Sequentially, consolidated revenue for the quarter increased 5%. U.S./Mexico Pressure Pumping Services increased 1%, International Pressure Pumping Services increased 19% and Other Oilfield Services decreased 4%. Compared to prior year's fourth quarter, consolidated revenue increased 18%, with U.S./Mexico Pressure Pumping Services increasing 28%, International Pressure Pumping Services increasing 3%, and Other Oilfield Services up 25%.
Operating income margins during the quarter were 17.9%, up from 16.1% reported in the previous quarter and up from 15.5% reported in last year's fourth quarter. Sequential increases in operating income were generated throughout the Company, with the most significant contributor being Canada. The improvement year over year was primarily due to favorable margins on activity gains in the U.S. pressure pumping market.
Capital spending was $61.2 million for the quarter. Cash plus short term investments, as of September 30, 2004 was $650.9 million, which exceeded total debt by $152.4 million at September 30, 2004.
U.S./Mexico Pressure Pumping Services
The Company's U.S./Mexico Pressure Pumping Services revenue increased 1% sequentially. Despite a 5% increase in the combined U.S. and Mexico average drilling rig count and favorable pricing, revenues were negatively impacted by hurricanes in the Gulf of Mexico and lower Mexico activity.
Compared to the fourth quarter of the prior year, revenue in U.S./Mexico increased 28%, on the strength of a 13% combined average drilling rig count increase for the U.S. and Mexico and better pricing in the U.S. market.
International Pressure Pumping Services
International Pressure Pumping Services revenue increased 19% sequentially primarily from a 73% revenue increase in Canada. Drilling rig activity in Canada increased 61% during the fourth quarter as the market exited the spring break-up period. International revenue excluding Canada was up 4% sequentially, led by increased activity in Brazil and Argentina. These increases were offset somewhat by declines in the U.K. and Malaysia.
Year over year, International Pressure Pumping Services revenue was up 3% led by a Russia revenue improvement of 28%. In addition, revenue increased in Argentina and India but was partially offset by declines in Norway and Canada.
Other Oilfield Services
Revenue from the Company's Other Oilfield Services (completion fluids, completion tools, process and pipeline services, casing and tubular services and production chemical services) was down 4% sequentially. Process and Pipeline Services revenue was down 7% as they came off of their seasonally best quarter. Revenue from Completion Tools was down 10% and Completion Fluids was down 5% as a result of the Gulf of Mexico hurricanes. Compared to the fourth quarter of the prior year, revenue for these services increased 25%, with all services showing improvement.
Year in Review
Increased drilling activity in the U.S. and Canada, pricing improvement in the U.S. and improved revenue from all service lines in the Other Oilfield Services segment resulted in $2.6 billion of revenue for the fiscal year ended September 30, 2004. This represents a 21% increase over fiscal 2003 revenue of $2.1 billion. Earnings per diluted share for the fiscal year ended September 30, 2004 was $2.14, which includes $56 million profit after taxes for the Halliburton patent infringement award. Before inclusion of the income associated with the Halliburton award, earnings increased 54% from the $1.17 per diluted share generated during the fiscal year ended September 30, 2003.
CEO Stewart Comments
Chairman and CEO Bill Stewart commented, "Despite some significant disruptions in our business, the Company generated its highest ever revenue during the quarter and earnings were up nicely from the prior quarter. Excluding the Halliburton award, our income before taxes improved 22% sequentially and we began to see improvement in our international margins outside of Canada.
"We believe the worldwide market activity will remain strong into the foreseeable future. The U.S. and Canadian markets should continue improving and we expect to see growth in the international markets we have been targeting for expansion. We are projecting our fiscal 2005 revenue to increase about 10% versus fiscal 2004 and believe our earnings will improve 25 - 30%, resulting in guidance for the 2005 fiscal year of $2.25 - 2.35 per diluted share."
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