USA: Halliburton Sets New Revenue Record in Second Quarter
Halliburton announced that income from continuing operations for the second quarter of 2012 was $745 million, or $0.80 per diluted share. This compares to income from continuing operations for the first quarter of 2012 of $635 million, or $0.69 per diluted share. First quarter reported results included $300 million ($191 million, after-tax, or $0.20 per diluted share) for an estimated loss contingency related to the Macondo well incident.
Halliburton’s consolidated revenue in the second quarter of 2012 was $7.2 billion, compared to $6.9 billion in the first quarter of 2012. Consolidated operating income was $1.2 billion in the second quarter of 2012, compared to $1.0 billion in the first quarter of 2012. All international regions experienced double-digit percentage revenue and operating income growth from the first quarter of 2012. North America margins were negatively impacted, however, by rising costs and pricing pressure in production enhancement services.
“I am pleased with our second quarter results, which set a new revenue record for the total company and all three of our international regions,” commented Dave Lesar, chairman, president and chief executive officer.
“We continue to be successful in executing our strategy of market share growth while maintaining a focus on industry-leading returns. From a global perspective, we achieved record revenues in eight of our product service lines, with four of them – Cementing, Completion Tools, Multi-Chem, and Testing and Subsea – generating record operating income as well.
“Consolidated revenue for the second quarter was up over 5% sequentially. The international rig count was up 3% during the quarter, compared to a 15% increase for our international revenues. North America rig count decreased 17%, while our North America revenues were essentially flat compared to the first quarter. Key strategic market share gains in international operations, continued capacity additions, and strong utilization contributed to this outperformance.
“Due to the annual spring break-up, the Canada rig count dropped 70% sequentially, while the United States rig count decreased 1%. We continued to see activity shift from natural gas to oil basins during the quarter. Oil and liquids-directed activity accounted for over 70% of the rig count at the end of the second quarter, while natural gas-directed rigs finished the quarter at a 12-year low.
“North America operating income decreased 19% from the first quarter, impacted by escalating costs associated with guar gum, a blending additive used in our hydraulic fracturing processes. Operating income was also impacted by the annual Canadian spring break-up, pricing pressure in hydraulic fracturing operations, and economic costs associated with equipment relocations, partially offset by improved Gulf of Mexico activity. We expect the guar cost and equipment relocation issues to subside as we enter 2013.
“In Latin America, revenue and operating income were up 13% sequentially, with only a 1% increase in rig count. Results were positively impacted by activity growth and pricing improvements in Venezuela and Mexico, as well as increased development of managed projects across the region. For the remainder of the year, we expect our margins for consulting and software services in Latin America to expand.
“In the Eastern Hemisphere our market share growth strategy is playing out as expected, as evidenced by the record revenues and improved margins achieved this quarter. Relative to a sequential rig count gain of 5%, Eastern Hemisphere revenue was up 15%. Compared to the second quarter of 2011, the Eastern Hemisphere rig count was up 8%, while revenue was up 23%. We continue to make progress in markets that had been negatively impacting our results and are optimistic about activity levels expanding in the second half of 2012.
“Europe/Africa/CIS had a strong recovery from the seasonal weather impact in the first quarter. The Europe and Eurasia areas as a whole are generating margins higher than our current Eastern Hemisphere average. Libya continues to recover, while the investments and restructuring efforts made last year in Africa continue to pay off.
“In Middle East/Asia, we recovered well from the seasonal weather experienced by Australia in the previous quarter and sales in China rebounded sharply from seasonally low levels in the first quarter. Compared to the second quarter of last year, operating income across the region was up 59%, highlighted by a 72% improvement in our Asia Pacific countries.
“Going forward, we intend to maintain our market leading position in North America, strengthen our international margins, and grow our market share in deepwater and in underserved international markets. The results for this quarter clearly demonstrate that our ongoing strategy is working. Additionally, we believe we are well-positioned to capture additional market share in the expanding international unconventional basins by leveraging our technology and expertise developed in North America,” concluded Lesar.
Press Release, July 23, 2012