Overview: Halliburton’s completion and production segment

By

Updated

Halliburton’s completion and production segment

Halliburton Company’s (HAL) completion and production segment offers production enhancement services, cementing services, and well completion products and services.

The segment provides hydraulic fracturing services to the shale natural gas producers and the shale oil producers. Hydraulic fracturing is a well boring technique applied to rock formation and moves oil or gas through rock pores to the production wells.

This segment also provides well intervention services, pressure control, equipment rental tools and services, and pipeline and process services.

Why revenue increased in the completion and production segment

During the second quarter of 2014 (or 2Q14), HAL’s completion and production segment revenues increased ~13% from $4.3 billion recorded in the second quarter of 2013 (or 2Q13) to $4.9 billion.

Higher stimulation activity in the U.S. land rigs and in HAL’s international operations drove the growth.

In Europe and Africa, the segment witnessed a growth of 10%. In the Middle East, the segment’s revenue increased by 13%. This rise in revenue was partially offset by Canadian spring breakup. Drill activity typically goes down during this period in Canada.

Why the operating margin improved for the segmentCompletion and Production operating income

Operating income for the segment increased 21% to $887 million in 2Q14 from $732 million recorded a year ago. Operating income margin increased to ~18% in 2Q14 from 16.8% in 2Q13.

Operating income for the segment increased the most in HAL’s North American operations due to higher land rig activity. In addition, the company also recorded higher profits from the Europe, Africa, CIS (“Commonwealth of Independent States”) region and also in the Middle East, Asia region.

Higher rig activity in Russia and Europe were the primary contributors to the higher operating income. However, the segment also witnessed flat to deteriorating income from Venezuela in Latin America and Angola in Africa.

Key ETFs

HAL is a component of the VanEck Vectors Oil Services ETF (OIH) and Energy Select Sector SPDR Fund (XLE). Other companies in this industry that are components of OIH include Weatherford International plc (WFT) and Baker Hughes Incorporated (BHI).

Article continues below advertisement
Advertisement

More From Market Realist