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Halliburton Announces Second Quarter Income From Continuing Operations Of $0.73 Per Diluted Share

Stocks in this article: HAL

Corporate and Other

During the second quarter of 2013, Halliburton invested an additional $34 million, pre-tax, in strategic projects aimed at strengthening Halliburton's North America service delivery model and repositioning technology, supply chain, and manufacturing infrastructure to support projected international growth. Halliburton expects to continue funding this effort throughout 2013.

Halliburton repurchased 23 million shares of common stock during the second quarter at a total cost of approximately $1.0 billion. Since the inception of the stock repurchase program in February 2006, Halliburton has purchased 120 million shares at a total cost of approximately $4.3 billion. On July 18, 2013, Halliburton’s board of directors increased the authorization to purchase Halliburton common stock by $4.3 billion, to a new total of $5.0 billion, and Halliburton anticipates additional purchases under the program during the third quarter.

Significant Recent Events and Achievements

  • Halliburton announced the successful completion of three wells in the deepwater Gulf of Mexico utilizing Halliburton's Enhanced Single-Trip Multizone (ESTMZ™) FracPac™ system. The ESTMZ downhole tool system enables the operator to stimulate and gravel pack multiple production zones in a single trip. Designed for use in deepwater and ultra-deepwater offshore completions, the ESTMZ system allows the highest treating rate with the greatest volume of proppant in the industry. Halliburton developed the multi-zone completion technology in collaboration with Chevron U.S.A. Inc. The time savings realized for each of the three Chevron-operated wells completed with the ESTMZ system averaged 18 days, equating to approximately $22 million.
  • Halliburton’s SandCastle® PS-2500 vertical proppant storage bin was awarded E&P magazine’s Meritorious Award for Engineering Innovation at the Offshore Technology Conference. The SandCastle PS-2500 vertical bin helps address problems with space constraints at most well-site locations. The new unit offers a reduced footprint with no volume compromise as compared to a traditional horizontal proppant storage unit. The unit uses solar power for all power needs, eliminating the diesel engine normally required, and is equipped with an integrated weighing system for improved logistics.
  • Halliburton announced it is expanding its sonic fleet with the introduction of the XBAT SM Azimuthal Sonic and Ultrasonic logging-while-drilling service. The XBAT LWD service delivers accurate acoustic measurements in a wide range of formations via sensors and electronics that are much less sensitive to drilling noise and have a wider frequency response. The result is a greater signal-to-noise ratio that enables better measurements, even in noisy drilling environments and poor hole conditions. With more than 100 successful runs, the XBAT LWD service delivered accurate measurements in formations from Brunei to Brazil and has been tested extensively in the challenging environments of the North Sea and the Gulf of Mexico.
  • Halliburton announced the deployment of nearly 100 light-duty compressed natural gas (CNG) trucks across 15 field locations in seven U.S. states as part of a pilot program. The environmentally friendly vehicles, when operating on CNG, emit about 90 percent less emissions than gasoline-powered vehicles and are estimated to save approximately $5,100 per truck in annual fuel costs.
  • Halliburton announced the opening of its new Technology Center at the Federal University of Rio de Janeiro Technology Park, located at Ilha do FundFu, Rio de Janeiro, Brazil. The center provides the setting for collaboration as Halliburton works with the country's leading university and customer research groups to establish a global center of expertise for deepwater and mature fields.

Founded in 1919, Halliburton is one of the world's largest providers of products and services to the energy industry. With more than 75,000 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; whether a settlement relating to the Macondo multi-district litigation will be reached at the amounts contemplated by our reserve or at all; settlement discussions relating to the Macondo incident do not cover all possible parties and claims, and there are additional reasonably possible losses relating to the Macondo incident that we cannot reasonably estimate at this time; with respect to repurchases of Halliburton common stock, 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 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, 2012, Form 10-Q for the quarter ended March 31, 2013, 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. There can be no assurance as to the amount, timing or prices of share repurchases. The specific timing and amount of repurchases may vary based on market conditions and other factors. The share repurchase program may be suspended at any time.

 

HALLIBURTON COMPANY

Condensed Consolidated Statements of Operations

(Millions of dollars and shares except per share data)

(Unaudited)

 
  Three Months Ended
June 30   March 31
    2013   2012   2013
Revenue:    
Completion and Production $ 4,363 $ 4,460 $ 4,100
Drilling and Evaluation   2,954     2,774     2,874  
Total revenue   $ 7,317     $ 7,234     $ 6,974  
Operating income:
Completion and Production $ 732 $ 914 $ 615
Drilling and Evaluation 415 393 407
Corporate and other (a)   (108 )   (106 )   (1,120 )
Total operating income (loss)   1,039     1,201     (98 )
Interest expense, net (71 ) (80 ) (71 )
Other, net   (11 )   (17 )   (14 )
Income (loss) from continuing operations before income taxes 957 1,104 (183 )
Income tax benefit (provision) (b)   (276 )   (357 )   172  
Income (loss) from continuing operations 681 747 (11 )
Income (loss) from discontinued operations, net   2     (8 )   (5 )
Net income (loss)   $ 683     $ 739     $ (16 )
Noncontrolling interest in net income of subsidiaries   (4 )   (2 )   (2 )
Net income (loss) attributable to company   $ 679     $ 737     $ (18 )
Amounts attributable to company shareholders:
Income (loss) from continuing operations $ 677 $ 745 $ (13 )
Income (loss) from discontinued operations, net   2     (8 )   (5 )
Net income (loss) attributable to company   $ 679     $ 737     $ (18 )
Basic income (loss) per share attributable to company shareholders:
Income (loss) from continuing operations $ 0.73 $ 0.81 $ (0.01 )
Income (loss) from discontinued operations, net       (0.01 )   (0.01 )
Net income (loss) per share   $ 0.73     $ 0.80     $ (0.02 )
Diluted income (loss) per share attributable to company shareholders:
Income (loss) from continuing operations $ 0.73 $ 0.80 $ (0.01 )
Income (loss) from discontinued operations, net       (0.01 )   (0.01 )
Net income (loss) per share   $ 0.73     $ 0.79     $ (0.02 )
Basic weighted average common shares outstanding 925 924 931
Diluted weighted average common shares outstanding   928     926     931  
 

(a) Includes a $1.0 billion, pre-tax, charge in the three months ended March 31, 2013 related to the Macondo well incident.

(b) Includes $50 million in federal tax benefits in the three months ended March 31, 2013.

See Footnote Table 1 for a reconciliation of as-reported operating income (loss) to adjusted operating income.
See Footnote Table 2 for a reconciliation of as-reported income (loss) from continuing operations to adjusted income from continuing operations.
 

HALLIBURTON COMPANY

Condensed Consolidated Statements of Operations

(Millions of dollars and shares except per share data)

(Unaudited)

 
Six Months Ended June 30
  2013 2012
Revenue:
Completion and Production $ 8,463 $ 8,750
Drilling and Evaluation 5,828   5,352  
Total revenue $ 14,291   $ 14,102  
Operating income:
Completion and Production $ 1,347 $ 1,950
Drilling and Evaluation 822 761
Corporate and other (a) (1,228 ) (487 )
Total operating income 941   2,224  
Interest expense, net (142 ) (154 )
Other, net (25 ) (24 )
Income from continuing operations before income taxes 774 2,046
Provision for income taxes (b) (104 ) (661 )
Income from continuing operations 670 1,385
Loss from discontinued operations, net (3 ) (16 )
Net income $ 667   $ 1,369  
Noncontrolling interest in net income of subsidiaries (6 ) (5 )
Net income attributable to company $ 661   $ 1,364  
Amounts attributable to company shareholders:
Income from continuing operations $ 664 $ 1,380
Loss from discontinued operations, net (3 ) (16 )
Net income attributable to company $ 661   $ 1,364  
Basic income per share attributable to company
shareholders:
Income from continuing operations $ 0.72 $ 1.50
Loss from discontinued operations, net (0.01 ) (0.02 )
Net income per share $ 0.71   $ 1.48  
Diluted income per share attributable to company
shareholders:
Income from continuing operations $ 0.71 $ 1.49
Loss from discontinued operations, net   (0.02 )
Net income per share $ 0.71   $ 1.47  
Basic weighted average common shares outstanding 928 923
Diluted weighted average common shares outstanding 931   926  
 
(a)  

Includes a $1.0 billion, pre-tax, charge in the six months ended June 30, 2013, and a $300 million, pre-tax, charge in the six months ended June 30, 2012, related to the Macondo well incident.

(b)

Includes $50 million in federal tax benefits in the six months ended June 30, 2013.

See Footnote Table 1 for a reconciliation of as-reported operating income to adjusted operating income.

 

HALLIBURTON COMPANY

Condensed Consolidated Balance Sheets
(Millions of dollars)
 
(Unaudited)  
June 30   December 31
  2013   2012
Assets
Current assets:
Cash and equivalents $ 1,412 $ 2,484
Receivables, net 6,359 5,787
Inventories 3,341 3,186
Other current assets (a) 1,489     1,629
Total current assets 12,601 13,086
 
Property, plant, and equipment, net 10,753 10,257
Goodwill 2,116 2,135
Other assets (b) 1,928     1,932
Total assets $ 27,398     $ 27,410
 
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable $ 2,251 $ 2,041
Accrued employee compensation and benefits 867 930
Other current liabilities (c) 1,604     1,781
Total current liabilities 4,722 4,752
 
Long-term debt 4,820 4,820
Loss contingency for Macondo well incident 1,022 300
Other liabilities 1,434     1,748
Total liabilities 11,998 11,620
 
Company shareholders’ equity 15,372 15,765
Noncontrolling interest in consolidated subsidiaries 28     25
Total shareholders’ equity 15,400     15,790
Total liabilities and shareholders’ equity $ 27,398     $ 27,410
 

(a) Includes $146 million of investments in fixed income securities at June 30, 2013, and $270 million of investments in fixed income securities at December 31, 2012.

(b) Includes $131 million of investments in fixed income securities at June 30, 2013, and $128 million of investments in fixed income securities at December 31, 2012.

(c) Includes a $278 million loss contingency related to the Macondo well incident at June 30, 2013.

 
HALLIBURTON COMPANY
Condensed Consolidated Statements of Cash Flows
(Millions of dollars)
(Unaudited)
 
    Six Months EndedJune 30
      2013       2012
Cash flows from operating activities:      
Net income $       667 $       1,369
Adjustments to reconcile net income to net cash flows from operating activities:
Loss contingency for Macondo well incident 1,000 300
Depreciation, depletion, and amortization 922 791
Payment of Barracuda-Caratinga obligation (219 )
Other, primarily working capital     (899 )       (1,325 )
Total cash flows from operating activities     1,471         1,135  
 
Cash flows from investing activities:
Capital expenditures (1,396 ) (1,651 )
Sales of investment securities 232 200
Purchases of investment securities (110 ) (100 )
Other     83         34  
Total cash flows from investing activities     (1,191 )       (1,517 )
 
Cash flows from financing activities:
Payments to reacquire common stock (1,015 )
Dividends to shareholders (231 ) (167 )
Other     (83 )       25  
Total cash flows from financing activities     (1,329 )       (142 )
 
Effect of exchange rate changes on cash     (23 )       (2 )
Decrease in cash and equivalents (1,072 ) (526 )
Cash and equivalents at beginning of period     2,484         2,698  
Cash and equivalents at end of period     $       1,412         $       2,172  
 
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: 2013   2012   2013
Completion and Production:    
North America $ 2,876 $ 3,167 $ 2,745
Latin America 391 340 355
Europe/Africa/CIS 576 551 532
Middle East/Asia 520     402     468  
Total 4,363     4,460     4,100  
Drilling and Evaluation:
North America 926 973 961
Latin America 553 539 590
Europe/Africa/CIS 723 605 655
Middle East/Asia 752     657     668  
Total 2,954     2,774     2,874  
Total revenue by region:
North America 3,802 4,140 3,706
Latin America 944 879 945
Europe/Africa/CIS 1,299 1,156 1,187
Middle East/Asia 1,272     1,059     1,136  
Total revenue $ 7,317     $ 7,234     $ 6,974  
 
Operating income by geographic region:          
Completion and Production:
North America $ 517 $ 691 $ 432
Latin America 48 54 28
Europe/Africa/CIS 74 95 64
Middle East/Asia 93     74     91  
Total 732     914     615  
Drilling and Evaluation:
North America 149 166 173
Latin America 53 84 81
Europe/Africa/CIS 87 64 57
Middle East/Asia 126     79     96  
Total 415     393     407  
Total operating income by region:
North America 666 857 605
Latin America 101 138 109
Europe/Africa/CIS 161 159 121
Middle East/Asia 219     153     187  
Corporate and other (108 )   (106 )   (1,120 )
Total operating income (loss) $ 1,039     $ 1,201     $ (98 )
 
See Footnote Table 1 for a reconciliation of as-reported operating income (loss) to adjusted 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: 2013 2012
Completion and Production:
North America $ 5,621 $ 6,349
Latin America 746 646
Europe/Africa/CIS 1,108 1,007
Middle East/Asia 988   748  
Total 8,463   8,750  
Drilling and Evaluation:
North America 1,887 1,959
Latin America 1,143 1,013
Europe/Africa/CIS 1,378 1,161
Middle East/Asia 1,420   1,219  
Total 5,828   5,352  
Total revenue by region:
North America 7,508 8,308
Latin America 1,889 1,659
Europe/Africa/CIS 2,486 2,168
Middle East/Asia 2,408   1,967  
Total revenue $ 14,291   $ 14,102  
 
Operating income by geographic region:    
Completion and Production:
North America $ 949 $ 1,562
Latin America 76 109
Europe/Africa/CIS 138 152
Middle East/Asia 184   127  
Total 1,347   1,950  
Drilling and Evaluation:
North America 322 356
Latin America 134 151
Europe/Africa/CIS 144 104
Middle East/Asia 222   150  
Total 822   761  
Total operating income by region:
North America 1,271 1,918
Latin America 210 260
Europe/Africa/CIS 282 256
Middle East/Asia 406   277  
Corporate and other (1,228 ) (487 )
Total operating income $ 941   $ 2,224  
 
See Footnote Table 1 for a reconciliation of as-reported operating income to adjusted operating income.
 
FOOTNOTE TABLE 1
 
HALLIBURTON COMPANY
Reconciliation of As Reported Operating Income to Adjusted Operating Income
(Millions of dollars)
(Unaudited)
 
     

Six Months EndedJune 30

     

Three Months EndedMarch 31

        2013       2012       2013
As reported operating income (loss) $   941       $ 2,224       $   (98 )
Macondo-related charge (a)       1,000         300         1,000  
Adjusted operating income (a)       $   1,941         $ 2,524         $   902  
(a)  

Management believes that operating income (loss) adjusted for the Macondo-related charges for the three months ended March 31, 2013 and for the six months ended June 30, 2013 and 2012 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 expenses. Adjusted operating income is calculated as: “As reported operating income (loss)” plus “Macondo-related charge” for the three months ended March 31, 2013 and the six months ended June 30, 2013 and 2012.

 
FOOTNOTE TABLE 2
 
HALLIBURTON COMPANY
Reconciliation of As Reported Income from Continuing Operations to
Adjusted Income from Continuing Operations
(Millions of dollars)
(Unaudited)
 
   

Three Months EndedMarch 31

      2013
As reported loss from continuing operations attributable to company $ (13 )
Macondo-related charge, net of tax (a)     637  
Adjusted income from continuing operations attributable to company (a)     $ 624  
 
As reported diluted weighted average common shares outstanding 931
Adjusted diluted weighted average common shares outstanding (b) 935
 
As reported loss from continuing operations per diluted share (c) $ (0.01 )
Adjusted income from continuing operations per diluted share (c)     $ 0.67  
(a)  

Management believes that loss from continuing operations adjusted for the Macondo-related charge for the quarter ended March 31, 2013 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 item to be outside of the company's normal operating results. Management analyzes income from continuing operations without the impact of this item as an indicator of performance, to identify underlying trends in the business, and to establish operational goals. The adjustment removes the effect of this expense. Adjusted income from continuing operations attributable to company is calculated as: “As reported loss from continuing operations attributable to company” plus “Macondo-related charge, net of tax.”

(b)

As reported diluted weighted average common shares outstanding excludes four million shares of common stock associated with awards granted under employee stock plans as their impact would be antidilutive since our reported continuing operations attributable to company was in a loss position. When adjusting income from continuing operations attributable to company for the Macondo-related charge, these four million shares become dilutive.

(c)

As reported loss from continuing operations per diluted share is calculated as: “As reported loss 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 “Adjusted diluted weighted average common shares outstanding.”

 

Conference Call Details

Halliburton (NYSE:HAL) will host a conference call on Monday, July 22, 2013, to discuss the second quarter 2013 financial results. The call will begin at 8:00 AM Central Time (9:00 AM Eastern Time).

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