Halliburton release 4Q19 results

This compares to net income for 3Q19 of US$295 million, or US$0.34 per diluted share. Adjusted net income for 4Q19, excluding impairments and other charges, was US$285 million, or US$0.32 per diluted share. Halliburton's total revenue in 4Q19 was US$5.2 billion, a 6% decrease from revenue of US$5.6 billion in 3Q19. Reported operating loss was $1.7 billion during 4Q19, compared to operating income of US$536 million in 3Q19. Adjusted operating income for 4Q19, excluding impairments and other charges, was US$546 million, a 2% increase sequentially.

Total revenue for the full year of 2019 was US$22.4 billion, a decrease of US$1.6 billion, or 7%, from 2018. Reported operating loss for 2019 was US$448 million, compared to a reported operating income of US$2.5 billion for 2018. Excluding impairments and other charges, adjusted operating income for 2019 was US$2.1 billion, compared to adjusted operating income of US$2.7 billion for 2018.

“I am pleased with how Halliburton executed for the fourth quarter and the full year. We optimised our performance in North America as the market softened, and our international business grew for the second year in a row,” commented Jeff Miller, Chairman, President and CEO.

“We delivered over US$900 million of free cash flow for the full year 2019, demonstrating our ability to generate consistent free cash flow throughout different business environments. “International revenue increased 10% sequentially in the fourth quarter of 2019. It also grew 10% on a full year basis, outpacing the international rig count. For the full year, revenue increased in all international regions and in both our divisions.

“In 2020, we expect our international growth to continue. Increased activity, disciplined capital allocation, pricing improvements, and our ability to compete for a larger share of high-margin services should lead to improvement in our international margins in 2020.

“Our North America revenue decreased 21% sequentially in the fourth quarter and 18% for the full year as a result of reduced customer activity and pricing, and our decision to focus on returns over growth. We took swift actions in the fourth quarter making structural changes to adjust to the current market environment.

“While we expect customer spending in North America to be down again this year, we will continue executing our playbook, implementing our service delivery improvement strategy, and focusing on maximising our returns.

Operating segments

Completion and production

Completion and production revenue in 4Q19 was US$3.1 billion, a decrease of US$448 million, or 13%, when compared to 3Q19, while operating income was US$387 million, a decrease of US$59 million, or 13%. These results were primarily due to reduced activity and pricing in multiple product service lines in North America land, primarily associated with stimulation services, coupled with reduced stimulation services in Latin America and well intervention services in the Middle East. These declines were partially offset by increased pressure pumping activity in the Eastern Hemisphere, coupled with increased year-end completion tool sales globally.

Drilling and evaluation

Drilling and evaluation revenue in 4Q19 was US$2.1 billion, an increase of US$89 million, or 4%, when compared to 3Q19, while operating income was US$224 million, an increase of US$74 million, or 49%. These results were primarily driven by increased activity in all product service lines in Middle East/Asia, coupled with increased drilling activity in Europe/Africa/CIS and year-end software sales globally. These improvements were partially offset by reduced activity in multiple product service lines in North America and reduced testing activity in Latin America.

Geographic regions

North America

North America revenue in 4Q19 was US$2.3 billion, a 21% decrease when compared to 3Q19. This decline was mainly due to reduced activity and pricing in North America land, primarily associated with pressure pumping and well construction. This decline was partially offset by increased year-end completion tool sales in the Gulf of Mexico.

International

International revenue in 4Q19 was US$2.9 billion, a 10% increase when compared to 3Q19, primarily driven by increased activity in multiple product service lines in Middle East/Asia and increased well construction activity in the North Sea. These improvements were partially offset by a decline in activity in Argentina. Latin America revenue in 4Q19 was US$598 million, a 2% decrease sequentially, resulting primarily from reduced activity in multiple product service lines in Argentina, coupled with decreased testing activity across the region. These results were partially offset by increased activity for all product service lines in Colombia, increased project management activity and cloud infrastructure installations in Mexico, and increased year-end completion tool sales across the region.

Europe/Africa/CIS revenue in 4Q19 was US$883 million, a 6% increase sequentially, resulting primarily from increased well construction activity in the North Sea, coupled with increased activity in multiple product service lines in Algeria. These improvements were partially offset by reduced pipeline services across the region. Middle East/Asia revenue in 4Q19 was US$1.4 billion, a 19% increase sequentially, largely resulting from increased activity in multiple product service lines in the Middle East, India and China, increased pressure pumping activity in Australasia, and increased year-end completion tool sales across the region. These results were partially offset by reduced well intervention services in the Middle East.

Other financial items

Halliburton recognised US$2.2 billion, pre-tax, of impairments and other charges during 4Q19 to further adjust its cost structure to market conditions. These charges consisted primarily of non-cash asset impairments, mostly associated with pressure pumping and legacy drilling equipment, as well as severance and other costs.

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