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Halliburton Announces Second Quarter 2017 Results

HOUSTON--(BUSINESS WIRE)--Halliburton Company (NYSE:HAL) announced today income from continuing operations of $28 million, or $0.03 per diluted share, for the second quarter of 2017. Adjusted income from continuing operations for the second quarter of 2017, excluding a fair market value adjustment associated with an expected promissory note in Venezuela, was $201 million, or $0.23 per diluted share. These second quarter results include a $0.04 per diluted share impact from litigation settlements and one-time executive compensation charges. Reported operating income was $146 million and adjusted operating income was $408 million for the second quarter of 2017, compared to operating income of $203 million for the first quarter of 2017.

“I am very pleased with our second quarter results. We continue to execute our strategy to maximize asset value for our customers and deliver differentiated services that we believe will generate superior returns over the long term”

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“Our performance this quarter demonstrates that Halliburton is the execution company, and we are the leader in North America. North America revenue growth of 24% outpaced the average sequential U.S. land rig count growth of 21%, while our margins grew into the double digits. More broadly, we outperformed our major peer in every geo-market, demonstrating that we continue to grow our global market share,” said Dave Lesar, Executive Chairman.

“I am very pleased with our second quarter results. We continue to execute our strategy to maximize asset value for our customers and deliver differentiated services that we believe will generate superior returns over the long term,” remarked Jeff Miller, President and CEO.

“Total company revenue this quarter was $5.0 billion, representing a 16% increase compared to the first quarter of this year, while total adjusted operating income was $408 million. These results were primarily driven by continued strengthening of market conditions in North America, which were partially offset by pricing pressure internationally.

“The Completion and Production division revenue increased 20% in the quarter and operating margins improved by 700 basis points to approximately 13%, driven by the strength in our production enhancement, cementing and completion tools product service lines.

“Our Drilling and Evaluation division is driven, in large part, by our international footprint. While we experienced a modest increase this quarter the overall market continues to move sideways with continued pricing pressure.

“Overall, I am confident about Halliburton’s ability to grow North America margins, and continue to maintain the run rate for our international business. Our strategy is working well and we intend to stay the course. We will continue to drive superior execution and remain focused on delivering best-in-class returns,” concluded Miller.

Operating Segments

Completion and Production

Completion and Production revenue in the second quarter of 2017 was $3.1 billion, an increase of $528 million, or 20%, from the first quarter of 2017, while operating income was $397 million, an increase of $250 million. These improvements were primarily due to improved pressure pumping utilization and pricing in the United States land market. Also benefiting these results were increased well completion activity in the Gulf of Mexico, North Sea, and Russia, partially offset by pricing pressure in the Middle East.

Drilling and Evaluation

Drilling and Evaluation revenue in the second quarter of 2017 was $1.8 billion, an increase of $150 million, or 9%, from the first quarter of 2017, while operating income was $125 million, an increase of $3 million. These increases were primarily due to increased drilling activity in North America, Latin America, North Sea, and Russia, partially offset by pricing pressure across international markets.

Corporate and Other Events

Corporate and other expense was $114 million in the second quarter of 2017. This included approximately $42 million of litigation settlements and a one-time executive compensation expense. Of the $42 million, $29 million is related to a loss contingency in connection with an understanding with the Securities and Exchange Commission (SEC) staff to settle the previously disclosed investigation of certain past matters related to our operations in Angola and Iraq. The settlement is pending approval by the Commissioners of the SEC. Separately, the Department of Justice has advised us that it has completed its investigation of these matters and will not be taking any action.

Additionally, Halliburton currently expects to exchange $375 million of outstanding trade receivables with our primary customer in Venezuela for an interest-bearing promissory note with a par value of the same amount. As required by accounting rules, we recognized a pre-tax charge of 2 million for a fair market value adjustment related to this expected exchange.

Geographic Regions

North America

North America revenue in the second quarter of 2017 was $2.8 billion, a 24% increase sequentially. This improvement was driven primarily by increased utilization and pricing throughout the United States land sector, particularly in pressure pumping and well construction product service lines, as well as higher completion tool sales in the Gulf of Mexico.

International

International revenue in the second quarter of 2017 was $2.2 billion, a 7% increase sequentially, resulting primarily from higher drilling activity in Latin America, increased well completion and drilling services in Europe/Africa/CIS, and increased fluid activity in the Eastern Hemisphere.

Latin America revenue in the second quarter of 2017 was $508 million, a 10% increase sequentially, driven by increased drilling activity in Mexico, Venezuela, and Colombia, as well as higher stimulation activity in Argentina.

Europe/Africa/CIS revenue in the second quarter of 2017 was $679 million, a 12% increase sequentially, primarily due to a seasonal rebound in the North Sea and Russia resulting in higher drilling, well completions and pipeline and process service activity.

Middle East/Asia revenue in the second quarter of 2017 was $1.0 billion, a 2% increase sequentially, primarily resulting from increased fluid services in Asia Pacific and higher well wireline and well completion activity in the Middle East. Partially offsetting these increases were decreases in stimulation services in the Middle East and pricing pressure across the region.

Selective Technology & Highlights

  • In July 2017, Halliburton acquired two businesses, Summit ESP and Ingrain, Inc. Summit is a leading provider of electric submersible pumps, and related technology and services. Ingrain specializes in the analysis of complex rock types and has developed and brought to market unique capabilities in rock physics, using digital scanning and analysis to derive petrophysical insights for operators to use in commercial decision-making. The additions of these two businesses strengthen Halliburton’s artificial lift and wireline portfolios for its global customers.
  • Halliburton’s AccessFrac™ Service drives production and asset efficiency. A Permian Basin operator was developing a multi-well Sprayberry formation pad offsetting existing producing assets. The AccessFrac Service substantially reduced well bashing effects on offset wells, which in turn allowed effective fracture lengths and improved productivity. After one year of production, the wells that applied AccessFrac Service averaged a 33% increase in cumulative BOE production when compared to previous pad development efforts, and reduced negative impacts on the offset wells. AccessFrac™ is a unique service combining materials, equipment and design process to solve challenges in completing shale wells in North America.
  • Halliburton and Accenture announced the companies are working together to help transform how operators can achieve a lower cost per BOE by digitalizing crucial business activities between the field, front office and back office. The combined strengths and capabilities of Halliburton and Accenture will enable digital solutions that align and elevate technical, operational, and business outcomes for operators.
  • Halliburton announced an agreement with GroundMetrics to deliver full field reservoir characterization and monitoring services. The collaboration combines GroundMetrics' capabilities in...

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