Consolidated Revenue in the Third Quarter of 2011 Was $6.5 billion
HOUSTON, Texas—(ENEWSPF)—October 17, 2011. Halliburton (NYSE:HAL) announced today that income from continuing operations for the third quarter of 2011 was $867 million, or $0.94 per diluted share, excluding a $19 million, after-tax, or $0.02 per diluted share, impairment charge on an asset held for sale in the Europe/Africa/CIS region. This compares to income from continuing operations for the second quarter of 2011 of $747 million, or $0.81 per diluted share, excluding employee separation costs of $8 million, after-tax, or $0.01 per diluted share.
Halliburton’s consolidated revenue in the third quarter of 2011 was $6.5 billion, compared to $5.9 billion in the second quarter of 2011. Consolidated operating income was $1.3 billion in the third quarter of 2011, compared to $1.2 billion in the second quarter of 2011. Strong growth in the Western Hemisphere accounted for the majority of these increases.
“I am extremely pleased with our third quarter results, as we set company records for revenue and operating income. North America continues to deliver very strong growth in revenue and profitability, while international profitability recovered at the rate we expected. Compared to the second quarter, our Completion and Production division grew revenue and operating income by 11% and 16%, respectively, and our Drilling and Evaluation division grew revenue and operating income by 9% and 14%, respectively,” said Dave Lesar, chairman, president, and chief executive officer.
“North America revenue and operating income grew sequentially by 13% and 14%, respectively, compared to United States rig count growth of 6%, with incremental operating margin of greater than 30%. Incremental operating margin was negatively impacted by cost increases for materials, logistics and labor, as well as weather in the Marcellus and water shortages in the Mid-Continent. Operating income in North America exceeded $1.0 billion for the first time in our company’s history. The sequential improvements were primarily driven by strong activity in the Bakken, Eagle Ford, and Permian Basin areas, along with the seasonal recovery in Canada. “International revenue grew 7% from the prior quarter, with 23% operating income growth compared to international rig count growth of 2%. We set company records for revenue in the third quarter in both our Latin America and Middle East/Asia regions. The strong sequential operating income growth was driven by improved activity in Latin America and Asia. Project delays in Iraq and the shutdown in Libya continued to have a negative impact on results in the third quarter. In Iraq, we started operating three rigs near the end of the quarter, and we expect to have six rigs by the end of the fourth quarter. Libya is in an assessment phase and is expected to make a positive contribution in 2012. Other Eastern Hemisphere markets continue to show gradual progress primarily as a result of volume increases, as international pricing remains very competitive.
“The recent drop in oil prices and related declines in equity markets have been unsettling to investors. Despite short-term macroeconomic concerns, I continue to believe in the long-term prospects for our business. Our international business continues to show gradual recovery as activity increases. In North America, we see several meaningful differences from prior cycles, including a high level of oil-directed activity, an increased presence of large international customers, and strong credit availability that provide us continued confidence in the resiliency of the North America market.
“Globally, as field development becomes increasingly complex, we expect the demand for oil services will continue to grow. We anticipate the execution of our strategy and our focus on the high-growth segments of deepwater, unconventional resources, and mature fields will result in a strong operating environment in both our North America and international business and will support continued delivery of strong financial results,” Lesar concluded.
Net income in the third quarter of 2011 was $683 million, or $0.74 per diluted share, compared to $739 million, or $0.80 per diluted share, in the second quarter of 2011. In addition, discontinued operations for the third quarter of 2011 included a $163 million, or $0.18 per diluted share, charge related to a ruling in an arbitration proceeding between Barracuda & Caratinga Leasing Company B.V. and Halliburton’s former subsidiary, KBR, whom Halliburton agreed to indemnify.
2011 Third Quarter Results
Completion and Production
Completion and Production (C&P) revenue in the third quarter of 2011 was $4.0 billion, an increase of $407 million, or 11%, from the second quarter of 2011. All product service lines experienced revenue increases, with production enhancement and cementing achieving a record quarter in both revenue and operating income.
C&P operating income in the third quarter of 2011 was $1.1 billion, an increase of $150 million, or 16%, over the second quarter of 2011. Excluding the third quarter impairment charge on an asset held for sale in the Europe/Africa/CIS region and the second quarter impact of employee separation costs in the Eastern Hemisphere, C&P operating income improved $169 million, or 18%, from the second quarter of 2011. North America C&P operating income increased $133 million compared to the second quarter of 2011, primarily due to higher demand for production enhancement services in the United States land market. Latin America C&P operating income increased $14 million as a result of higher activity levels in cementing and completion tool sales in Brazil. Excluding the impairment charge, Europe/Africa/CIS C&P operating income improved, primarily due to increased demand for production enhancement services in Angola and Algeria and higher activity for our Boots & Coots product service line in Norway and Algeria. Middle East/Asia C&P operating income increased as higher activity in Indonesia and Malaysia offset declines in Kuwait, Oman, and Qatar, and lower completion tools sales in China.
Drilling and Evaluation
Drilling and Evaluation (D&E) revenue in the third quarter of 2011 was $2.5 billion, an increase of $206 million, or 9%, from the second quarter of 2011, primarily due to improved results in Latin America and continued strength in North America.
D&E operating income in the third quarter of 2011 was $369 million, an increase of $45 million, or 14%, from the second quarter of 2011. Excluding the second quarter impact of employee separation costs in the Eastern Hemisphere, D&E operating income increased $40 million, or 12%, from the second quarter of 2011. North America D&E operating income improved $5 million compared to the second quarter of 2011 as a result of the seasonal recovery from the Canadian spring breakup and stronger directional drilling activity in the Gulf of Mexico. Latin America D&E operating income improved $42 million due to improved drilling activity in Mexico, increased testing and subsea activity in Brazil, and higher software sales in Colombia. Europe/Africa/CIS D&E operating income decreased due to lower directional drilling activity in the North Sea and Egypt and reduced wireline activity across Africa, which were offset by higher drilling activity in Eurasia and Angola. Middle East/Asia D&E operating income remained flat, as project delays in Iraq offset improvements from direct sales in China, increased activity in Malaysia, and activity on the Ghawar project in Saudi Arabia. Corporate and Other
During the third quarter of 2011, Halliburton invested an additional $18 million 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 for the remainder of 2011 and into 2012. Third quarter results in 2011 were also adversely impacted by additional legal and environmental expenses.
Source: Halliburton.com
