Halliburton Beats Earnings, Rev - Analyst Blog

Major oilfield services provider, Halliburton Co. ( HAL ), reported better-than-anticipated second-quarter 2013 results - the fifth outperformance in the last 6 quarters - helped by robust growth in its international business. Earnings per share from continuing operations came in at 73 cents, beating the Zacks Consensus Estimate of 72 cents.

Following Schlumberger Ltd. ( SLB ), Halliburton stepped up as the second member of the 'big 4 oil service companies' to post above consensus result. However, Baker Hughes Inc. ( BHI ) failed to match the earnings estimate. The remaining member of the contingent, Weatherford International Ltd. ( WFT ), is scheduled to report next week.

However, the company's per share profits fell below than the second-quarter 2012 level of 79 cents, amid sluggish activity in its core North American operations.

Revenues of $7,317.0 million were 1.2% higher than that achieved during the second quarter of 2012 and also surpassed the Zacks Consensus Estimate of $ 7,252.0 million.

During the quarter, North America accounted for approximately 52.0% of Halliburton's total revenue and 58.1% of its operating income.

Segmental Performance

Completion & Production: Revenues for Halliburton's Completion and Production segment came in at $ 4,363.0 million, representing a year over year decrease of 2.2%. However, the figure was up by 6.4% sequentially. Increase in activity in the land market of the U.S. along with good result from the international market aided the sequential result.

Operating income for the unit came in at $732.0 million, down 19.9% from the year-earlier level, with North American profitability plunging 25.2%. The poor performance was owing to the weak results from most of the regions, especially North America.

However, the segment's operating income managed to exhibit a 19.0% sequential increase. Decrease in guar costs along with the hike in demand for production enhancement services in the land market of U.S aided the result.

Drilling & Evaluation: Revenues from Halliburton's Drilling and Evaluation business were 6.5% above the second-quarter 2012 level and also improved by 2.8% sequentially to $2,954.0 million. The results were aided by Eastern Hemisphere's increased drilling activity.

Income in the Drilling and Evaluation unit increased 5.6% from the year-ago period and 2.0% sequentially owing to robust drilling activities in international regions.

Dividend and Share Repurchase Program

Today Halliburton declared that it has purchased roughly 23 million common shares during the quarter, for a total consideration of $1.0 billion.

Moreover, on Jul 18, 2013, the board of directors of Halliburton has given authorization to increase its share repurchase capacity to $5.0 billion from $0.7 billion in 2006.
Today, Halliburton also announced its third-quarter 2013 dividend payment of $12.5 cents. The dividend will be paid on Sep 25, 2013, to shareholders of record as of Sep 4, 2013.

Balance Sheet

Halliburton's capital expenditure in the second quarter was $711.0 million. As of Jun 30, 2013, the company had approximately $1,412.0 million in cash/cash equivalents and $4,820.0 million in long-term debt, representing a debt-to-capitalization ratio of 23.8%.

Zacks Rank

As of now, Halliburton, carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.



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