UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8‑K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): July 20, 2016
HALLIBURTON COMPANY
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
|
| |
| 001-03492 | No. 75-2677995 |
| (Commission File Number) | (IRS Employer Identification No.) |
| |
3000 North Sam Houston Parkway East Houston, Texas | 77032 |
| (Address of Principal Executive Offices) | (Zip Code) |
(281) 871-2699
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
|
| |
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
INFORMATION TO BE INCLUDED IN REPORT
Item 2.02. Results of Operations and Financial Condition
On July 20, 2016, registrant issued a press release entitled “Halliburton Announces Second Quarter 2016 Results."
The text of the Press Release is as follows:
Halliburton Announces Second Quarter 2016 Results
| |
| • | Reported loss from continuing operations of $3.73 per diluted share |
| |
| • | Adjusted loss from continuing operations of $0.14 per diluted share, excluding special items |
HOUSTON - July 20, 2016 - Halliburton Company (NYSE:HAL) announced today results for the second quarter of 2016.
|
| | | | | | | | | | |
| | Three Months Ended | |
| Millions of dollars except per share data | June 30, 2016 | | March 31, 2016 | Change |
| Revenue | $ | 3,835 |
| | $ | 4,198 |
| (9 | )% |
| Operating loss | (3,880 | ) | | (3,079 | ) | (26 | )% |
| Adjusted operating income | 62 |
| | 225 |
| (72 | )% |
| Loss from continuing operations | (3,208 | ) | | (2,410 | ) | (33 | )% |
| Adjusted income (loss) from continuing operations | (121 | ) | | 64 |
| (289 | )% |
| Reported loss from continuing operations per diluted share | (3.73 | ) | | (2.81 | ) | (33 | )% |
| Adjusted income (loss) from continuing operations per diluted share | (0.14 | ) | | 0.07 |
| (300 | )% |
“Our second quarter results showed resilience in the face of another challenging quarter marked by lower activity levels and continued pricing pressure around the globe,” said Dave Lesar, Chairman and CEO.
“North America revenue declined 15% sequentially, significantly outperforming the average US rig count, which was down 23%. After falling 78% from the November 2014 peak, the US rig count reached a landing point during the second quarter, as we predicted during our last earnings call. Since reaching the bottom, the rig count has improved by 26 over the last several weeks, reflecting operator confidence in stabilizing commodity prices.
“In Latin America, revenue declined 12% sequentially, relative to a rig count decrease of 18% from the first quarter average. Looking at our major countries, rig activity in both Brazil and Mexico is at 20-year lows, while Venezuela continues to experience significant political and economic turmoil.
“Moving to the Eastern Hemisphere, we are still seeing modest headwinds around pricing and activity, but we have been successful in winning market share during the downturn. Our second quarter revenue was down 1% sequentially, relative to an average rig count that was down 4%. Middle East / Asia revenue declined 3% from the first quarter, due to lower activity levels in Iraq, Australia, and Indonesia. In Europe/Africa/CIS, revenue increased 2% sequentially, primarily due to a seasonal recovery of activity in the North Sea and Russia.
“Our activity outlook has not changed and our strategy is working. During the coming recovery, we plan to scale up our integrated delivery platform by addressing our product line
building blocks one at a time through a combination of organic growth and selective acquisitions. We will continue to deliver our services to the highest service quality standards and provide technology to increase efficiency in the field.
“We believe the North America market has turned. We expect to see a modest uptick in rig count during the second half of the year. With our growth in market share during the downturn, we believe we are best-positioned to benefit from any recovery, including a modest one. Internationally, we are maintaining our service footprint, managing costs and continuing to gain market share.
“As we prepare for the upcycle, our approach to the market remains unchanged. We remain focused on consistent execution, generating superior financial performance, and providing industry-leading shareholder returns,” concluded Lesar.
Geographic Regions
North America
North America revenue in the second quarter of 2016 was $1.5 billion, a 15% decrease sequentially, relative to a 23% decline in average U.S. rig count. Additionally, an operating loss of $124 million was recognized in the region. This decline was driven by reduced activity throughout the United States land sector, particularly pressure pumping services and drilling activity.
International
International revenue in the second quarter of 2016 was $2.3 billion, a 4% decrease sequentially, driven primarily by a decline in pressure pumping and logging services. International second quarter operating income was $246 million, which decreased $64 million, or 21%, sequentially, driven by lower pressure pumping, logging and subsea services.
Latin America revenue in the second quarter of 2016 was $476 million, a 12% decrease sequentially, with operating income of $22 million, a 54% decrease sequentially. These declines were a result of reduced activity in Brazil, Mexico and Colombia, and Halliburton’s decision to curtail activity in Venezuela.
Europe/Africa/CIS revenue in the second quarter of 2016 was $795 million, a 2% increase sequentially, with operating income of $64 million, a 12% increase sequentially. The increase for the quarter was primarily driven by seasonal recovery of activity in the North Sea and Russia.
Middle East/Asia revenue in the second quarter of 2016 was $1.0 billion, a 3% decline sequentially, with operating income of $160 million, a 22% decrease sequentially. This was primarily the result of significant reductions in activity and pricing throughout the Asia Pacific markets as well as pricing concessions in the Middle East.
Operating Segments
Completion and Production
Completion and Production (C&P) revenue in the second quarter of 2016 was $2.1 billion, a decrease of $210 million, or 9%, from the first quarter of 2016, due to a decline in activity and pricing in most product services lines, particularly North America pressure pumping services which drove the majority of the C&P revenue decline. International revenue also declined as a result of reduced pressure pumping services, which were partially offset by increased completion tool sales in Nigeria and pipeline services in the North Sea.
C&P operating loss in the second quarter was $32 million, which decreased $62 million from the first quarter of 2016, with decreased profitability as a result of global activity and pricing reductions, primarily in North America for pressure pumping services.
Drilling and Evaluation
Drilling and Evaluation (D&E) revenue in the second quarter of 2016 was $1.7 billion, a decrease of $153 million, or 8%, from the first quarter of 2016. Revenue declines were seen across a majority of product lines due to the historically low rig count, lower pricing, and customer budget constraints worldwide. Logging, drilling and offshore activity drove the declines, which were partially offset by an increase in fluid services in the North Sea.
D&E second quarter operating income was $154 million, which decreased $87 million, or 36%, compared to the first quarter of 2016, driven by a decline in activity and pricing across North America and Middle East/Asia, particularly drilling and logging activity in the United States. Second quarter results were also impacted by approximately $40 million of depreciation expense from assets previously classified as held for sale.
Corporate and Other Events
In conjunction with the termination of its merger agreement with Baker Hughes during the second quarter of 2016, Halliburton paid a $3.5 billion termination fee which was recognized during the quarter. In addition, Halliburton mandatorily redeemed $2.5 billion of senior notes during the second quarter of 2016, resulting in $41 million, pre-tax, of redemption fees and associated costs. Halliburton also recorded company-wide impairments and other charges in the second quarter of 2016 of approximately $423 million, pre-tax, related primarily to severance costs and asset impairments as the company continued to right-size its cost structure. Also included in this number was a fair market value adjustment, required by accounting rules, related to a financing agreement Halliburton executed with its primary customer in Venezuela, resulting in an exchange of $200 million of outstanding trade receivables for an interest-bearing promissory note. Halliburton recorded the note at its fair market value at the date of exchange, resulting in a $148 million pre-tax loss during the second quarter.
The tax impact of all of these adjustments includes the impact of Halliburton’s decision that it may not permanently reinvest its foreign earnings, as well as the inability to utilize certain tax deductions resulting from the carryback of net operating losses to prior tax periods.
The aggregate impact of these second quarter items is $3.1 billion, after-tax, or $3.59 per diluted share.
Selective Technology & Highlights
| |
| • | Halliburton worked with Eclipse Resources Corporation to complete hydraulic fracturing of the extended reach lateral test well known as "Purple Hayes." The Utica Shale well had a lateral length of over 18,500 feet and was completed with 124 frac stages in 24 days. The total depth was 27,046 feet, including the lateral extension which Eclipse believes is the longest horizontal onshore lateral ever drilled in the United States. The fracturing operations performed by Halliburton utilized the company’s industry-leading Q10™ pumps equipped with dual fuel technology, which performed with zero down time. In addition, SandCastle® PS-2500 units equipped with Halliburton Dust Control systems provided superior sand loading logistics while reducing the environmental footprint on site. The efficiencies achieved with this equipment allowed Eclipse to improve its daily completion rate by 20 percent over the original plan, lowering their ultimate cost per BOE. |
| |
| • | Halliburton expanded its iEnergy™ collaboration portal, the industry’s foremost E&P community. iEnergy provides secure proprietary workspaces for Halliburton’s customers, utilizing the DecisionSpace platform to analyze their geophysical data and manage their projects in a seamless end-to-end environment. iEnergy™ brings together Halliburton and a broad range of partners to deliver a unique experience in which operators can work with the data and technology they need in integrated workflows, collaborate in discussion and project forums, contribute to the knowledge of the community as a whole, learn from the wealth of on-line training options and secure value for their business. |
| |
| • | Halliburton announced that its BaraLogix™ Density and Rheology Unit (DRU) received the Offshore Technology Conference 2016 Spotlight on New Technology Award. The BaraLogix™ DRU breaks down barriers by delivering a single piece of equipment that can autonomously measure fluid density and rheology during drilling operations, providing advanced data analysis in real time. The frequent and accurate data collection helps identify trends in fluid properties that are unavailable with current resources. As a result, BaraLogix™ helps operators make proactive decisions that reduce non-productive time, optimize drilling programs and save costs. |
About Halliburton
Founded in 1919, Halliburton is one of the world's largest providers of products and services to the energy industry. With over 50,000 employees, representing 140 nationalities and operations in approximately 70 countries, the company serves the upstream oil and gas industry throughout the lifecycle of the reservoir - from locating hydrocarbons and managing geological data, to drilling and formation evaluation, well construction and completion, and optimizing production through the life of the field. Visit the company’s website at www.halliburton.com. Connect with Halliburton on Facebook, Twitter, LinkedIn, and YouTube.
NOTE: The statements in this press release that are not historical statements, including statements regarding future financial performance, are forward-looking statements within the meaning of the federal securities laws. These statements are subject to numerous risks and uncertainties, many of which are beyond the company's control, which could cause actual results to differ materially from the results expressed or implied by the statements. These risks and uncertainties include, but are not limited to: with respect to the Macondo well incident, final court approval of, and the satisfaction of the conditions in, Halliburton's September 2014 settlement, including the results of any appeals of rulings in the multi-district litigation; indemnification and insurance matters; with respect to repurchases of Halliburton common stock, the continuation or suspension of the repurchase program, the amount, the timing and the trading prices of Halliburton common stock, and the availability and alternative uses of cash; changes in the demand for or price of oil and/or natural gas can be significantly impacted by weakness in the worldwide economy; consequences of audits and investigations by domestic and foreign government agencies and legislative bodies and related publicity and potential adverse proceedings by such agencies; protection of intellectual property rights and against cyber-attacks; compliance with environmental laws; changes in government regulations and regulatory requirements, particularly those related to offshore oil and natural gas exploration, radioactive sources, explosives, chemicals, hydraulic fracturing services, and climate-related initiatives; compliance with laws related to income taxes and assumptions regarding the generation of future taxable income; risks of international operations, including risks relating to unsettled political conditions, war, the effects of terrorism, foreign exchange rates and controls, international trade and regulatory controls, and doing business with national oil companies; weather-related issues, including the effects of hurricanes and tropical storms; changes in capital spending by customers; delays or failures by customers to make payments owed to us; execution of long-term, fixed-price contracts; structural changes in the oil and natural gas industry; maintaining a highly skilled workforce; availability and cost of raw materials; and integration and success of acquired businesses and operations of joint ventures. Halliburton's Form 10-K for the year ended December 31, 2015, Form 10-Q for the quarter ended March 31, 2016, recent Current Reports on Form 8-K, and other Securities and Exchange Commission filings discuss some of the important risk factors identified that may affect Halliburton's business, results of operations, and financial condition. Halliburton undertakes no obligation to revise or update publicly any forward-looking statements for any reason.
HALLIBURTON COMPANY
Condensed Consolidated Statements of Operations
(Millions of dollars and shares except per share data)
(Unaudited)
|
| | | | | | | | | | | | |
| | Three Months Ended |
| | June 30 | | March 31 |
| | 2016 | | 2015 | | 2016 |
Revenue: | | | | | |
| Completion and Production | $ | 2,114 |
| | $ | 3,444 |
| | $ | 2,324 |
|
| Drilling and Evaluation | 1,721 |
| | 2,475 |
| | 1,874 |
|
| Total revenue | $ | 3,835 |
| | $ | 5,919 |
| | $ | 4,198 |
|
| Operating income (loss): | | | | | |
| Completion and Production | $ | (32 | ) | | $ | 313 |
| | $ | 30 |
|
| Drilling and Evaluation | 154 |
| | 400 |
| | 241 |
|
| Corporate and other | (60 | ) | | (70 | ) | | (46 | ) |
| Baker Hughes termination fee and related costs (a) | (3,519 | ) | | (83 | ) | | (538 | ) |
| Impairments and other charges (b) | (423 | ) | | (306 | ) | | (2,766 | ) |
| Total operating income (loss) | (3,880 | ) | | 254 |
| | (3,079 | ) |
| Interest expense, net (c) | (196 | ) | | (106 | ) | | (165 | ) |
| Other, net | (31 | ) | | (23 | ) | | (47 | ) |
| Income (loss) from continuing operations before income taxes | (4,107 | ) | | 125 |
| | (3,291 | ) |
| Income tax benefit (provision) | 902 |
| | (71 | ) | | 875 |
|
| Income (loss) from continuing operations | (3,205 | ) | | 54 |
| | (2,416 | ) |
| Loss from discontinued operations, net | — |
| | (1 | ) | | (2 | ) |
| Net income (loss) | $ | (3,205 | ) | | $ | 53 |
| | $ | (2,418 | ) |
| Net (income) loss attributable to noncontrolling interest | (3 | ) | | 1 |
| | 6 |
|
| Net income (loss) attributable to company | $ | (3,208 | ) | | $ | 54 |
| | $ | (2,412 | ) |
| Amounts attributable to company shareholders: | | | | | |
| Income (loss) from continuing operations | $ | (3,208 | ) | | $ | 55 |
| | $ | (2,410 | ) |
| Loss from discontinued operations, net | — |
| | (1 | ) | | (2 | ) |
| Net income (loss) attributable to company | $ | (3,208 | ) | | $ | 54 |
| | $ | (2,412 | ) |
| Basic income (loss) per share attributable to company shareholders: | | | | | |
| Income (loss) from continuing operations | $ | (3.73 | ) | | $ | 0.06 |
| | $ | (2.81 | ) |
| Loss from discontinued operations, net | — |
| | — |
| | — |
|
| Net income (loss) per share | $ | (3.73 | ) | | $ | 0.06 |
| | $ | (2.81 | ) |
| Diluted income (loss) per share attributable to company shareholders: | | | | | |
| Income (loss) from continuing operations | $ | (3.73 | ) | | $ | 0.06 |
| | $ | (2.81 | ) |
| Loss from discontinued operations, net | — |
| | — |
| | — |
|
| Net income (loss) per share | $ | (3.73 | ) | | $ | 0.06 |
| | $ | (2.81 | ) |
| Basic weighted average common shares outstanding | 860 |
| | 852 |
| | 858 |
|
| Diluted weighted average common shares outstanding | 860 |
| | 854 |
| | 858 |
|
| | | |
| (a) Includes a $3.5 billion termination fee recognized in the three months ended June 30, 2016. Also includes an aggregate $464 million of charges taken in the three months ended March 31, 2016 for the reversal of assets held for sale accounting, representing $329 million of associated depreciation costs suspended since April 2015 for the businesses held for sale and $135 million of other divestiture-related costs. |
| (b) For further details of impairments and other charges for all periods presented, see Footnote Table 1. |
| (c) Includes $41 million of debt redemption fees and associated expenses in the three months ended June 30, 2016 related to the $2.5 billion of debt mandatorily redeemed during the second quarter, as well as interest expense associated with the $7.5 billion debt issued in late 2015. |
| See Footnote Table 1 for Reconciliation of As Reported Operating Income (Loss) to Adjusted Operating Income. |
| See Footnote Table 2 for Reconciliation of As Reported Loss from Continuing Operations to Adjusted Income (Loss) from Continuing Operations. |
HALLIBURTON COMPANY
Condensed Consolidated Statements of Operations
(Millions of dollars and shares except per share data)
(Unaudited)
|
| | | | | | | | |
| | Six Months Ended June 30 |
| | 2016 | | 2015 |
Revenue: | | | |
| Completion and Production | $ | 4,438 |
| | $ | 7,690 |
|
| Drilling and Evaluation | 3,595 |
| | 5,279 |
|
| Total revenue | $ | 8,033 |
| | $ | 12,969 |
|
| Operating loss: | | | |
| Completion and Production | $ | (2 | ) | | $ | 775 |
|
| Drilling and Evaluation | 395 |
| | 706 |
|
| Corporate and other | (106 | ) | | (139 | ) |
| Baker Hughes termination fee and related costs (a) | (4,057 | ) | | (122 | ) |
| Impairments and other charges | (3,189 | ) | | (1,514 | ) |
| Total operating loss | (6,959 | ) | | (294 | ) |
| Interest expense, net (b) | (361 | ) | | (212 | ) |
| Other, net (c) | (78 | ) | | (247 | ) |
| Loss from continuing operations before income taxes | (7,398 | ) | | (753 | ) |
| Income tax benefit | 1,777 |
| | 170 |
|
| Loss from continuing operations | (5,621 | ) | | (583 | ) |
| Loss from discontinued operations, net | (2 | ) | | (5 | ) |
| Net loss | $ | (5,623 | ) | | $ | (588 | ) |
| Net (income) loss attributable to noncontrolling interest | 3 |
| | (1) |
|
| Net loss attributable to company | $ | (5,620 | ) | | $ | (589 | ) |
| Amounts attributable to company shareholders: | | | |
| Loss from continuing operations | $ | (5,618 | ) | | $ | (584 | ) |
| Loss from discontinued operations, net | (2 | ) | | (5 | ) |
| Net loss attributable to company | $ | (5,620 | ) | | $ | (589 | ) |
| Basic loss per share attributable to company shareholders: | | | |
| Loss from continuing operations | $ | (6.54 | ) | | $ | (0.69 | ) |
Loss from discontinued operations, net
| — |
| | (0.01 | ) |
| Net loss per share | $ | (6.54 | ) | | $ | (0.70 | ) |
| Diluted loss per share attributable to company shareholders: | | | |
| Loss from continuing operations | $ | (6.54 | ) | | $ | (0.69 | ) |
Loss from discontinued operations, net
| — |
| | (0.01 | ) |
| Net loss per share | $ | (6.54 | ) | | $ | (0.70 | ) |
| Basic weighted average common shares outstanding | 859 |
| | 851 |
|
| Diluted weighted average common shares outstanding | 859 |
| | 851 |
|
| |
| (a) During the six months ended June 30, 2016, we recognized a $3.5 billion termination fee and an aggregate $464 million of charges for the reversal of assets held for sale accounting effective March 31, 2016. The reversal of assets held for sale accounting represents $329 million of associated depreciation costs suspended from April 2015 through March 2016 for the businesses held for sale and $135 million of other divestiture-related costs. |
| (b) Includes $41 million of debt redemption fees and associated expenses in the six months ended June 30, 2016 related to the $2.5 billion of debt mandatorily redeemed during the second quarter, as well as interest expense associated with the $7.5 billion debt issued in late 2015. |
(c) Includes a foreign currency loss of $199 million due to a currency devaluation in Venezuela in the six months ended June 30, 2015.
|
HALLIBURTON COMPANY
Condensed Consolidated Balance Sheets
(Millions of dollars)
(Unaudited)
|
| | | | | | | | |
| | June 30 | | December 31 |
| | 2016 | | 2015 |
| Assets |
| Current assets: | | | |
| Cash and equivalents | $ | 3,108 |
| | $ | 10,077 |
|
| Receivables, net | 4,725 |
| | 5,317 |
|
| Inventories | 2,650 |
| | 2,993 |
|
| Prepaid income taxes | 1,099 |
| | 527 |
|
| Other current assets | 998 |
| | 1,156 |
|
| Total current assets | 12,580 |
| | 20,070 |
|
| | | | |
| Property, plant and equipment, net | 8,961 |
| | 12,117 |
|
| Goodwill | 2,383 |
| | 2,385 |
|
| Deferred income taxes | 1,856 |
| | 552 |
|
| Other assets | 1,957 |
| | 1,818 |
|
| Total assets | $ | 27,737 |
| | $ | 36,942 |
|
| | | | |
| Liabilities and Shareholders’ Equity |
| Current liabilities: | | | |
| Accounts payable | $ | 1,490 |
| | $ | 2,019 |
|
| Current maturities of long-term debt | 763 |
| | 659 |
|
| Accrued employee compensation and benefits | 549 |
| | 862 |
|
| Liabilities for Macondo well incident | 367 |
| | 400 |
|
| Other current liabilities | 1,309 |
| | 1,397 |
|
| Total current liabilities | 4,478 |
| | 5,337 |
|
| | | | |
| Long-term debt | 12,158 |
| | 14,687 |
|
| Employee compensation and benefits | 449 |
| | 479 |
|
| Other liabilities | 875 |
| | 944 |
|
| Total liabilities | 17,960 |
| | 21,447 |
|
| | | | |
| Company shareholders’ equity | 9,734 |
| | 15,462 |
|
| Noncontrolling interest in consolidated subsidiaries | 43 |
| | 33 |
|
| Total shareholders’ equity | 9,777 |
| | 15,495 |
|
| Total liabilities and shareholders’ equity | $ | 27,737 |
| | $ | 36,942 |
|
| | | | | |
HALLIBURTON COMPANY
Condensed Consolidated Statements of Cash Flows
(Millions of dollars)
(Unaudited)
|
| | | | | | | |
| | Six Months Ended |
| | June 30 |
| | 2016 | | 2015 |
| Cash flows from operating activities: | | | |
| Net loss | $ | (5,623 | ) | | $ | (588 | ) |
| Adjustments to reconcile net loss to cash flows from operating activities: | | | |
| Impairments and other charges | 3,189 |
| | 1,514 |
|
| Deferred income tax benefit, continuing operations | (1,516 | ) | | (523 | ) |
| Depreciation, depletion and amortization | 742 |
| | 1,016 |
|
| Working capital (a) | 72 |
| | 866 |
|
| Other | (667 | ) | | (290 | ) |
| Total cash flows from operating activities (b) | (3,803 | ) | | 1,995 |
|
| | | | |
| Cash flows from investing activities: | | | |
| Capital expenditures | (447 | ) | | (1,223 | ) |
| Proceeds from sales of property, plant and equipment | 114 |
| | 83 |
|
| Other investing activities | (60 | ) | | (95 | ) |
| Total cash flows from investing activities | (393 | ) | | (1,235 | ) |
| | | | |
| Cash flows from financing activities: | | | |
| Payments on long-term borrowings | (2,525 | ) | | (8 | ) |
| Dividends to shareholders | (309 | ) | | (306 | ) |
| Other financing activities | 102 |
| | 71 |
|
| Total cash flows from financing activities | (2,732 | ) | | (243 | ) |
| | | | |
| Effect of exchange rate changes on cash | (41 | ) | | (48 | ) |
| Increase (decrease) in cash and equivalents | (6,969 | ) | | 469 |
|
| Cash and equivalents at beginning of period | 10,077 |
| | 2,291 |
|
| Cash and equivalents at end of period | $ | 3,108 |
| | $ | 2,760 |
|
| (a) Working capital includes receivables, inventories and accounts payable. |
| (b) Includes a $3.5 billion termination fee paid to Baker Hughes during the second quarter of 2016. |
HALLIBURTON COMPANY
Revenue and Operating Income (Loss) Comparison
By Operating Segment and Geographic Region
(Millions of dollars)
(Unaudited) |
| | | | | | | | | | | |
| | Three Months Ended |
| | June 30 | | March 31 |
| Revenue | 2016 | | 2015 | | 2016 |
| By operating segment: | | | | | |
| Completion and Production | $ | 2,114 |
| | $ | 3,444 |
| | $ | 2,324 |
|
| Drilling and Evaluation | 1,721 |
| | 2,475 |
| | 1,874 |
|
| Total revenue | $ | 3,835 |
| | $ | 5,919 |
| | $ | 4,198 |
|
| | | | | | |
| By geographic region: | | | | | |
| North America | $ | 1,516 |
| | $ | 2,671 |
| | $ | 1,794 |
|
| Latin America | 476 |
| | 767 |
| | 541 |
|
| Europe/Africa/CIS | 795 |
| | 1,095 |
| | 778 |
|
| Middle East/Asia | 1,048 |
| | 1,386 |
| | 1,085 |
|
| Total revenue | $ | 3,835 |
| | $ | 5,919 |
| | $ | 4,198 |
|
| | | | | | |
| Operating Income (Loss) | | | | | |
| By operating segment: | | | | | |
| Completion and Production | $ | (32 | ) | | $ | 313 |
| | $ | 30 |
|
| Drilling and Evaluation | 154 |
| | 400 |
| | 241 |
|
| Total | 122 |
| | 713 |
| | 271 |
|
| Corporate and other | (60 | ) | | (70 | ) | | (46 | ) |
| Baker Hughes termination fee and related costs | (3,519 | ) | | (83 | ) | | (538 | ) |
| Impairments and other charges | (423 | ) | | (306 | ) | | (2,766 | ) |
| Total operating income (loss) | $ | (3,880 | ) | | $ | 254 |
| | $ | (3,079 | ) |
| | | | | | |
| By geographic region: | | | | | |
| North America | $ | (124 | ) | | $ | 130 |
| | $ | (39 | ) |
| Latin America | 22 |
| | 112 |
| | 48 |
|
| Europe/Africa/CIS | 64 |
| | 164 |
| | 57 |
|
| Middle East/Asia | 160 |
| | 307 |
| | 205 |
|
| Total | $ | 122 |
| | $ | 713 |
| | $ | 271 |
|
| | | | | | |
| See Footnote Table 1 for Reconciliation of As Reported Operating Income (Loss) to Adjusted Operating Income. |
HALLIBURTON COMPANY
Revenue and Operating Income (Loss) Comparison
By Operating Segment and Geographic Region
(Millions of dollars)
(Unaudited)
|
| | | | | | | |
| | Six Months Ended June 30 |
| Revenue | 2016 | | 2015 |
| By operating segment: | | | |
| Completion and Production | $ | 4,438 |
| | $ | 7,690 |
|
| Drilling and Evaluation | 3,595 |
| | 5,279 |
|
| Total revenue | $ | 8,033 |
| | $ | 12,969 |
|
| | | | |
| By geographic region: | | | |
| North America | $ | 3,310 |
| | $ | 6,213 |
|
| Latin America | 1,017 |
| | 1,716 |
|
| Europe/Africa/CIS | 1,573 |
| | 2,192 |
|
| Middle East/Asia | 2,133 |
| | 2,848 |
|
| Total revenue | $ | 8,033 |
| | $ | 12,969 |
|
| | | | |
| Operating Income (Loss) | | | |
| By operating segment: | | | |
| Completion and Production | $ | (2 | ) | | $ | 775 |
|
| Drilling and Evaluation | 395 |
| | 706 |
|
| Total | 393 |
| | 1,481 |
|
| Corporate and other | (106 | ) | | (139 | ) |
| Baker Hughes termination fee and related costs | (4,057 | ) | | (122 | ) |
| Impairments and other charges | (3,189 | ) | | (1,514 | ) |
| Total operating loss | $ | (6,959 | ) | | $ | (294 | ) |
| | | | |
| By geographic region: | | | |
| North America | $ | (163 | ) | | $ | 409 |
|
| Latin America | 70 |
| | 234 |
|
| Europe/Africa/CIS | 121 |
| | 250 |
|
| Middle East/Asia | 365 |
| | 588 |
|
| Total | $ | 393 |
| | $ | 1,481 |
|
| | | | |
| |
FOOTNOTE TABLE 1
HALLIBURTON COMPANY
Reconciliation of As Reported Operating Income (Loss) to Adjusted Operating Income
(Millions of dollars)
(Unaudited)
|
| | | | | | | | | | | | |
| | | Three Months Ended |
| | | June 30, 2016 | | June 30, 2015 | | March 31, 2016 |
| As reported operating income (loss) | $ | (3,880 | ) | | $ | 254 |
| | $ | (3,079 | ) |
| | | | | | |
| Baker Hughes termination fee and related costs | 3,519 |
| | 83 |
| | 538 |
|
| | | | | | |
| Impairments and other charges: | | | | | |
| Venezuela promissory note loss | 148 |
| | — |
| | — |
|
| Severance costs | 126 |
| | 78 |
| | 135 |
|
| Fixed asset impairments | 92 |
| | 177 |
| | 2,445 |
|
| Inventory write-downs | 64 |
| | 39 |
| | 66 |
|
| Intangible asset impairments | — |
| | 8 |
| | 87 |
|
| Country closures | — |
| | 2 |
| | 2 |
|
| Other | (7 | ) | | 2 |
| | 31 |
|
| Total Impairments and other charges | 423 |
| | 306 |
| | 2,766 |
|
| | | | | | |
| Adjusted operating income (a) | $ | 62 |
| | $ | 643 |
| | $ | 225 |
|
| | | | | | | |
| (a) | Management believes that operating income (loss) adjusted for impairments and other charges and Baker Hughes termination fee and related costs for the three months ended June 30, 2016, March 31, 2016 and June 30, 2015 is useful to investors to assess and understand operating performance, especially when comparing those results with previous and subsequent periods or forecasting performance for future periods, primarily because management views the excluded items to be outside of the company's normal operating results. Management analyzes operating income (loss) without the impact of these items as an indicator of performance, to identify underlying trends in the business, and to establish operational goals. The adjustments remove the effects of these items. Adjusted operating income is calculated as: “As reported operating income (loss)” plus "Total Impairments and other charges" and "Baker Hughes termination fee and related costs" for the three months ended June 30, 2016, March 31, 2016 and June 30, 2015. |
FOOTNOTE TABLE 2
HALLIBURTON COMPANY
Reconciliation of As Reported Loss from Continuing Operations to
Adjusted Income (Loss) from Continuing Operations
(Millions of dollars and shares except per share data)
(Unaudited)
|
| | | | | | | | |
| | | Three Months Ended |
| | | June 30, 2016 | | March 31, 2016 |
| As reported loss from continuing operations attributable to company | $ | (3,208 | ) | | $ | (2,410 | ) |
| | | | |
| Baker Hughes termination fee and related costs (a) | 3,519 |
| | 538 |
|
| Impairments and other charges (a) | 423 |
| | 2,766 |
|
| Debt mandatory redemption fee and expenses (a) | 41 |
| | — |
|
| Interest expense for acquisition (a) | — |
| | 71 |
|
| Total adjustments, before taxes | 3,983 |
| | 3,375 |
|
| Income tax benefit (b) | (896 | ) | | (901 | ) |
| Total adjustments, net of tax | $ | 3,087 |
| | $ | 2,474 |
|
| | | | |
| Adjusted income (loss) from continuing operations attributable to company | $ | (121 | ) | | $ | 64 |
|
| | | | |
| As reported diluted weighted average common shares outstanding (c) | 860 |
| | 858 |
|
| Adjusted diluted weighted average common shares outstanding | 860 |
| | 859 |
|
| | | | | |
| As reported loss from continuing operations per diluted share (d) | $ | (3.73 | ) | | $ | (2.81 | ) |
| Adjusted income (loss) from continuing operations per diluted share (d) | $ | (0.14 | ) | | $ | 0.07 |
|
| | | | | |
| (a) | Management believes that income (loss) from continuing operations adjusted for impairments and other charges, Baker Hughes termination fee and other Baker Hughes related costs, debt mandatory redemption fee and expenses, and interest expense for acquisition, is useful to investors to assess and understand operating performance, especially when comparing those results with previous and subsequent periods or forecasting performance for future periods, primarily because management views the excluded items to be outside of the company's normal operating results. Management analyzes income (loss) from continuing operations without the impact of these items as an indicator of performance, to identify underlying trends in the business, and to establish operational goals. The adjustments remove the effects of these items. Adjusted income (loss) from continuing operations attributable to company is calculated as: “As reported loss from continuing operations attributable to company” plus "Total adjustments, net of tax" for the three months ended June 30, 2016 and March 31, 2016. |
| (b) | Represents the tax effects of the aggregate adjustments during the period. Additionally, includes approximately $486 million of discrete tax adjustments recorded during the second quarter of 2016, primarily relating to deferred tax expenses associated with Halliburton's decision that it now may not permanently reinvest some of its foreign earnings, and tax expenses associated with the inability to utilize certain tax deductions resulting from the carryback of net operating losses to prior tax periods. |
| (c) | As reported diluted weighted average common shares outstanding excludes options to purchase one million shares of common stock as of March 31, 2016, as their impact would be antidilutive since reported income from continuing operations attributable to company was in a loss position during the periods. When adjusting income from continuing operations attributable to company in each period for the special items discussed above, these shares become dilutive. |
| (d) | As reported loss from continuing operations per diluted share is calculated as: "As reported loss from continuing operations attributable to company" divided by "As reported diluted weighted average common shares outstanding." Adjusted income (loss) from continuing operations per diluted share is calculated as: "Adjusted income (loss) from continuing operations attributable to company" divided by "Adjusted diluted weighted average common shares outstanding." |
Conference Call Details
Halliburton will host a conference call on Wednesday, July 20, 2016, to discuss the second quarter 2016 financial results. The call will begin at 8:00 AM Central Time (9:00 AM Eastern Time).
Please visit the website to listen to the call live via webcast. Interested parties may also participate in the call by dialing (866) 550-4949 within North America or (973) 935-8681 outside North America. A passcode is not required. Attendees should log in to the webcast or dial in approximately 15 minutes prior to the call’s start time.
A replay of the conference call will be available on Halliburton’s website for seven days following the call. Also, a replay may be accessed by telephone at (888) 266-2081 within North America or (703) 925-2533 outside of North America, using the passcode 1672892.
###
CONTACTS
For Investors:
Lance Loeffler
Halliburton, Investor Relations
Investors@Halliburton.com
281-871-2688
For Media:
Emily Mir
Halliburton, Public Relations
PR@Halliburton.com
281-871-2601
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
| | | |
| | | | HALLIBURTON COMPANY |
| | | | |
| | | | |
| Date: | July 20, 2016 | By: | /s/ Bruce A. Metzinger |
| | | | Bruce A. Metzinger |
| | | | Assistant Secretary |
