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) |
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)) |
• | Reported income from continuing operations of $0.03 per diluted share |
• | Adjusted income from continuing operations of $0.23 per diluted share |
• | In July 2017, Halliburton acquired two businesses, Summit ESP and Ingrain, Inc. Summit is a leading provider of electric submersible pumps, and related technology and services. Ingrain specializes in the analysis of complex rock types and has developed and brought to market unique capabilities in rock physics, using digital scanning and analysis to derive petrophysical insights for operators to use in commercial decision-making. The additions of these two businesses strengthen Halliburton’s artificial lift and wireline portfolios for its global customers. |
• | Halliburton’s AccessFrac™ Service drives production and asset efficiency. A Permian Basin operator was developing a multi-well Sprayberry formation pad offsetting existing producing assets. The AccessFrac Service substantially reduced well bashing effects on offset wells, which in turn allowed effective fracture lengths and improved productivity. After one year of production, the wells that applied AccessFrac Service averaged a 33% increase in cumulative BOE production when compared to previous pad development efforts, and reduced negative impacts on the offset wells. AccessFrac™ is a unique service combining materials, equipment and design process to solve challenges in completing shale wells in North America. |
• | Halliburton and Accenture announced the companies are working together to help transform how operators can achieve a lower cost per BOE by digitalizing crucial business activities between the field, front office and back office. The combined strengths and capabilities of Halliburton and Accenture will enable digital solutions that align and elevate technical, operational, and business outcomes for operators. |
• | Halliburton announced an agreement with GroundMetrics to deliver full field reservoir characterization and monitoring services. The collaboration combines GroundMetrics' capabilities in electromagnetic and resistivity sensing where the capabilities and |
• | Halliburton awarded a multi-million dollar software grant to King Fahd University for Petroleum and Minerals. The software grant is delivered through Landmark’s University Grants Program, which contributes renewable software licenses to qualified academic institutions worldwide. |
Three Months Ended | ||||||||||||
June 30 | March 31 | |||||||||||
2017 | 2016 | 2017 | ||||||||||
Revenue: | ||||||||||||
Completion and Production | $ | 3,132 | $ | 2,114 | $ | 2,604 | ||||||
Drilling and Evaluation | 1,825 | 1,721 | 1,675 | |||||||||
Total revenue | $ | 4,957 | $ | 3,835 | $ | 4,279 | ||||||
Operating income (loss): | ||||||||||||
Completion and Production | $ | 397 | $ | (32 | ) | $ | 147 | |||||
Drilling and Evaluation | 125 | 154 | 122 | |||||||||
Corporate and other (a) | (114 | ) | (60 | ) | (66 | ) | ||||||
Impairments and other charges (b) | (262 | ) | (423 | ) | — | |||||||
Merger termination fee and related costs (c) | — | (3,519 | ) | — | ||||||||
Total operating income (loss) | 146 | (3,880 | ) | 203 | ||||||||
Interest expense, net (d) | (121 | ) | (196 | ) | (242 | ) | ||||||
Other, net | (26 | ) | (31 | ) | (18 | ) | ||||||
Loss before income taxes | (1 | ) | (4,107 | ) | (57 | ) | ||||||
Income tax benefit | 29 | 902 | 25 | |||||||||
Income (loss) from continuing operations | 28 | (3,205 | ) | (32 | ) | |||||||
Net income attributable to noncontrolling interest | — | (3 | ) | — | ||||||||
Net income (loss) attributable to company | $ | 28 | $ | (3,208 | ) | $ | (32 | ) | ||||
Basic and diluted net income (loss) per share | $ | 0.03 | $ | (3.73 | ) | $ | (0.04 | ) | ||||
Basic weighted average common shares outstanding | 869 | 860 | 867 | |||||||||
Diluted weighted average common shares outstanding | 871 | 860 | 867 | |||||||||
(a) Includes an aggregate $42 million of litigation settlements and one-time executive compensation charges in the three months ended June 30, 2017. | ||||||||||||
(b) During the three months ended June 30, 2017, Halliburton recognized a $262 million fair market value adjustment associated with an expected promissory note in Venezuela. | ||||||||||||
(c) Includes a $3.5 billion merger termination fee recognized in the three months ended June 30, 2016. | ||||||||||||
(d) Includes $104 million of costs related to the early extinguishment of $1.4 billion of senior notes in the three months ended March 31, 2017, as well as $41 million of debt redemption fees and associated expenses in the three months ended June 30, 2016. | ||||||||||||
See Footnote Table 1 for Reconciliation of As Reported Operating Income to Adjusted Operating Income | ||||||||||||
See Footnote Table 2 for Reconciliation of As Reported Income (Loss) from Continuing Operations to Adjusted Income from Continuing Operations. |
Six Months Ended June 30 | ||||||||
2017 | 2016 | |||||||
Revenue: | ||||||||
Completion and Production | $ | 5,736 | $ | 4,438 | ||||
Drilling and Evaluation | 3,500 | 3,595 | ||||||
Total revenue | $ | 9,236 | $ | 8,033 | ||||
Operating income (loss): | ||||||||
Completion and Production | $ | 544 | $ | (2 | ) | |||
Drilling and Evaluation | 247 | 395 | ||||||
Corporate and other | (180 | ) | (106 | ) | ||||
Impairments and other charges (a) | (262 | ) | (3,189 | ) | ||||
Merger termination fee and related costs (b) | — | (4,057 | ) | |||||
Total operating income (loss) | 349 | (6,959 | ) | |||||
Interest expense, net (c) | (363 | ) | (361 | ) | ||||
Other, net | (44 | ) | (78 | ) | ||||
Loss before income taxes | (58 | ) | (7,398 | ) | ||||
Income tax benefit | 54 | 1,777 | ||||||
Loss from continuing operations | (4 | ) | (5,621 | ) | ||||
Loss from discontinued operations, net | — | (2 | ) | |||||
Net loss | $ | (4 | ) | $ | (5,623 | ) | ||
Net loss attributable to noncontrolling interest | — | 3 | ||||||
Net loss attributable to company | $ | (4 | ) | $ | (5,620 | ) | ||
Amounts attributable to company shareholders: | ||||||||
Loss from continuing operations | $ | (4 | ) | $ | (5,618 | ) | ||
Loss from discontinued operations, net | — | (2 | ) | |||||
Net loss attributable to company | $ | (4 | ) | $ | (5,620 | ) | ||
Basic and diluted net loss per share | $ | — | $ | (6.54 | ) | |||
Basic and diluted weighted average common shares outstanding | 868 | 859 | ||||||
(a) During the six months ended June 30, 2017, Halliburton recognized a $262 million fair market value adjustment associated with an expected promissory note in Venezuela. | ||||||||
(b) During the six months ended June 30, 2016, Halliburton recognized a $3.5 billion merger termination fee and an aggregate $464 million of charges for the reversal of assets held for sale accounting. | ||||||||
(c) Includes $104 million of costs related to the early extinguishment of $1.4 billion of senior notes in the six months ended June 30, 2017, as well as $41 million of debt redemption fees and associated expenses in the six months ended June 30, 2016. |
June 30 | December 31 | |||||||
2017 | 2016 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and equivalents | $ | 2,139 | $ | 4,009 | ||||
Receivables, net | 4,385 | 3,922 | ||||||
Inventories | 2,283 | 2,275 | ||||||
Prepaid income taxes | 557 | 585 | ||||||
Other current assets | 896 | 886 | ||||||
Total current assets | 10,260 | 11,677 | ||||||
Property, plant and equipment, net | 8,374 | 8,532 | ||||||
Goodwill | 2,407 | 2,414 | ||||||
Deferred income taxes | 2,232 | 1,960 | ||||||
Other assets | 2,052 | 2,417 | ||||||
Total assets | $ | 25,325 | $ | 27,000 | ||||
Liabilities and Shareholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 2,166 | $ | 1,764 | ||||
Accrued employee compensation and benefits | 583 | 544 | ||||||
Short-term borrowings and current maturities of long-term debt | 336 | 170 | ||||||
Other current liabilities | 983 | 1,545 | ||||||
Total current liabilities | 4,068 | 4,023 | ||||||
Long-term debt | 10,816 | 12,214 | ||||||
Employee compensation and benefits | 550 | 574 | ||||||
Other liabilities | 938 | 741 | ||||||
Total liabilities | 16,372 | 17,552 | ||||||
Company shareholders’ equity | 8,917 | 9,409 | ||||||
Noncontrolling interest in consolidated subsidiaries | 36 | 39 | ||||||
Total shareholders’ equity | 8,953 | 9,448 | ||||||
Total liabilities and shareholders’ equity | $ | 25,325 | $ | 27,000 | ||||
Six Months Ended June 30 | |||||||
2017 | 2016 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (4 | ) | $ | (5,623 | ) | |
Adjustments to reconcile net loss to cash flows from operating activities: | |||||||
Depreciation, depletion and amortization | 769 | 742 | |||||
Payment related to the Macondo well incident | (368 | ) | (33 | ) | |||
Impairments and other charges | 262 | 3,189 | |||||
Working capital (a) | (222 | ) | 72 | ||||
Deferred income tax benefit, continuing operations | (216 | ) | (1,516 | ) | |||
Other | 130 | (634 | ) | ||||
Total cash flows provided by (used in) operating activities (b) | 351 | (3,803 | ) | ||||
Cash flows from investing activities: | |||||||
Capital expenditures | (592 | ) | (447 | ) | |||
Proceeds from sales of property, plant and equipment | 76 | 114 | |||||
Other investing activities | (29 | ) | (60 | ) | |||
Total cash flows used in investing activities | (545 | ) | (393 | ) | |||
Cash flows from financing activities: | |||||||
Payments on long-term borrowings | (1,623 | ) | (2,525 | ) | |||
Dividends to shareholders | (312 | ) | (309 | ) | |||
Borrowings on short-term debt, net | 232 | 13 | |||||
Other financing activities | 62 | 89 | |||||
Total cash flows used in financing activities | (1,641 | ) | (2,732 | ) | |||
Effect of exchange rate changes on cash | (35 | ) | (41 | ) | |||
Decrease in cash and equivalents | (1,870 | ) | (6,969 | ) | |||
Cash and equivalents at beginning of period | 4,009 | 10,077 | |||||
Cash and equivalents at end of period | $ | 2,139 | $ | 3,108 | |||
(a) Working capital includes receivables, inventories and accounts payable. | |||||||
(b) Includes a $3.5 billion merger termination fee paid during the second quarter of 2016. |
Three Months Ended | |||||||||||
June 30 | March 31 | ||||||||||
Revenue | 2017 | 2016 | 2017 | ||||||||
By operating segment: | |||||||||||
Completion and Production | $ | 3,132 | $ | 2,114 | $ | 2,604 | |||||
Drilling and Evaluation | 1,825 | 1,721 | 1,675 | ||||||||
Total revenue | $ | 4,957 | $ | 3,835 | $ | 4,279 | |||||
By geographic region: | |||||||||||
North America | $ | 2,770 | $ | 1,516 | $ | 2,231 | |||||
Latin America | 508 | 476 | 463 | ||||||||
Europe/Africa/CIS | 679 | 795 | 604 | ||||||||
Middle East/Asia | 1,000 | 1,048 | 981 | ||||||||
Total revenue | $ | 4,957 | $ | 3,835 | $ | 4,279 | |||||
Operating Income (Loss) | |||||||||||
By operating segment: | |||||||||||
Completion and Production | $ | 397 | $ | (32 | ) | $ | 147 | ||||
Drilling and Evaluation | 125 | 154 | 122 | ||||||||
Total | 522 | 122 | 269 | ||||||||
Corporate and other | (114 | ) | (60 | ) | (66 | ) | |||||
Impairments and other charges | (262 | ) | (423 | ) | — | ||||||
Merger termination fee and related costs | — | (3,519 | ) | — | |||||||
Total operating income (loss) | $ | 146 | $ | (3,880 | ) | $ | 203 | ||||
See Footnote Table 1 for Reconciliation of As Reported Operating Income to Adjusted Operating Income |
Six Months Ended June 30 | |||||||
Revenue | 2017 | 2016 | |||||
By operating segment: | |||||||
Completion and Production | $ | 5,736 | $ | 4,438 | |||
Drilling and Evaluation | 3,500 | 3,595 | |||||
Total revenue | $ | 9,236 | $ | 8,033 | |||
By geographic region: | |||||||
North America | $ | 5,001 | $ | 3,310 | |||
Latin America | 971 | 1,017 | |||||
Europe/Africa/CIS | 1,283 | 1,573 | |||||
Middle East/Asia | 1,981 | 2,133 | |||||
Total revenue | $ | 9,236 | $ | 8,033 | |||
Operating Income (Loss) | |||||||
By operating segment: | |||||||
Completion and Production | $ | 544 | $ | (2 | ) | ||
Drilling and Evaluation | 247 | 395 | |||||
Total | 791 | 393 | |||||
Corporate and other | (180 | ) | (106 | ) | |||
Impairments and other charges | (262 | ) | (3,189 | ) | |||
Merger termination fee and related costs | — | (4,057 | ) | ||||
Total operating income (loss) | $ | 349 | $ | (6,959 | ) | ||
Three Months Ended | ||||||||
June 30, 2017 | March 31, 2017 | |||||||
As reported operating income | $ | 146 | $ | 203 | ||||
Impairments and other charges (a) | 262 | — | ||||||
Adjusted operating income (b) | $ | 408 | $ | 203 | ||||
(a) | During the three months ended June 30, 2017, Halliburton recognized a $262 million fair market value adjustment associated with an expected promissory note in Venezuela. There were no such operating charges or costs for the three months ended March 31, 2017. | |||||||
(b) | Management believes that operating income adjusted for impairments and other charges for the three months ended June 30, 2017 is useful to investors to assess and understand operating performance, especially when comparing those results with previous and subsequent periods or forecasting performance for future periods, primarily because management views this excluded item to be outside of the company's normal operating results. Management analyzes operating income without the impact of this item as an indicator of performance, to identify underlying trends in the business, and to establish operational goals. The adjustments remove the effect of this item. Adjusted operating income is calculated as: “As reported operating income” plus "Impairments and other charges" for the three months ended June 30, 2017. |
Three Months Ended | ||||||||
June 30, 2017 | March 31, 2017 | |||||||
As reported income (loss) from continuing operations attributable to company | $ | 28 | $ | (32 | ) | |||
Adjustments: | ||||||||
Impairments and other charges | 262 | — | ||||||
Costs related to the early extinguishment of debt | — | 104 | ||||||
Total adjustments, before taxes (a) | 262 | 104 | ||||||
Income tax benefit | (89 | ) | (38 | ) | ||||
Total adjustments, net of tax | $ | 173 | $ | 66 | ||||
Adjusted income from continuing operations attributable to company | $ | 201 | $ | 34 | ||||
As reported diluted weighted average common shares outstanding (b) | 871 | 867 | ||||||
Adjusted diluted weighted average common shares outstanding (b) | 871 | 871 | ||||||
As reported income (loss) from continuing operations per diluted share (c) | $ | 0.03 | $ | (0.04 | ) | |||
Adjusted income from continuing operations per diluted share (c) | $ | 0.23 | $ | 0.04 | ||||
(a) | Management believes that income (loss) from continuing operations adjusted for impairments and other charges and costs related to the early extinguishment of debt is useful to investors to assess and understand operating performance, especially when comparing those results with previous and subsequent periods or forecasting performance for future periods, primarily because management views the excluded items to be outside of the company's normal operating results. Management analyzes income (loss) from continuing operations without the impact of these items as an indicator of performance, to identify underlying trends in the business and to establish operational goals. The adjustment removes the effect of these items. Adjusted income from continuing operations attributable to company is calculated as: “As reported income (loss) from continuing operations attributable to company” plus "Total adjustments, net of tax" for the three months ended June 30, 2017 and March 31, 2017. | |||||||
(b) | As reported diluted weighted average common shares outstanding for the three months ended March 31, 2017 excludes options to purchase four million shares of common stock, respectively, as their impact would be antidilutive because our reported income from continuing operations attributable to company was in a loss position during the period. When adjusting income from continuing operations attributable to company in the period for the adjustments discussed above, these shares become dilutive. | |||||||
(c) | As reported income (loss) from continuing operations per diluted share is calculated as: "As reported income (loss) from continuing operations attributable to company" divided by "As reported diluted weighted average common shares outstanding." Adjusted income from continuing operations per diluted share is calculated as: "Adjusted income from continuing operations attributable to company" divided by "Adjusted diluted weighted average common shares outstanding." |
HALLIBURTON COMPANY | |||
Date: | July 24, 2017 | By: | /s/ Bruce A. Metzinger |
Bruce A. Metzinger | |||
Vice President, Public Law and | |||
Assistant Secretary |