Major oilfield services provider Halliburton Company (HAL) reported strong fourth-quarter 2014 results, even as oil prices plummeted throughout the quarter. This is primarily owing to improved stimulation work in the U.S. Better drilling operations in the Middle East/Asia region also drove the results.
Earnings per share from continuing operations (excluding restructuring expenses) came in at $1.19, beating the Zacks Consensus Estimate of $1.11. Moreover, the company’s per share profits significantly improved from the fourth-quarter 2013 level of 93 cents.
Following Baker Hughes Inc. and Schlumberger Ltd (SLB), Halliburton stepped up as the third member of the ‘big 4 oil service companies’ to post above-consensus earnings. The other member Weatherford International Ltd (WFT) is scheduled to report next month.
Revenues of $8.8 billion reflect a 15% year-over-year improvement. The figure also surpassed the Zacks Consensus Estimate.
During the quarter, North America accounted for approximately 54% of Halliburton’s total revenue and 64% of its operating income.
For the year ended Dec 31, 2014, Halliburton reported income from continuing operations (excluding non-operating items) of $4.02 per share, above the Zacks Consensus Estimate of $3.96. The figure also outpaced the 2013 adjusted earnings of $3.15 per share. Revenues of $32.9 billion were 12% higher than the year-ago number and marginally above the Zacks Consensus Estimate.
Fourth-Quarter Segmental Performance
Completion & Production: Revenues at Halliburton’s Completion and Production segment were almost in line with third-quarter 2014 and increased 21% year over year to $5.5 billion. Improved work related to stimulation in the Middle East/Asia section and in the land market of United States aided results.
The segment’s operating income was $991 million, exhibiting an almost 8% sequential decrease. Reduced profitability from lower activities in Russia, Angola and the North Sea hampered the income.
However, the unit’s profit increased a significant 30% from the year-ago quarter owing to increased cementing work in the U.S.
Drilling & Evaluation: Revenues at Halliburton’s Drilling and Evaluation business were also in a row with the sequential figure. The figure improved 7% year over year to $3.3 billion. The improvement was driven by higher operations in the Middle East/Asia region.
The segment’s operating income fell 10% from the September quarter and 18% from the year-ago period to $408 million on reduced activities and currency weakness in Russia and Norway.
Balance Sheet
Halliburton’s capital expenditure in the fourth quarter was $999 million, bringing the full-year spending to $3.3 billion. As of Dec 31, 2014, the company had approximately $2.3 billion in cash/cash equivalents and $7.8 billion in long-term debt, representing a debt-to-capitalization ratio of 32.5%.
Challenging Drilling Activity in 2015
Halliburton expects oil prices to remain weak throughout 2015. Hence, the company warned investors that although it came out with solid fourth-quarter and full-year 2014 results, it may face difficulties in drilling activities this year due to the free fall in oil.
Zacks Rank
Halliburton currently carries a Zacks Rank #5 (Strong Sell), implying that to the stock will significantly underperform the broader U.S. equity market over the next one to three months.
A better-ranked player in the energy sector is Seadrill Partners LLC (SDLP), which sports a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment