Up $18 Million in D&E, Down $26 Million in C&P for Halliburton
Halliburton reported that Completion and Production (C&P) operating income in the fourth quarter of 2007 was $571 million, a decrease of $26 million or 4% from the fourth quarter of 2006, which was impacted by a $48 million gain on the sale of lift boats in West Africa and the North Sea in 2006. This gain unfavorably impacted yearly comparisons for C&P in the Europe/Africa/CIS region. A decline in North Sea activity for completion tools also impacted the region. Middle East/Asia C&P operating income increased 78%, with increased project activity across all product lines in the region. North America C&P operating income decreased 9%, primarily due to a $17 million gain related to hurricane insurance proceeds in the fourth quarter of 2006. Additionally, North America was impacted by cost escalation and reduced production enhancement pricing in the United States. Latin America C&P operating income increased 30%, primarily due to increased cementing activity in Mexico and Brazil.
Drilling and Evaluation (D&E) operating income in the fourth quarter of 2007 was $403 million, an increase of $18 million or 5% over the prior year fourth quarter. Europe/Africa/CIS D&E operating income increased 52%, benefiting from increased Sperry Drilling Services and wireline activity in the North Sea and North Africa. Middle East/Asia D&E operating income decreased 11% over the prior year fourth quarter due to the $34 million Bangladesh impairment charge. Partially offsetting the charge was improved demand for wireline services in the Middle East and Sperry Drilling Services sales in Asia. North America D&E operating income decreased 3%, negatively impacted by the $21 million gain related to hurricane insurance proceeds in the fourth quarter of 2006 and lower drilling activity in Canada. This was partially offset by an increase in horizontal drilling activity in the United States. Latin America D&E operating income decreased 14% on lower activity in Venezuela.
During the fourth quarter of 2007, under the company's share repurchase program, Halliburton purchased approximately 2 million shares at an average price of $36.26 for a total cost of approximately $67 million. Since the inception of the program, Halliburton has purchased 79 million shares for a total cost of approximately $2.7 billion. Approximately $2.3 billion remains available under the program.
"In the fourth quarter, we successfully rolled over a significant portion of our fracturing contracts. We maintained our strong position in the United States and picked up market share in some locations. Based on the prices in these contracts, we anticipate that we will see an average price decline in our fracturing business in the mid- to upper-single digits during the first quarter of 2008. We will be partially offsetting this impact by growth in our other service lines, resulting in a more balanced portfolio, and by capitalizing on the trend towards unconventional plays and horizontal drilling. We expect to see prices stabilize during the latter half of the year, as equipment additions decelerate, and our customers try to meet their drilling plans.
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