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001-03492
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No. 75-2677995
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(Commission File Number)
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(IRS Employer Identification No.)
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3000 North Sam Houston Parkway East
Houston, Texas
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77032
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(Address of Principal Executive Offices)
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(Zip Code)
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o
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Halliburton has the broadest portfolio of high-pressure and high-temperature (HP/HT) tools in the industry. Recent contract wins which expand Halliburton’s market position in offshore HP/HT environments include the following:
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Halliburton was awarded several contracts by Statoil to provide services for two HP/HT fields offshore Norway. Halliburton estimates that these significant multi-year awards have the potential to exceed more than $200 million in value. Under these contracts, Halliburton will provide directional drilling, logging-while-drilling, cementing, drilling fluids, and completion equipment and services. Drilling is scheduled to begin in the third quarter of 2011.
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Halliburton was awarded several contracts for equipment and services on two offshore blocks in the South China Sea. This is the first ultra-HP/HT oil and gas drilling project in Asia. This project will push existing technology limits, with required equipment specifications at 250°C and 15,000 psi. Under these contracts, Halliburton will provide several ultra-HP/HT technologies for drilling, completions, cementing, and testing, including two industry-first technologies. The exploration campaign calls for two firm wells and one potential well. Drilling is scheduled to start in the third quarter of 2011.
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Halliburton was awarded a $120 million, three-year contract extension by Chevron Thailand for directional drilling, measurement-while-drilling, and logging-while-drilling services for its ongoing offshore developments in the Gulf of Thailand. The majority of the wells that Halliburton's Sperry Drilling product service line will service are high temperature wells that exceed 150°C (302°F), with some exceeding 200°C (392°F).
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Halliburton has been awarded a contract by Statoil to provide integrated drilling and well services in offshore Norway with options up to eight years in duration with extended scope and activity. Under the first phase of the contract, Halliburton will provide directional drilling services, logging- and measurement-while-drilling services, surface data logging, drill bits, hole enlargement and coring services, cementing and pumping services, drilling and completion fluids, completion services – including multilateral junctions, SmartWell® completion systems and VersaFlex® expandable liner hangers – and project management. This is the first time Statoil has awarded an integrated well services contract in Norway, which includes project management by Halliburton, with the intent to increase efficiency and reduce development costs.
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Halliburton was awarded a contract by Exxon Mobil Iraq Limited to provide drilling services for 15 wells in the West Qurna (Phase I) oil field located in southern Iraq. This is in addition to work awarded in this field by the same customer in 2010. Under this contract, Halliburton will provide a complete range of well construction services, utilizing three drilling rigs to deliver the wells.
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As reported in the Oil and Gas Journal, Halliburton received the No. 1 overall ranking and was named the most sustainable oil/gas full service engineering company by Management and Excellence, a sustainability rating firm. Halliburton earned an AAA ranking through demonstrating quantifiable performance and risk reduction in areas such as energy consumption, earnings per share, and debt. Further, Halliburton was named “Best in Class” among all oil and gas service companies in corporate governance, sustainable management, emissions reductions, and executive remuneration effectiveness. Halliburton’s score registered at 90.4 out of 100 possible points, a 26% increase from the last survey performed in 2009.
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Halliburton announced its plan to build a 200,000-square-foot manufacturing facility in Lafayette, Louisiana. The facility is expected to produce complex machined components for oilfield service operations with state-of-the-art manufacturing equipment, and will support the fast-growing needs of the Western Hemisphere oil and gas industry, including the shale markets. Construction on the new facility is scheduled to begin by July 2011 and to be completed in early 2012.
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Landmark Software and Services, a Halliburton product service line, announced that leading Brazilian exploration and production company, OGX Oil and Gas, will migrate all users of geophysical and geological software applications to the Landmark DecisionSpace® Desktop system. OGX explored and tested the capabilities of the DecisionSpace Desktop technology as part of a Landmark pre-release program launched in early 2010. OGX determined that the software suite greatly enhanced its workflow capabilities with significant improvements in productivity.
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Halliburton announced that it has integrated the drilling capabilities of several product service lines to deliver significant drilling performance gains and save operators millions of dollars in well costs. Halliburton's Optimized Drilling Performance™ approach includes the delivery of a proprietary engineering workflow, an integrated suite of drilling applications that sit on the DecisionSpace® InSite® global infrastructure, and localized, cross-functional teams. Optimized Drilling Performance has already improved production rates and saved thousands of days in drilling time in all of the major basins globally, both in deepwater and on land.
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Three Months Ended
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March 31
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December 31
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2011
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2010
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2010
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||||||||||
| Revenue: | ||||||||||||
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Completion and Production
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$ | 3,172 | $ | 1,964 | $ | 2,985 | ||||||
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Drilling and Evaluation
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2,110 | 1,797 | 2,175 | |||||||||
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Total revenue
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$ | 5,282 | $ | 3,761 | $ | 5,160 | ||||||
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Operating income:
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Completion and Production
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$ | 660 | $ | 238 | $ | 688 | ||||||
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Drilling and Evaluation
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230 | 270 | 354 | |||||||||
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Corporate and other
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(76 | ) | (59 | ) | (62 | ) | ||||||
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Total operating income
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814 | 449 | 980 | |||||||||
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Interest expense, net of interest income of $1, $3, and $2
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(69 | ) | (76 | ) | (69 | ) | ||||||
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Other, net
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(4 | ) | (40 | )(a) | (1 | ) | ||||||
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Income from continuing operations before income taxes
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741 | 333 | 910 | |||||||||
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Provision for income taxes
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(229 | ) | (121 | )(b) | (283 | ) | ||||||
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Income from continuing operations
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512 | 212 | 627 | |||||||||
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Loss from discontinued operations, net
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(1 | ) | (5 | ) | (20 | )(c) | ||||||
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Net income
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$ | 511 | $ | 207 | $ | 607 | ||||||
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Noncontrolling interest in net income of subsidiaries
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– | (1 | ) | (2 | ) | |||||||
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Net income attributable to company
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$ | 511 | $ | 206 | $ | 605 | ||||||
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Amounts attributable to company shareholders:
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Income from continuing operations
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$ | 512 | $ | 211 | $ | 625 | ||||||
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Loss from discontinued operations, net
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(1 | ) | (5 | ) | (20 | )(c) | ||||||
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Net income attributable to company
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$ | 511 | $ | 206 | $ | 605 | ||||||
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Basic income per share attributable to company
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shareholders:
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Income from continuing operations
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$ | 0.56 | $ | 0.23 | $ | 0.69 | ||||||
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Loss from discontinued operations, net
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– | – | (0.02 | )(c) | ||||||||
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Net income per share
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$ | 0.56 | $ | 0.23 | $ | 0.67 | ||||||
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Diluted income per share attributable to company
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shareholders:
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Income from continuing operations
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$ | 0.56 | $ | 0.23 | $ | 0.68 | ||||||
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Loss from discontinued operations, net
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– | – | (0.02 | )(c) | ||||||||
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Net income per share
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$ | 0.56 | $ | 0.23 | $ | 0.66 | ||||||
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Basic weighted average common shares outstanding
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914 | 905 | 910 | |||||||||
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Diluted weighted average common shares outstanding
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919 | 908 | 915 | |||||||||
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(a)
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Includes, among other items, a $31 million non-tax deductible, foreign currency loss associated with the devaluation of the Venezuelan Bolívar Fuerte.
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(b)
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Includes, among other items, $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.
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(c)
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Includes, among other items, a charge of $17 million, after-tax, related to an indemnity payment on behalf of KBR for a settlement agreement reached with the Federal Government of Nigeria.
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March 31
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December 31
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2011
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2010
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Assets
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Current assets:
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Cash and equivalents
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$ | 1,030 | $ | 1,398 | ||||
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Receivables, net
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4,132 | 3,924 | ||||||
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Inventories, net
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2,099 | 1,940 | ||||||
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Investments in marketable securities
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852 | 653 | ||||||
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Other current assets
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915 | 971 | ||||||
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Total current assets
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9,028 | 8,886 | ||||||
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Property, plant, and equipment, net
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7,248 | 6,842 | ||||||
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Goodwill
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1,323 | 1,315 | ||||||
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Other assets
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1,391 | 1,254 | ||||||
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Total assets
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$ | 18,990 | $ | 18,297 | ||||
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Liabilities and Shareholders’ Equity
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Current liabilities:
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Accounts payable
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$ | 1,372 | $ | 1,139 | ||||
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Accrued employee compensation and benefits
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637 | 716 | ||||||
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Other current liabilities
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910 | 902 | ||||||
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Total current liabilities
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2,919 | 2,757 | ||||||
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Long-term debt
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3,824 | 3,824 | ||||||
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Other liabilities
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1,307 | 1,329 | ||||||
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Total liabilities
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8,050 | 7,910 | ||||||
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Company’s shareholders’ equity
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10,924 | 10,373 | ||||||
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Noncontrolling interest in consolidated subsidiaries
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16 | 14 | ||||||
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Total shareholders’ equity
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10,940 | 10,387 | ||||||
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Total liabilities and shareholders’ equity
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$ | 18,990 | $ | 18,297 | ||||
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Three Months Ended
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March 31
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2011
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2010
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Cash flows from operating activities:
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Net income
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$ | 511 | $ | 207 | ||||
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Adjustments to reconcile net income to net cash from operations:
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Depreciation, depletion, and amortization
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320 | 261 | ||||||
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Payments related to KBR TSKJ matters
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– | (47 | ) | |||||
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Other, primarily working capital
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(266 | ) | (104 | ) | ||||
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Total cash flows from operating activities
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565 | 317 | ||||||
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Cash flows from investing activities:
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Capital expenditures
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(704 | ) | (404 | ) | ||||
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Purchases of marketable securities
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(501 | ) | (500 | ) | ||||
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Sales of marketable securities
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300 | – | ||||||
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Other
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(12 | ) | (66 | ) | ||||
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Total cash flows from investing activities
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(917 | ) | (970 | ) | ||||
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Cash flows from financing activities:
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Payments of dividends to shareholders
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(82 | ) | (81 | ) | ||||
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Other
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73 | 44 | ||||||
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Total cash flows from financing activities
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(9 | ) | (37 | ) | ||||
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Effect of exchange rate changes on cash
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(7 | ) | (9 | ) | ||||
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(Decrease) in cash and equivalents
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(368 | ) | (699 | ) | ||||
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Cash and equivalents at beginning of period
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1,398 | 2,082 | ||||||
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Cash and equivalents at end of period
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$ | 1,030 | $ | 1,383 | ||||
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Three Months Ended
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March 31
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December 31
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Revenue by geographic region:
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2011
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2010
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2010
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Completion and Production:
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North America
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$ | 2,221 | $ | 1,125 | $ | 1,918 | ||||||
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Latin America
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240 | 202 | 217 | |||||||||
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Europe/Africa/CIS
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401 | 385 | 516 | |||||||||
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Middle East/Asia
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310 | 252 | 334 | |||||||||
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Total
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3,172 | 1,964 | 2,985 | |||||||||
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Drilling and Evaluation:
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North America
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761 | 579 | 713 | |||||||||
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Latin America
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372 | 293 | 382 | |||||||||
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Europe/Africa/CIS
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510 | 535 | 550 | |||||||||
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Middle East/Asia
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467 | 390 | 530 | |||||||||
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Total
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2,110 | 1,797 | 2,175 | |||||||||
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Total revenue by region:
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North America
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2,982 | 1,704 | 2,631 | |||||||||
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Latin America
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612 | 495 | 599 | |||||||||
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Europe/Africa/CIS
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911 | 920 | 1,066 | |||||||||
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Middle East/Asia
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777 | 642 | 864 | |||||||||
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Operating income (loss) by geographic region
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(excluding Corporate and other):
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Completion and Production:
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North America
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$ | 614 | $ | 137 | $ | 518 | ||||||
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Latin America
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36 | 29 | 24 | |||||||||
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Europe/Africa/CIS
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(26 | ) | 39 | 94 | ||||||||
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Middle East/Asia
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36 | 33 | 52 | |||||||||
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Total
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660 | 238 | 688 | |||||||||
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Drilling and Evaluation:
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North America
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118 | 93 | 114 | |||||||||
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Latin America
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40 | 17 | 54 | |||||||||
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Europe/Africa/CIS
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22 | 91 | 73 | |||||||||
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Middle East/Asia
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50 | 69 | 113 | |||||||||
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Total
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230 | 270 | 354 | |||||||||
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Total operating income (loss) by region:
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North America
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732 | 230 | 632 | |||||||||
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Latin America
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76 | 46 | 78 | |||||||||
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Europe/Africa/CIS
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(4 | ) | 130 | 167 | ||||||||
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Middle East/Asia
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86 | 102 | 165 | |||||||||
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Items Included in Operating Income
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(Millions of dollars except per share data)
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(Unaudited)
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Three Months Ended
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Three Months Ended
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Three Months Ended
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March 31, 2011
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March 31, 2010
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December 31, 2010
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Operating
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After Tax
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Operating
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After Tax
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Operating
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After Tax
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Income
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per Share
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Income
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per Share
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Income
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per Share
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Completion and Production:
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Europe/Africa/CIS
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Libya reserve
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$ | (36 | ) | $ | (0.03 | ) | $ | – | $ | – | $ | – | $ | – | ||||||||||
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Drilling and Evaluation:
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Europe/Africa/CIS
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Libya reserve
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(23 | ) | (0.02 | ) | – | – | – | – | ||||||||||||||||
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By Segment and Geographic Region
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(Millions of dollars)
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(Unaudited)
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Three Months Ended
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March 31
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December 31
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Adjusted operating income by geographic region: (a) (b)
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2011
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2010
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2010
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Completion and Production:
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North America
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$ | 614 | $ | 137 | $ | 518 | ||||||
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Latin America
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36 | 29 | 24 | |||||||||
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Europe/Africa/CIS
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10 | 39 | 94 | |||||||||
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Middle East/Asia
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36 | 33 | 52 | |||||||||
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Total
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696 | 238 | 688 | |||||||||
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Drilling and Evaluation:
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North America
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118 | 93 | 114 | |||||||||
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Latin America
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40 | 17 | 54 | |||||||||
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Europe/Africa/CIS
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45 | 91 | 73 | |||||||||
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Middle East/Asia
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50 | 69 | 113 | |||||||||
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Total
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253 | 270 | 354 | |||||||||
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Adjusted operating income by region:
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North America
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732 | 230 | 632 | |||||||||
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Latin America
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76 | 46 | 78 | |||||||||
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Europe/Africa/CIS
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55 | 130 | 167 | |||||||||
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Middle East/Asia
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86 | 102 | 165 | |||||||||
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Corporate and other
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(76 | )(c) | (59 | ) | (62 | ) | ||||||
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Total adjusted consolidated operating income
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873 | 449 | 980 | |||||||||
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(a)
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Management believes that operating income adjusted for a charge to recognize doubtful accounts receivable with the Libyan national oil companies and inventory that we believe has been compromised in the unrest is useful to investors to assess and understand operating performance, especially when comparing current results with previous periods or forecasting performance for future periods, primarily because management views the excluded item to be outside of the Company’s normal operating results. Management analyzes operating income without the impact of the Libya reserve as an indicator of ongoing operating performance, to identify underlying trends in the business, and to establish segment and region operational goals. The adjustment removes the effect of the expense.
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(b)
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Adjusted operating income for each segment and region is calculated as: “Operating income” less “Items Included in Operating Income.”
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(c)
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“Corporate and other” includes $11 million of expense associated with strategic investments in the Company’s business model to lower service delivery costs in North America and reposition supply chain, manufacturing, and technology infrastructure to support projected international growth.
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-more-
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Three Months Ended
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March 31, 2011
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As reported net income attributable to company
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$ | 511 | ||
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Libya reserve, net of tax (a)
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46 | |||
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Adjusted net income attributable to company (a)
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$ | 557 | ||
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As reported diluted weighted average common shares outstanding
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919 | |||
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As reported net income per diluted share (b)
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$ | 0.56 | ||
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Adjusted net income per diluted share (b)
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$ | 0.61 | ||
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(a)
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Management believes that net income adjusted for a charge to recognize doubtful accounts receivable with the Libyan national oil companies and inventory that we believe has been compromised in the unrest is useful to investors to assess and understand operating performance, especially when comparing current results with previous periods or forecasting performance for future periods, primarily because management views the excluded item to be outside of the Company’s normal operating results. Management analyzes net income without the impact of the Libya reserve as an indicator of performance, to identify underlying trends in the business, and to establish operational goals. The adjustment removes the effect of the expense. Adjusted net income is calculated as: “As reported net income attributable to company” plus “Libya reserve, net of tax.”
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(b)
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As reported net income per diluted share is calculated as: “As reported net income attributable to company” divided by “As reported diluted weighted average common shares outstanding.” Adjusted net income per diluted share is calculated as: “Adjusted net income attributable to company” divided by “As reported diluted weighted average common shares outstanding.”
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Three Months Ended
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March 31, 2011
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As reported operating income (loss) by geographic region:
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Latin America
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$ | 76 | ||
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Europe/Africa/CIS
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(4 | ) | ||
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Middle East/Asia
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86 | |||
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International operating income
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$ | 158 | ||
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Libya reserve (a)
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59 | |||
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Adjusted international operating income (a)
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$ | 217 | ||
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As reported revenue by geographic region:
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Latin America
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$ | 612 | ||
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Europe/Africa/CIS
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911 | |||
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Middle East/Asia
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777 | |||
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As reported international revenue
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$ | 2,300 | ||
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Adjusted international operating margin (a) (b)
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9 | % | ||
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(a)
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Management believes that international operating income and margin adjusted for a charge to recognize doubtful accounts receivable with the Libyan national oil companies and inventory that we believe has been compromised in the unrest is useful to investors to assess and understand operating performance, especially when comparing current results with previous periods or forecasting performance for future periods, primarily because management views the excluded item to be outside of the Company’s normal operating results. Management analyzes international operating income and margin without the impact of the Libya reserve as an indicator of ongoing performance, to identify trends in the business, and to establish regional operational goals. The adjustment removes the effect of the expense.
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(b)
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Adjusted international operating margin is calculated as: “Adjusted international operating income” divided by “As reported international revenue.”
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-more-
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###
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SIGNATURES
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HALLIBURTON COMPANY
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Date: April 19, 2011
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By:
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/s/ Bruce A. Metzinger |
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Bruce A. Metzinger
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Assistant Secretary
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