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Halliburton Company Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: October 21, 2011 01:33PM
Halliburton Company (HAL) filed Quarterly Report for the period ended 2011-09-30. Halliburton Co. has a market cap of $31.7 billion; its shares were traded at around $34.47 with a P/E ratio of 12.9 and P/S ratio of 1.8. The dividend yield of Halliburton Co. stocks is 1%. Halliburton Co. had an annual average earning growth of 1.2% over the past 5 years.
Highlight of Business Operations:Deepwater drilling activity in the Gulf of Mexico is continuing to recover due to the issuance of a number of drilling permits. Despite some improvement in the third quarter, we believe risks remain for further growth in the Gulf of Mexico unless the pace of permit issuance is sustained at higher levels for a period of time. Our business in the Gulf of Mexico represented approximately 16% of our North America revenue in the nine months of 2009, approximately 10% in the nine months of 2010, and approximately 6% in the nine months of 2011. In addition, the Gulf of Mexico represented approximately 6% of our consolidated revenue in the nine months of 2009, approximately 5% in the nine months of 2010, and approximately 3% in the nine months of 2011. Longer term, we do not know the extent to which the Macondo well incident or resulting drilling regulations will impact revenue or earnings, as they are dependent on, among other things, governmental approvals for permits, our customers actions, and the potential movement of deepwater rigs to or from other markets.
Drilling and Evaluation operating income increased 36% compared to the third quarter of 2010, as strong results in North America and Latin America were partially offset by startup costs from the commencement of work in Iraq. In addition, operating income increased significantly compared to the third quarter of 2010 due to a $50 million impairment charge for an oil and gas property in Bangladesh in the prior year. North America operating income increased 52%, due to higher wireline activity in the United States land market and increased demand for drilling activities throughout the region. Latin America operating income increased 92%, driven by strong demand for drilling activities in Mexico, software sales in Colombia, and testing and subsea activity in Brazil. Europe/Africa/CIS region operating income decreased 23%, primarily due to increased wireline costs throughout the region and geopolitical disruptions in North Africa. Middle East/Asia operating income increased 20%, as the 2010 results were impacted by the impairment charge. This was partially offset by 2011 startup costs associated with the commencement of work in Iraq.
Drilling and Evaluation revenue increased 20% compared to the nine months of 2010 as drilling activity improved across all regions, most significantly in North America. North America revenue grew 32% on substantial activity increases in the United States land market. Latin America revenue rose 29% as a result of increased demand for most product service lines in Brazil, Venezuela, and Colombia. Europe/Africa/CIS revenue was relatively flat, as higher drilling activity in Norway and Angola was offset by lower activity in Libya and Kazakhstan. Middle East/Asia revenue increased 15% due to the commencement of work in Iraq, increased fluids demand in Indonesia, and higher wireline direct sales in China. Revenue outside North America was 63% of total segment revenue in the nine months of 2011 and 67% of total segment revenue in the nine months of 2010.
Drilling and Evaluation revenue increased 26% compared to the third quarter of 2010, with all regions experiencing revenue growth from the third quarter of 2010. North America revenue grew 37%, primarily due to higher activity and improved pricing in the United States land market and a recovery of activity in the United States Gulf of Mexico. Latin America revenue increased 41%, driven by higher drilling activities in Mexico and Brazil. Europe/Africa/CIS revenue increased 9%, as higher drilling activities in Norway and Algeria were offset by geopolitical disruptions in North Africa. Middle East/Asia revenue grew 14%, primarily due to the commencement of activity in Iraq, which was offset by lower demand for drilling services in Indonesia and Malaysia. Revenue outside of North America was 63% of total segment revenue in the third quarter of 2011 and 66% of total segment revenue in the third quarter of 2010.
During the nine months of 2011, we produced revenue of $17.8 billion and operating income of $3.3 billion, reflecting an operating margin of 19%. Revenue increased $5.0 billion, or 39%, from the nine months of 2010, while operating income increased $1.3 billion, or 63%, from the nine months of 2010. These increases were due mainly to increased drilling activity and pricing improvements in North America as well as increased activity in Latin America. Partially offsetting these results were operational disruptions in North Africa and project delays in the Middle East.
Stocks Discussed: HAL,