Halliburton: Q1 Rev Outside N. America Increases 24%
Halliburton announced that net income for the first quarter of 2008 was $584 million, or $0.64 per diluted share. This compares to net income of $552 million, or $0.54 per diluted share, in the first quarter of 2007. The first quarter of 2008 results were unfavorably impacted by a $14 million, or $0.02 per diluted share, after-tax charge related to the impairment of an oil and gas property in Bangladesh, where the company has had an interest in a producing property since 1996. The first quarter of 2008 results were favorably impacted by a $22 million, or $0.02 per diluted share, after-tax gain related to the sale of a joint venture interest in the United States.
Halliburton's consolidated revenue in the first quarter of 2008 was $4.0 billion, up 18% from the first quarter of 2007. All product service lines contributed to this increase, primarily due to increased international activity.
Operating income was $847 million in the first quarter of 2008 compared to $788 million in the first quarter of 2007. With the exception of the production enhancement product service line, which experienced the expected pricing declines and cost increases in its United States operations, and Landmark, which incurred the impairment noted above, all product service lines contributed to the increase.
"Our first quarter results were consistent with our previously announced expectations," said Dave Lesar, chairman, president, and chief executive officer. "Our international revenue growth helped offset the production enhancement pricing pressures we knew were coming in the U.S. market.
"First quarter revenue outside of North America grew 24% year-over-year with operating income growth of 21%. It has been just over a year since we announced the opening of a corporate headquarters in Dubai as a part of our international expansion strategy, and the positive results are evident. Both growth and profitability in our Middle East/Asia region are exceptional. The recent offshore win for work in the Manifa field in Saudi Arabia and the Norwegian continental shelf completion products contract evidence our customers' confidence in our ability to execute on large, complex projects. As expected, revenue outside of North America declined 6% sequentially due to the large fourth quarter to first quarter fall-off of Landmark software, completion product, and wireline sales. Also impacting the results were weakness in the North Sea and Nigeria operations, and fracturing activity in Russia. We expect fracturing activity in Russia will pick up during the rest of the year, but Nigeria and the North Sea may continue to struggle.
"Latin America revenue grew over 25% year-over-year as the opening of two of our completion products manufacturing facilities in this region have allowed us to facilitate the strong growth this part of our business has experienced. As more projects come on line during the year, this region's prospects continue to expand.
"The North America region also posted double-digit, year-over-year revenue growth of 11%, confirming this market is much stronger than may have been anticipated just a few months ago. Sequentially, revenue was flat on better results in Canada and our Drilling and Evaluation segment, which offset the expected decline in production enhancement revenue. Our Drilling and Evaluation revenue increased 5% and operating income increased 7% on a sequential basis. This limited the margin reduction in North America to 210 basis points sequentially when excluding the gain on sale of our joint venture interest.
"The fundamentals of the world oil and gas market are projecting that the next leg up in this extended cycle is near. It is evident that we have taken the right steps in our development of technology and service quality to win the important large-scale projects that are likely to characterize this industry for years to come, while developing the infrastructure to deliver on the results our customers have come to expect."
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