 2,982
Europe/Africa/CIS 4,510 3,956
Middle East/Asia   4,295     3,478  
 
Operating income by geographic region:        
Completion and Production:
North America $ 2,260 $ 3,341
Latin America 206 159
Europe/Africa/CIS 347 48
Middle East/Asia   331     185  
Total   3,144     3,733  
Drilling and Evaluation:
North America 680 641
Latin America 393 305
Europe/Africa/CIS 246 191
Middle East/Asia   356     266  
Total   1,675     1,403  
Total operating income by region:
North America 2,940 3,982
Latin America 599 464
Europe/Africa/CIS 593 239
Middle East/Asia   687     451  
Corporate and other   (660 )   (399 )
Total operating income   $ 4,159     $ 4,737  
See Footnote Table 2 for a list of significant items included in operating income.
 

FOOTNOTE TABLE 1HALLIBURTON COMPANYItems Included in Operating Income(Millions of dollars except per share data)(Unaudited)

 
  Three Months Ended   Three Months Ended
December 31, 2011 September 30, 2012
Operating   After Tax Operating   After Tax
    Income   per Share   Income   per Share
Completion and Production:
North America
Acquisition-related charge $

$

$

(40 )

$

(0.02

)

Latin America
Acquisition-related charge           (8 )   (0.01

)

Corporate and other:
Environmental charge (24 ) (0.02 )
Patent infringement case settlement      

    20    

0.01

 
 

FOOTNOTE TABLE 2HALLIBURTON COMPANYItems Included in Operating Income(Millions of dollars except per share data)(Unaudited)

 
  Year Ended   Year Ended
December 31, 2012 December 31, 2011
Operating   After Tax Operating   After Tax
    Income   per Share   Income   per Share
Completion and Production:
North America
Acquisition-related charge $ (40 ) $ (0.02 ) $ $
Latin America
Acquisition-related charge (8 ) (0.01 )
Europe/Africa/CIS
Asset impairment charge (25 ) (0.02 )
Employee separation costs (5 ) (0.01 )
Libya reserve (36 ) (0.03 )
Middle East/Asia
Employee separation costs           (1 )    
Drilling and Evaluation:
Europe/Africa/CIS
Employee separation costs (4 )
Libya reserve (23 ) (0.02 )
Middle East/Asia
Employee separation costs           (1 )    
Corporate and other:
Macondo-related charge (300 ) (0.20 )
Patent infringement case settlement 20 0.01
Environmental charge           (24 )   (0.02 )
 

FOOTNOTE TABLE 3HALLIBURTON COMPANYAdjusted Total Operating Income Excluding Certain ItemsBy Segment and Geographic Region(Millions of dollars)(Unaudited)

 
  Three Months Ended
December 31   September 30

Adjusted operating income by geographic region: (a) (b)

  2012 2011   2012
Completion and Production:  
North America $ 315 $ 940 $ 423
Latin America 57 51 48
Europe/Africa/CIS 107 44 88
Middle East/Asia   124   52     80  
Total   603   1,087     639  
Drilling and Evaluation:
North America 150 178 174
Latin America 136 119 106
Europe/Africa/CIS 79 65 63
Middle East/Asia   119   118     87  
Total   484   480     430  
Adjusted total operating income by region:
North America 465 1,118 597
Latin America 193 170 154
Europe/Africa/CIS 186 109 151
Middle East/Asia   243   170     167  
Corporate and other   (106 ) (113 )   (87 )
Adjusted total operating income   $ 981   $ 1,454     $ 982  

(a)

  Management believes that operating income adjusted for the fourth quarter of 2011 environmental-related charge and the third quarter of 2012 acquisition-related charge and settlement of a patent infringement case 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 these items to be outside of the company’s normal operating results. Management analyzes operating income without the impact of these items as an indicator of ongoing operating performance, to identify underlying trends in the business, and to establish operational goals, including segment and region operational goals. The adjustments remove the effects of these expenses.

(b)

Adjusted operating income for each segment and region is calculated as: “Operating income” less “Items Included in Operating Income.”
 

FOOTNOTE TABLE 4HALLIBURTON COMPANYReconciliation of As Reported Results to Adjusted Results(Millions of dollars)(Unaudited)

 
  Three Months Ended
    September 30, 2012
 
As reported income from continuing operations attributable to company   $ 608

Acquisition-related charge, net of tax (a)

30

Patent infringement case settlement, net of tax (a)

  (13 )

Adjusted income from continuing operations attributable to company (a)

  $ 625  
 
As reported diluted weighted average common shares outstanding 930
 

As reported income from continuing operations per diluted share (b)

$ 0.65

Adjusted income from continuing operations per diluted share (b)

  $ 0.67  

(a)

  Management believes that income from continuing operations attributable to company adjusted for the acquisition-related charge and patent infringement case settlement 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 from continuing operations attributable to company 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 expenses. Adjusted income from continuing operations attributable to company is calculated as: “As reported income from continuing operations attributable to company” plus “Acquisition-related charge, net of tax” plus “Patent infringement case settlement, net of tax” for the quarter ended September 30, 2012.

(b)

As reported income from continuing operations per diluted share is calculated as: “As reported income from continuing operations attributable to company” divided by “As reported diluted weighted average common shares outstanding.” Adjusted income from continuing operations per diluted share is calculated as: “Adjusted income from continuing operations attributable to company” divided by “As reported diluted weighted average common shares outstanding.”
 

Conference Call Details

Halliburton (NYSE:HAL) will host a conference call on Friday, January 25, 2013, to discuss the fourth quarter 2012 financial results. The call will begin at 8:00 AM Central Time (9:00 AM Eastern Time).

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