Halliburton Announces Record Quarter Revenues

Halliburton announced that income from continuing operations for the second quarter of 2013 was $677 million, or $0.73 per diluted share. This compares to income from continuing operations for the first quarter of 2013 of $624 million, or $0.67 per diluted share, excluding a $637 million charge, after-tax, or $0.68 per diluted share, to increase a reserve related to the Macondo litigation.

Halliburton’s total revenue in the second quarter of 2013 was a company record of $7.3 billion, compared to $7.0 billion in the first quarter of 2013. Operating income was $1.0 billion in the second quarter of 2013, compared to operating income of $902 million in the first quarter of 2013, adjusted for the Macondo charge. For the first quarter of 2013, reported loss from continuing operations was $13 million, or $0.01 per diluted share, and reported operating loss was $98 million.

“I am pleased with our second quarter results, as total company revenue of $7.3 billion was a record quarter for Halliburton,” commented Dave Lesar, chairman, president and chief executive officer.

“Looking at our product lines, Baroid, Cementing, Completion Tools, Multi-Chem, and Testing set quarterly revenue records, while Baroid, Testing, and Artificial Lift all set quarterly operating income records.

“Relative to our primary competitors, we have delivered leading year-over-year international revenue growth for five consecutive quarters. Eastern Hemisphere operations grew revenue 11% sequentially, resulting from record revenues in both of our regions, and operating income was up 23%.

“Middle East / Asia, our fastest growing market, improved revenue 12% and operating income 17% sequentially. This across the board growth was led by higher stimulation, wireline, and fluids activity in Malaysia, and improved sales in China.

“In Europe/Africa/CIS, revenue and operating income increased 9% and 33%, respectively, compared to the first quarter. This growth was led by seasonal recovery of activity levels in Russia and the North Sea, and by higher drilling and completions activity in Angola.

“We believe that the Eastern Hemisphere will continue to improve, year-over-year, with full year revenue growth in the mid-teens. We expect margins will continue to improve over the next two quarters and average in the upper teens for the full year.

“Latin America revenue was flat to the first quarter, and operating income was down 7%, primarily as a result of activity reductions in the northern region of Mexico, increased mobilization costs, and lower vessel activity. Although the first half of the year in Latin America was disappointing, we feel confident that revenue will improve in second half of the year, and expect Latin America full year margins to average in the mid-teens.

“In North America, revenue increased 3% sequentially and margins improved by 120 basis points to 17.5%. This was despite a relatively flat U.S. land rig count and seasonally lower Canadian activity levels.

“For the third quarter, we anticipate the U.S. land rig count to be flat. We are observing a continuing trend towards multi-well pad activity among our customer base, which we believe will result in higher service intensity. Ultimately, we believe this efficiency trend bodes very well for us, as our scale and expertise allows us to lead the industry in executing factory-type operations. We also expect North America margins to continue to expand over the balance of the year.

“We continue to be optimistic about Halliburton’s performance for the remainder of 2013, our ability to continue growing our North America margins, and continued revenue and margin expansion in our international business. We are relentlessly focused on delivering best-in-class returns. Our recent quarterly dividend increase, aggressive stock repurchases, and our $5 billion stock repurchase authorization reflect our growing confidence in the strength of our business outlook,” concluded Lesar.

2013 Second Quarter Results

Completion and Production

Completion and Production (C&P) revenue in the second quarter of 2013 was $4.4 billion, an increase of $263 million, or 6%, from the first quarter of 2013. Improved activity levels in the United States land market and strong international results more than offset the effects of the seasonal Canadian spring break-up.

C&P operating income in the second quarter of 2013 was $732 million, an increase of $117 million, or 19%, from the first quarter of 2013. North America C&P operating income increased $85 million, or 20%, sequentially, primarily due to lower guar costs and increased demand for production enhancement services in the United States land market. Latin America C&P operating income improved by $20 million, or 71%, compared to the first quarter of 2013, due to increased demand for cementing services in Brazil and Mexico, and increased stimulation activity in Argentina. Europe/Africa/CIS C&P operating income increased $10 million, or 16%, sequentially, driven by higher cementing activity in Russia and Mozambique and increased demand for production enhancement services and completion tools sales in Norway. Middle East/Asia C&P operating income was flat compared to the first quarter, as increased stimulation activity in Southeast Asia and higher direct sales in China were partially offset by mobilization costs in Saudi Arabia.

Drilling and Evaluation

Drilling and Evaluation (D&E) revenue in the second quarter of 2013 was $3.0 billion, an increase of $80 million, or 3%, from the first quarter of 2013, as higher drilling activity in the Eastern Hemisphere more than offset the effects of the Canadian spring break-up and lower activity levels in Mexico.

D&E operating income in the second quarter of 2013 was $415 million, an increase of $8 million from the first quarter of 2013. North America D&E operating income declined $24 million, or 14%, sequentially, primarily due to lower drilling activity in the Gulf of Mexico and the effects of the Canadian spring break-up. Latin America D&E operating income decreased $28 million, or 35%, from the first quarter of 2013, as a result of higher costs in Brazil and lower drilling activity in Mexico, Ecuador, and Colombia. Europe/Africa/CIS D&E operating income increased $30 million, or 53%, sequentially, due to higher drilling activity in Angola and fluids demand in Russia. Middle East/Asia D&E operating income rose $30 million, or 31%, from the first quarter, as increased demand for drilling services in Saudi Arabia, higher drilling direct sales in China, and improved profitability in Iraq more than offset lower wireline direct sales in China.

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.

Press Release, July 22, 2013