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Halliburton Company Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: July 21, 2011 01:14PM
Halliburton Company (HAL) filed Quarterly Report for the period ended 2011-06-30.
Highlight of Business Operations:
During the first half of 2011, we produced revenue of $11.2 billion and operating income of $2.0 billion, reflecting an operating margin of 18%. Revenue increased $3.1 billion, or 38%, from the first half of 2010, while operating income increased $764 million, or 63%, from the first half of 2010. Overall, these increases were due to increased drilling activity and pricing improvements in North America. Partially offsetting the strong North America results were operational disruptions in North Africa.
We ended the second quarter of 2011 and December 31, 2010 with cash and equivalents of $1.4 billion. We also held $451 million of short-term, United States Treasury securities classified as marketable securities at June 30, 2011 compared to $653 million at December 31, 2010.
Further available sources of cash. On February 22, 2011, we entered into an unsecured $2.0 billion five-year revolving credit facility that replaced our then existing $1.2 billion unsecured credit facility established in July 2007. The purpose of the facility is to provide commercial paper support, general working capital, and credit for other corporate purposes.
Subject to Board of Directors approval, we expect to pay quarterly dividends of approximately $83 million during 2011. We also have approximately $1.7 billion remaining available under our share repurchase authorization, which may be used for open market share purchases.
Guarantee agreements. In the normal course of business, we have agreements with financial institutions under which approximately $1.5 billion of letters of credit, bank guarantees, or surety bonds were outstanding as of June 30, 2011, including $240 million of surety bonds related to Venezuela. See “Business Environment and Results of Operations – International Operations” for further discussion related to Venezuela. Some of the outstanding letters of credit have triggering events that would entitle a bank to require cash collateralization.
Financial position in current market. We believe our $1.4 billion of cash and equivalents and $451 million in investments in marketable securities as of June 30, 2011 provide us with sufficient liquidity and flexibility, given the current market environment. Our debt maturities extend over a long period of time. We currently have a total of $2.0 billion of committed bank credit under our revolving credit facility to support our operations and any commercial paper we may issue in the future. The full amount of the revolving credit facility was available as of June 30, 2011. We have no financial covenants or material adverse change provisions in our bank agreements. Although a portion of earnings from our foreign subsidiaries is reinvested overseas indefinitely, we do not consider this to have a significant impact on our liquidity.
Stocks Discussed: HAL,