Item 2.02. Results of Operations and Financial Condition
On January 24, 2022, registrant issued a press release entitled "Halliburton
Announces Fourth Quarter 2021 Results and Increases Dividend."
The text of the Press Release is as follows:
HALLIBURTON ANNOUNCES FOURTH QUARTER 2021 RESULTS AND INCREASES DIVIDEND
•Reported net income of $0.92 per diluted share
•Adjusted net income of $0.36 per diluted share
•Cash flow from operating activities of $682 million and free cash flow of $478
million
•First quarter dividend of $0.12 per share
HOUSTON - January 24, 2022 - Halliburton Company (NYSE: HAL) announced today net
income of $824 million, or $0.92 per diluted share, for the fourth quarter of
2021. This compares to net income for the third quarter of 2021 of $236 million,
or $0.26 per diluted share. Adjusted net income for the fourth quarter of 2021,
excluding tax adjustments, was $320 million, or $0.36 per diluted share. This
compares to adjusted net income for the third quarter of 2021, excluding special
items, of $248 million, or $0.28 per diluted share. Halliburton's total revenue
for the fourth quarter of 2021 was $4.3 billion compared to revenue of $3.9
billion in the third quarter of 2021. Reported operating income was $550 million
in the fourth quarter of 2021 compared to reported operating income of
$446 million in the third quarter of 2021. Reported operating income of $550
million in the fourth quarter of 2021 increased 20% compared to adjusted
operating income of $458 million in the third quarter of 2021, excluding special
items.
Total revenue for the full year of 2021 was $15.3 billion, an increase of $850
million, or 6% from 2020. Reported operating income for 2021 was $1.8 billion,
compared to reported operating loss of $2.4 billion and adjusted operating
income of $1.4 billion for 2020, excluding impairments and other charges.
"I am pleased with our solid execution in the fourth quarter and for the full
year. Both operating divisions experienced revenue growth in the international
and North America markets. Our Completion and Production division delivered
solid mid-teens margins, and our Drilling and Evaluation division margins
surprised to the upside," commented Jeff Miller, Chairman, President and CEO.
"Today's announcements of the dividend increase and debt retirement demonstrate
my confidence in our business, customers, employees, and value proposition.
"I am excited about the accelerating multi-year upcycle. I expect the macro
industry environment to remain supportive and the international and North
America markets to continue their simultaneous growth.
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"Halliburton uniquely benefits from this constructive environment. Our value
proposition works, we have the right strategies for both international and North
America markets, we are leaders in digital and automation, and we drive capital
efficiency while advancing a sustainable energy future. I fully expect that
Halliburton will accelerate cash flow generation, strengthen our balance sheet,
and increase cash returns to shareholders in this upcycle," concluded Miller.
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Operating Segments
Completion and Production
Completion and Production revenue in the fourth quarter of 2021 was $2.4
billion, an increase of $220 million, or 10%, when compared to the third quarter
of 2021, while operating income was $347 million, an increase of $25 million, or
8%. These results were driven by higher completion tool sales globally, as well
as increased pressure pumping services in North America land and the Middle
East/Asia region. These improvements were partially offset by reduced
stimulation activity in Latin America, Canada, and the Gulf of Mexico, lower
pipeline services in Europe/Africa/CIS and Asia, reduced well intervention
services in Brazil, and decreased artificial lift activity in North America
land.
Drilling and Evaluation
Drilling and Evaluation revenue in the fourth quarter of 2021 was $1.9 billion,
an increase of $197 million, or 11%, when compared to the third quarter of 2021,
while operating income was $269 million, an increase of $83 million, or 45%.
These results were due to increased drilling-related services globally, wireline
sales in Guyana, improved project management activity in Ecuador and India,
increased wireline activity in the Middle East/Asia region, and higher software
sales in Latin America and Middle East/Asia. Partially offsetting these
increases were decreased project management activity and testing services in
Mexico, as well as lower drilling-related activity in Russia.
Geographic Regions
North America
North America revenue in the fourth quarter of 2021 was $1.8 billion, a 10%
increase when compared to the third quarter of 2021. This increase was primarily
driven by higher pressure pumping activity and drilling-related services in
North America land, in addition to higher completion tool sales and fluid
services in the Gulf of Mexico. These increases were partially offset by reduced
stimulation activity in Canada and the Gulf of Mexico, coupled with reduced
artificial lift activity in North America land.
International
International revenue in the fourth quarter of 2021 was $2.5 billion, an 11%
increase when compared to the third quarter of 2021. This improvement was
primarily driven by higher completion tool sales and software sales in all
regions, increased activity across multiple product service lines in Norway,
Brazil, and Egypt, increased well construction services and wireline activity in
the Middle East/Asia region, improved project management activity in Ecuador and
India, as well as increased drilling-related services in Mexico. Partially
offsetting these increases were reduced activity in Russia, Mexico, and Vietnam.
Latin America revenue in the fourth quarter of 2021 was $669 million, a 7%
increase sequentially. This improvement was driven by improved project
management activity in Ecuador, increased drilling-related services in Mexico,
increased activity across multiple
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product service lines in Brazil, wireline sales in Guyana, and higher activity
across multiple product service lines in Colombia. These increases were
partially offset by reduced project management activity, stimulation activity,
and testing services in Mexico.
Europe/Africa/CIS revenue in the fourth quarter of 2021 was $730 million, an 8%
increase sequentially. Higher software and completion tool sales across the
region, improved activity across multiple product service lines in Norway and
Egypt, and increased well control activity in Nigeria were partially offset by
reduced activity in multiple product service lines in Russia, reduced pipeline
services and well construction activity in the United Kingdom, and decreased
stimulation activity in the Congo.
Middle East/Asia revenue in the fourth quarter of 2021 was $1.1 billion, a 16%
increase sequentially, resulting from higher completion tool sales and wireline
activity across the region, improved well construction services in Saudi Arabia
and Oman, higher software sales in Kuwait and China, improved project management
activity in India, and increased stimulation activity throughout Asia. These
increases were partially offset by reduced pipeline services in Asia, along with
lower activity across multiple product service lines in Vietnam.
Other Financial Items
•Halliburton recognized a $409 million tax benefit, which included a gain of
approximately $500 million due to the partial release of a valuation allowance
on our deferred tax assets. This reversal is based on improved market conditions
and reflects the Company's expectation to utilize these deferred tax assets.
•Halliburton's board of directors has declared a 2022 first quarter dividend of
twelve cents ($0.12) a share on the Company's common stock payable on March 23,
2022, to shareholders of record at the close of business on March 2, 2022.
Selective Technology & Highlights
•Halliburton and VoltaGrid LLC announced a multi-year contract with Aethon
Energy to deploy an advanced, all-electric fracturing solution in the
Haynesville Shale. The solution combines Halliburton's all-electric fracturing
spread, featuring the Zeus™ 5,000 horsepower electric pumping unit, with
VoltaGrid's power generation system to offer increased reliability and real-time
emissions tracking.
•Halliburton announced the successful deployment of Landmark's Digital Well
Program® as a core component of BP's Well Design Optimizer project. The Well
Design Optimizer streamlines and automates the well planning process to empower
users to optimize well designs for placement and production. The solution uses
Landmark's Digital Well Program®, a DecisionSpace® 365 cloud application, which
combines planning and design processes on a single and open platform to
transform how wells are constructed and delivered.
•Halliburton released DS365.ai cloud service to help customers accelerate their
digital transformation with intelligent automation. DS365.ai delivers industry
specific artificial intelligence (AI) and machine learning (ML) models to
enhance productivity,
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operational efficiency, and increase asset value. DS365.ai runs on the OSDU™
Data Platform and uses the interoperable and scalable architecture of iEnergy®
Cloud. This allows citizen scientists, data engineers, and data scientists to
design, develop, and deploy AI models at scale. Users can rapidly train
pre-built ML models, or create and deploy solutions to enhance subsurface,
drilling, and production workflows. Users can consume these models as standalone
microservices, or in DS365.ai applications such as Assisted Lithology
Interpretation, Seismic Engine, and Real-Time Well Engineering.
•Halliburton announced it signed an agreement with Teck Resources Limited to
grant Teck access to Neftex® Predictions to support their global mineral
exploration efforts. Teck is one of Canada's leading mining companies and is
committed to responsible mining and mineral development with major business
units focused on copper, zinc, and steelmaking coal as well as investments in
energy assets with operations in Canada, the United States, Chile, and Peru.
Neftex®Predictions from Halliburton Landmark provides geoscience context,
knowledge, and insight and delivers the most comprehensive, integrated
geological framework for subsurface evaluation and risk assessment. The
integrated infrastructure for subsurface prediction delivers a complete
understanding of key geological features that guide mineral exploration.
•Cairn Oil & Gas, India's largest private oil and gas exploration and production
company, signed a Memorandum of Understanding (MoU) with Halliburton. Under the
MoU, Halliburton will work with Cairn to increase its recoverable reserves from
offshore assets to 300 mmboe - a 10-fold increase from the present cumulative
total of 30 mmboe. This announcement follows Cairn's commitment of doubling its
capacity, contributing 50% to India's domestic crude production, and assisting
the country in its goal to achieve energy autonomy.
•Halliburton released iCruise X™ Intelligent Rotary Steerable System, the next
generation of the drilling platform targeted to longer, harsher applications to
deliver precise well placement and reduced well time. Halliburton built the tool
around a robust mechanical design to deliver some of the highest specifications
in the industry. The iCruise X is equipped with an advanced steering head fit
for greater durability in operations with variable fluid conditions and in
fluids with high solids content. It delivers in high temperature environments
and provides more power for steering. Halliburton designed the iCruise X
steering section with the latest metallurgy and design techniques. The collar
includes new connections to better resist torsional oscillation and cyclical
bending at higher doglegs. The extra force available for steering delivers
geologically complex wells and curves faster and provides a stiffer assembly for
straight well sections.
•Halliburton announced it has been named to the Dow Jones Sustainability Index
(DJSI) North America, which highlights the top 10% most sustainable companies
per industry. The DJSI measures the performance of best-in-class companies
selected using environmental, social and governance (ESG) criteria. Halliburton
ranked in the 90th percentile among its peers in the Dow Jones Corporate
Sustainability Assessment and received high scores in code of business conduct,
policy influence, risk & crisis management, corporate citizenship &
philanthropy, and human capital development categories.
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•Halliburton Labs announced it selected a new group of companies to participate
in its collaborative environment where entrepreneurs, academics, and investors
come together to advance cleaner, affordable energy. By joining Halliburton
Labs, Helix Power, Icarus RT, SolvCor, and Strayos will gain access to
industrial capabilities, technical expertise, and mentorship to scale their
respective businesses.
•The 26th annual Halliburton Charity Golf Tournament raised $2.6 million for
over 75 U.S. nonprofit organizations, once again making it one of the largest
non-PGA golf tournament fundraisers. The tournament has raised more than $25
million for charities since it started in 1993.
About Halliburton
Founded in 1919, Halliburton is one of the world's largest providers of products
and services to the energy industry. With more than 40,000 employees,
representing 130 nationalities in more than 70 countries, the company helps its
customers maximize value 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
throughout the life of the asset. Visit the Company's website at
www.halliburton.com. Connect with Halliburton on Facebook, Twitter, LinkedIn,
Instagram and YouTube.
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Forward-looking Statements
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: the impact of COVID-19 and any
variants, the related economic repercussions and resulting negative impact on
demand for oil and gas, operational challenges relating to COVID-19 and efforts
to mitigate the spread of the virus, including logistical challenges, protecting
the health and well-being of our employees, performance of contracts and supply
chain disruptions; the ability of the OPEC+ countries to agree on and comply
with production quotas; the continuation or suspension of our stock repurchase
program, the amount, the timing, and the trading prices of Halliburton common
stock, and the availability and alternative uses of cash; changes in the demand
for or price of oil and/or natural gas; potential catastrophic events related to
our operations, and related indemnification and insurance matters; protection of
intellectual property rights and against cyber-attacks; compliance with
environmental laws; changes in government regulations and regulatory
requirements, particularly those related to oil and natural 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, foreign exchange rates and controls,
international trade and regulatory controls and sanctions, 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, and the resulting impact
on our liquidity; execution of long-term, fixed-price contracts; structural
changes and infrastructure issues in the oil and natural gas industry;
maintaining a highly skilled workforce; availability and cost of raw materials;
agreement with respect to and completion of potential dispositions, acquisitions
and integration and success of acquired businesses and operations of joint
ventures. Halliburton's Form 10-K for the year ended December 31, 2020, Form
10-Q for the quarter ended September 30, 2021, recent Current Reports on Form
8-K and other Securities and Exchange Commission 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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