USA: Halliburton Profit Down

Halliburton announced that income from continuing operations for the fourth quarter of 2012 was $589 million, or $0.63 per diluted share. This compares to reported income from continuing operations for the third quarter of 2012 of $608 million, or $0.65 per diluted share.

Adjusted income from continuing operations for the third quarter of 2012 was $625 million, or $0.67 per diluted share, excluding a $30 million after-tax ($0.03 per diluted share) acquisition-related charge and a $13 million after-tax ($0.01 per diluted share) gain from the settlement of a patent infringement case.

Halliburton’s total revenue in the fourth quarter of 2012 was $7.3 billion, compared to $7.1 billion in the third quarter of 2012. Total operating income was $981 million in the fourth quarter of 2012, compared to $954 million in the third quarter of 2012. Strong growth in our international regions, particularly in Middle East/Asia and Latin America, more than offset seasonally lower activity levels in North America.

Halliburton’s total revenue was $28.5 billion for the full year 2012, an increase of $3.7 billion, or 15%, from 2011. Total operating income decreased $578 million, or 12%, from 2011 mainly due to higher guar costs and pricing pressure for production enhancement services in North America and a $300 million charge for an estimated loss contingency related to the Macondo well incident. Income from continuing operations for the full year 2012 was $2.6 billion, or $2.78 per diluted share, compared to full year 2011 income from continuing operations of $3.0 billion, or $3.26 per diluted share.

“I am very proud to say that our company delivered industry-leading revenue growth in 2012, resulting in a record year,” commented Dave Lesar, chairman, president and chief executive officer.

“From a revenue perspective, we set new records this year in all of our regions and both of our divisions. From an operating income perspective, we achieved new records in our Latin America region and in five of our twelve product lines.

“In the fourth quarter, revenue of $7.3 billion was up 3% sequentially and represents the highest quarterly revenue in company history. All three of our international regions and eight of our twelve product lines set new revenue records.

“Fourth quarter operating income of $981 million was flat with adjusted results from the prior quarter. These results were driven by our international regions, where we also saw fourth quarter revenue and operating income growth of 20% and 39%, respectively, compared to the fourth quarter of 2011. I am also proud to say that both our Latin America and Middle East/Asia regions, as well as our completion tools product line, achieved record operating income.

“Latin America revenue was up 14% sequentially, despite a 2% drop in the rig count, and adjusted operating income increased 25% sequentially. Increased drilling fluids service activity, along with higher software sales in Mexico and Colombia, led the growth for the region.

“In the Eastern Hemisphere, revenue grew 11% sequentially, and operating income increased 35% sequentially, driven by year-end sales of completion tools, software, and other equipment. We believe activity levels will continue to grow in 2013, and anticipate full-year margins should average in the upper teens.

“Sequentially, Middle East/Asia revenue and operating income increased 14% and 46%, respectively. The growth was driven by higher year-end software, equipment, and completion tools sales, as well as increased service activity in Saudi Arabia and Australia.

“In Europe/Africa/CIS, we saw revenue and operating income increase 8% and 23%, respectively, compared to the prior quarter. The improvement was driven by the seasonally higher year-end completion tool sales in Angola and the North Sea, greater demand for drilling services in the North Sea and Russia, and increased service activity in East Africa.

“North America revenue was down 5% compared to the previous quarter, in line with the sequential 5% drop in the United States land rig count. Operating income was down 22% compared to adjusted third quarter results, driven mainly by an unusually high post-Thanksgiving decline in activity levels with key customers, increased consumption of our high priced supply of guar, and continued pricing pressure around hydraulic fracturing contracts.

“Our North America margins are also temporarily being negatively impacted by the upfront roll out costs of our Frac of the Future initiative, by our commitment to our customers to remain active in the North America natural gas basins at lower margins, and by our decision to stack equipment during the fourth quarter.

“In 2013, we anticipate the North America rig count will improve from fourth quarter levels but will be down slightly compared to 2012. We are committed to our leadership position in North America, and are focused on rebuilding margins as we recover from last year’s elevated guar costs, reap the benefits of our strategic initiatives, and look at all of our costs. Lastly, we remain laser-focused on capital discipline, especially in pressure pumping,” concluded Lesar.

LNG World News Staff, January 25, 2013

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