Halliburton Touts 17% Increase in Total Revenue
Halliburton announced the income from continuing operations for the second quarter of 2010 was $474 million, or $0.52 per diluted share. Net income for the second quarter of 2010 was $480 million, or $0.53 per diluted share. This compares to net income for the first quarter of 2010 of $206 million, or $0.23 per diluted share.
Consolidated revenue in the second quarter of 2010 was $4.4 billion, compared to $3.8 billion in the first quarter of 2010. All product service lines and geographic regions experienced sequential revenue growth from the first quarter, driven by strong demand in the United States and seasonal activity improvements internationally.
Consolidated operating income was $762 million in the second quarter of 2010, compared to $449 million in the first quarter of 2010. All product service lines contributed to this increase, with production enhancement exhibiting especially strong sequential growth followed by completion tools, cementing, and directional drilling.
The first quarter of 2010 results were negatively impacted by the devaluation of the Venezuelan Bolívar Fuerte, resulting in a $31 million, non-tax deductible, foreign currency loss and $10 million of additional income tax expense in Venezuela on the company’s United States dollar-denominated monetary assets and liabilities.
"I am very pleased with our second quarter results. Total revenue grew 17% and operating income grew 70% sequentially, driven by increased activity in the unconventional natural gas and oil basins in North America. In addition, our international results reflect the anticipated seasonal recovery of markets in the eastern hemisphere and improved activity in Latin America. Overall, second quarter operating margins improved by over 500 basis points to 17%," said Dave Lesar, chairman, president and chief executive officer.
"Revenue in North America increased 24% sequentially, outpacing the 13% growth in United States land rig count. Operating income grew over 90% sequentially as equipment utilization surpassed peak 2008 levels, further accelerating opportunities for pricing improvement. Increased horizontal drilling and the development of liquids-rich reservoirs amplified service intensity, as longer horizontal laterals increased the demand for premium tools, more sophisticated fluid systems, and the amount of horsepower needed for completions work.
"Going forward, we believe North America land rig count growth may moderate as activity in the dry gas basins may slow due to weak natural gas fundamentals, which should be partially offset by the continued growth of oil- and liquids- rich reservoirs.
"International revenue increased 11%, and operating income increased 35% from the prior quarter. Markets such as Russia and Asia Pacific experienced a seasonal rebound while Latin America posted solid improvement due to activity increases. We continue to expect growth in international revenue and margins, but the rate of improvement may be more weighted toward the end of the year as customers look at their spending plans in light of current economic conditions as well as ensuring they incorporate any lessons learned from the situation in the Gulf of Mexico.
"The tragic incident that occurred in the Gulf of Mexico and the subsequent suspension of deepwater drilling, we believe, will usher in a new regulatory climate and will have a profound impact on how deepwater drilling is performed.
"We are taking appropriate actions to mitigate the impact of the reduced activity in our Gulf of Mexico business, including redeploying our people and equipment to other areas of stable or increasing activity. Despite these moves, we estimate that the deepwater drilling suspension will negatively impact our earnings by $0.05-$0.08 per quarter for the remainder of 2010.
"The events in the Gulf of Mexico have not stifled our enthusiasm for increased deepwater activity in the coming years. Deepwater will continue to serve as an important source of hydrocarbons necessary to meet future energy demand.
"Contributions from the service sector can play a valuable role in developing new technological innovations and best practices to help customers operate safely and efficiently in these challenging conditions and will generate a corresponding increase in service intensity," Lesar concluded.
2010 Second Quarter Results
Completion and Production
Completion and Production (C&P) revenue in the second quarter of 2010 was $2.4 billion, an increase of $429 million from the first quarter of 2010. Sequential revenue growth was seen in all regions, with the most significant impact coming from increased activity in North America.
C&P operating income in the second quarter of 2010 was $497 million, an increase of $259 million over the first quarter of 2010. North America C&P operating income increased $173 million due to strong results in United States Land. Service intensity has continued to increase and has led to greater absorption of equipment capacity and further pricing improvements. Latin America C&P operating income increased $5 million, primarily due to improved performance in Mexico and Colombia. Europe/Africa/CIS C&P operating income increased $56 million, due to strong demand for production enhancement services in Congo, Algeria, and the North Sea and increased demand for completion tools in Nigeria and Norway. Middle East/Asia C&P operating income increased $25 million, primarily due to strong completions and production enhancement activity across the region.
Drilling and Evaluation
Drilling and Evaluation (D&E) revenue in the second quarter of 2010 was $2 billion, an increase of $197 million from the first quarter of 2010, with higher activity in North America, Latin America, and Middle East/Asia.
D&E operating income in the second quarter of 2010 was $318 million, an increase of $48 million from the first quarter of 2010. North America D&E operating income increased by $38 million, benefiting from higher horizontal drilling activity in United States Land. Latin America D&E operating income increased $38 million primarily due to increased drilling activity in Mexico and higher testing activity in Brazil. Europe/Africa/CIS D&E operating income decreased $38 million, primarily due to lower activity in the North Sea and certain locations in West Africa, which was partially offset by the seasonal recovery in Russia. Middle East/Asia D&E operating income increased $10 million as higher drilling activity in Saudi Arabia and Indonesia and increased fluids revenues in Australia helped bolster the region.
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