secondqtrearnings.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
     

FORM 8-K
     

Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (date of earliest event reported):  July 19, 2010
     

HALLIBURTON COMPANY
(Exact Name of Registrant as Specified in Its Charter)
     

Delaware
(State or Other Jurisdiction of Incorporation)

001-03492
No. 75-2677995
(Commission File Number)
(IRS Employer Identification No.)
   
3000 North Sam Houston Parkway East
Houston, Texas
77032
(Address of Principal Executive Offices)
(Zip Code)

(281) 871-2699
(Registrant’s Telephone Number, Including Area Code)

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
     

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 



 
 
 




INFORMATION TO BE INCLUDED IN REPORT

Item 2.02.  Results of Operations and Financial Condition

On July 19, 2010, registrant issued a press release entitled “Halliburton Announces Second Quarter Earnings of $0.52 Per Diluted Share From Continuing Operations”

The text of the Press Release is as follows:


HALLIBURTON ANNOUNCES SECOND QUARTER EARNINGS
OF $0.52 PER DILUTED SHARE FROM CONTINUING OPERATIONS


HOUSTON, Texas – Halliburton (NYSE:HAL) announced today that 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.


 
 
 

Halliburton/Page 2

“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.

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Halliburton/Page 3

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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Halliburton/Page 4

Significant Recent Events and Achievements

·  
Halliburton has announced the successful completion of field tests for the GeoTap® IDS fluid identification and sampling sensor for BG Norge. The test was performed on the Bredford Dolphin drilling rig for the 34/5-1 S Blåbær exploration well in offshore Norway. Application of the technology saves operators rig costs and significantly reduces the industry’s requirement for time-consuming, post-well wireline sampling.

The GeoTap® IDS sensor revolutionizes subsurface hydrocarbon fluid sampling. For the first time, reservoir formation fluids can be sampled during short stops in the drilling process with a tool placed in the logging-while-drilling (LWD) assembly. This makes the technology ideal for high-cost drilling environments such as deepwater exploration wells, where conventional wireline-based sampling programs often cost several million dollars more in rig time and increase well risk. The GeoTap® IDS system also allows operators to acquire multiple fluid samples within just hours of drilling the formation instead of days, reducing the likelihood of borehole damage and producing a less contaminated sample.

·  
Halliburton has announced the opening of a new test facility at its manufacturing center in Duncan, Oklahoma that is capable of safely testing Halliburton’s proprietary oil and gas field services equipment under the most strenuous simulated conditions.


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Halliburton/Page 5

Founded in 1919, Halliburton is one of the world’s largest providers of products and services to the energy industry.  With more than 50,000 employees in approximately 70 countries, the company serves the upstream oil and gas industry throughout the lifecycle of the reservoir – from locating hydrocarbons and managing geological data, to drilling and formation evaluation, well construction and completion, and optimizing production through the life of the field. Visit the company’s Web site at www.halliburton.com.

NOTE:  The statements in this press release that are not historical statements, including statements regarding future financial performance are forward-looking statements within the meaning of the federal securities laws. These statements are subject to numerous risks and uncertainties, many of which are beyond the company's control, which could cause actual results to differ materially from the results expressed or implied by the statements. These risks and uncertainties include, but are not limited to: results of litigation and investigations; actions by third parties, including governmental agencies; changes in the demand for or price of oil and/or natural gas which has been significantly impacted by the worldwide recession and by the worldwide financial and credit crisis; consequences of audits and investigations by domestic and foreign government agencies and legislative bodies and related publicity and potential adverse proceedings by such agencies; indemnification and insurance matters; protection of intellectual property rights; compliance with environmental laws; changes in government regulations and regulatory requirements, particularly those related to offshore oil and gas exploration, radioactive sources, explosives, chemicals, hydraulic fracturing services and climate-related initiatives; compliance with laws related to income taxes and assumptions regarding the generation of future taxable income; risks of international operations, including risks relating to unsettled political conditions, war, the effects of terrorism, and foreign exchange rates and controls, and doing business with national oil companies; weather-related issues, including the effects of hurricanes and tropical storms; changes in capital spending by customers; delays or failures by customers to make payments owed to us; execution of long-term, fixed-price contracts; impairment of oil and gas properties; structural changes in the oil and natural gas industry; maintaining a highly skilled workforce; availability of raw materials; and integration of acquired businesses and operations of joint ventures. Halliburton's Form 10-K for the year ended December 31, 2009, Form 10-Q for the quarter ended March 31, 2010, recent Current Reports on Form 8-K, and other Securities and Exchange Commission (SEC) filings discuss some of the important risk factors identified that may affect Halliburton’s business, results of operations, and financial condition. Halliburton undertakes no obligation to revise or update publicly any forward-looking statements for any reason.


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HALLIBURTON COMPANY
Condensed Consolidated Statements of Operations
(Millions of dollars and shares except per share data)
(Unaudited)

   
Three Months Ended
  
   
June 30
    
March 31
  
   
2010
    
2009
    
2010
  
Revenue:
                  
Completion and Production
   $ 2,393     $ 1,752     $ 1,964  
Drilling and Evaluation
     1,994       1,742       1,797  
Total revenue
   $ 4,387     $ 3,494     $ 3,761  
Operating income:
                        
Completion and Production
   $ 497     $ 243     $ 238  
Drilling and Evaluation
     318       284       270  
Corporate and other
     (53 )     (51 )     (59 )
Total operating income
     762       476       449  
Interest expense, net of interest income of $3, $3, and $3
     (76 )     (79 )     (76 )
Other, net
     (9 )     (14 )     (40 )(a)
Income from continuing operations before income taxes
     677       383       333  
Provision for income taxes
     (200 )     (117 )     (121 )(b)
Income from continuing operations
     477       266       212  
Income (loss) from discontinued operations, net
     6       (1 )     (5 )
Net income
   $ 483     $ 265     $ 207  
Noncontrolling interest in net income of subsidiaries
     (3 )     (3 )     (1 )
Net income attributable to company
   $ 480     $ 262     $ 206  
Amounts attributable to company shareholders:
                        
Income from continuing operations
   $ 474     $ 263     $ 211  
Income (loss) from discontinued operations, net
     6       (1 )     (5 )
Net income attributable to company
   $ 480     $ 262     $ 206  
Basic income per share attributable to company
                        
shareholders:
                        
Income from continuing operations
   $ 0.52     $ 0.29     $ 0.23  
Income (loss) from discontinued operations, net
     0.01       –       –  
Net income per share
   $ 0.53     $ 0.29     $ 0.23  
Diluted income per share attributable to company
                        
shareholders:
                        
Income from continuing operations
   $ 0.52     $ 0.29     $ 0.23  
Income (loss) from discontinued operations, net
     0.01       –       –  
Net income per share
   $ 0.53     $ 0.29     $ 0.23  
Basic weighted average common shares outstanding
     906       898       905  
Diluted weighted average common shares outstanding
     909       900       908  

(a)  
Includes, among other items, a $31 million non-tax deductible, foreign currency loss associated with the devaluation of the Venezuelan Bolívar Fuerte.
(b)  
Includes $10 million of additional tax expense for local Venezuelan income tax purposes as a result of a taxable gain created by the devaluation of the Bolívar Fuerte on Halliburton’s net United States dollar-denominated monetary assets and liabilities in Venezuela.

See Footnote Table 1 for a list of significant items included in operating income.


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HALLIBURTON COMPANY
Condensed Consolidated Statements of Operations
(Millions of dollars and shares except per share data)
(Unaudited)

   
Six Months Ended June 30
  
   
2010
    
2009
  
Revenue:
            
Completion and Production
   $ 4,357     $ 3,780  
Drilling and Evaluation
     3,791       3,621  
Total revenue
   $ 8,148     $ 7,401  
Operating income:
                
Completion and Production
   $ 735     $ 606  
Drilling and Evaluation
     588       588  
Corporate and other
     (112 )     (102 )
Total operating income
     1,211       1,092  
Interest expense, net of interest income of $6 and $5
     (152 )     (130 )
Other, net
     (49 )(a)     (19 )
Income from continuing operations before income taxes
     1,010       943  
Provision for income taxes
     (321 )(b)     (296 )
Income from continuing operations
     689       647  
Income (loss) from discontinued operations, net
     1       (2 )
Net income
   $ 690     $ 645  
Noncontrolling interest in net income of subsidiaries
     (4 )     (5 )
Net income attributable to company
   $ 686     $ 640  
Amounts attributable to company shareholders:
                
Income from continuing operations
   $ 685     $ 642  
Income (loss) from discontinued operations, net
     1       (2 )
Net income attributable to company
   $ 686     $ 640  
Basic income per share attributable to company
                
shareholders:
                
Income from continuing operations
   $ 0.76     $ 0.71  
Income (loss) from discontinued operations, net
     –       –  
Net income per share
   $ 0.76     $ 0.71  
Diluted income per share attributable to company
                
shareholders:
                
Income from continuing operations
   $ 0.75     $ 0.71  
Income (loss) from discontinued operations, net
     0.01       –  
Net income per share
   $ 0.76     $ 0.71  
Basic weighted average common shares outstanding
     906       898  
Diluted weighted average common shares outstanding
     908       899  

(a)  
Includes, among other items, a $31 million non-tax deductible, foreign currency loss associated with the devaluation of the Venezuelan Bolívar Fuerte.
(b)  
Includes $10 million of additional tax expense for local Venezuelan income tax purposes as a result of a taxable gain created by the devaluation of the Bolívar Fuerte on Halliburton’s net United States dollar-denominated monetary assets and liabilities in Venezuela.

See Footnote Table 1 for a list of significant items included in operating income.


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HALLIBURTON COMPANY
Condensed Consolidated Balance Sheets
(Millions of dollars)
(Unaudited)

   
June 30
    
December 31
  
   
2010
    
2009
  
Assets
  
Current assets:
            
Cash and equivalents
   $ 1,160     $ 2,082  
Receivables, net
     3,304       2,964  
Inventories, net
     1,767       1,598  
Investments in marketable securities
     1,935       1,312  
Other current assets
     1,037       682  
Total current assets
     9,203       8,638  
                 
Property, plant, and equipment, net
     6,175       5,759  
Goodwill
     1,132       1,100  
Other assets
     1,030       1,041  
Total assets
   $ 17,540     $ 16,538  
                 
Liabilities and Shareholders’ Equity
  
Current liabilities:
                
Accounts payable
   $ 1,069     $ 787  
Current maturities of long-term debt
     750       750  
Accrued employee compensation and benefits
     583       514  
Other current liabilities
     913       838  
Total current liabilities
     3,315       2,889  
                 
Long-term debt
     3,824       3,824  
Other liabilities
     1,017       1,068  
Total liabilities
     8,156       7,781  
                 
Company’s shareholders’ equity
     9,353       8,728  
Noncontrolling interest in consolidated subsidiaries
     31       29  
Total shareholders’ equity
     9,384       8,757  
Total liabilities and shareholders’ equity
   $ 17,540     $ 16,538  


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HALLIBURTON COMPANY
Condensed Consolidated Statements of Cash Flows
(Millions of dollars)
(Unaudited)

   
Six Months Ended
  
   
June 30
  
   
2010
    
2009
  
Cash flows from operating activities:
            
Net income
   $ 690     $ 645  
Adjustments to reconcile net income to net cash from operations:
                
Depreciation, depletion, and amortization
     533       439  
Payments of Department of Justice and Securities and Exchange Commission
                
settlement and indemnity
     (94 )     (322 )
Other
     (321 )     256  
Total cash flows from operating activities
     808       1,018  
                 
Cash flows from investing activities:
                
Purchases of investments in marketable securities
     (1,182 )     (1,518 )
Sales of investments in marketable securities
     550       –  
Capital expenditures
     (855 )     (950 )
Other
     (108 )     48  
Total cash flows from investing activities
     (1,595 )     (2,420 )
                 
Cash flows from financing activities:
                
Proceeds from long-term borrowings, net of offering costs
     –       1,975  
Payment of dividends to shareholders
     (163 )     (162 )
Other
     45       47  
Total cash flows from financing activities
     (118 )     1,860  
                 
Effect of exchange rate changes on cash
     (17 )     (14 )
Increase (decrease) in cash and equivalents
     (922 )     444  
Cash and equivalents at beginning of period
     2,082       1,124  
Cash and equivalents at end of period
   $ 1,160     $ 1,568  


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HALLIBURTON COMPANY
Revenue and Operating Income Comparison
By Segment and Geographic Region
(Millions of dollars)
(Unaudited)

   
Three Months Ended
  
   
June 30
    
March 31
  
Revenue by geographic region:
  
2010
    
2009
    
2010
  
Completion and Production:
                  
North America
   $ 1,434     $ 795     $ 1,125  
Latin America
     212       227       202  
Europe/Africa/CIS
     459       439       385  
Middle East/Asia
     288       291       252  
Total
     2,393       1,752       1,964  
Drilling and Evaluation:
                        
North America
     677       464       579  
Latin America
     355       317       293  
Europe/Africa/CIS
     522       532       535  
Middle East/Asia
     440       429       390  
Total
     1,994       1,742       1,797  
Total revenue by region:
                        
North America
     2,111       1,259       1,704  
Latin America
     567       544       495  
Europe/Africa/CIS
     981       971       920  
Middle East/Asia
     728       720       642  
                         
                         
Operating income by geographic region
                        
(excluding Corporate and other):
                        
Completion and Production:
                        
North America
   $ 310     $ 52     $ 137  
Latin America
     34       53       29  
Europe/Africa/CIS
     95       69       39  
Middle East/Asia
     58       69       33  
Total
     497       243       238  
Drilling and Evaluation:
                        
North America
     131       28       93  
Latin America
     55       53       17  
Europe/Africa/CIS
     53       86       91  
Middle East/Asia
     79       117       69  
Total
     318       284       270  
Total operating income by region:
                        
North America
     441       80       230  
Latin America
     89       106       46  
Europe/Africa/CIS
     148       155       130  
Middle East/Asia
     137       186       102  

See Footnote Table 1 for a list of significant items included in operating income.


 
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HALLIBURTON COMPANY
 
Revenue and Operating Income Comparison
 
By Segment and Geographic Region
 
(Millions of dollars)
 
(Unaudited)


   
Six Months Ended June 30
  
Revenue by geographic region:
  
2010
    
2009
  
Completion and Production:
            
North America
   $ 2,559     $ 1,866  
Latin America
     414       459  
Europe/Africa/CIS
     844       865  
Middle East/Asia
     540       590  
Total
     4,357       3,780  
Drilling and Evaluation:
                
North America
     1,256       1,076  
Latin America
     648       641  
Europe/Africa/CIS
     1,057       1,074  
Middle East/Asia
     830       830  
Total
     3,791       3,621  
Total by revenue by region:
                
North America
     3,815       2,942  
Latin America
     1,062       1,100  
Europe/Africa/CIS
     1,901       1,939  
Middle East/Asia
     1,370       1,420  
                 
                 
Operating income by geographic region
                
(excluding Corporate and other):
                
Completion and Production:
                
North America
   $ 447     $ 218  
Latin America
     63       107  
Europe/Africa/CIS
     134       146  
Middle East/Asia
     91       135  
Total
     735       606  
Drilling and Evaluation:
                
North America
     224       92  
Latin America
     72       107  
Europe/Africa/CIS
     144       177  
Middle East/Asia
     148       212  
Total
     588       588  
Total operating income by region:
                
North America
     671       310  
Latin America
     135       214  
Europe/Africa/CIS
     278       323  
Middle East/Asia
     239       347  

See Footnote Table 1 for a list of significant items included in operating income.


 
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FOOTNOTE TABLE 1

 
HALLIBURTON COMPANY
 
Items Included in Operating Income
 
(Millions of dollars except per share data)
 
(Unaudited)

   
Three Months Ended
  
   
June 30, 2009
  
   
Operating
    
After Tax
  
   
Income
    
per Share
  
             
Completion and Production:
            
Employee separation costs
   $ (10 )   $ (0.01 )
Drilling and Evaluation:
                
Employee separation costs
     (7 )     –  
Corporate and other:
                
Employee separation costs
     –       –  


   
Six Months Ended
  
   
June 30, 2009
  
   
Operating
    
After Tax
  
   
Income
    
per Share
  
             
Completion and Production:
            
Employee separation costs
   $ (21 )   $ (0.02 )
Drilling and Evaluation:
                
Employee separation costs
     (19 )     (0.01 )
Corporate and other:
                
Employee separation costs
     (5 )     –  


 
###






 
 
 
 




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.





   
HALLIBURTON COMPANY
     
     
Date:    July 19, 2010
By:
   /s/ Bruce A. Metzinger
   
Bruce A. Metzinger
   
Assistant Secretary