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Omega Advisors exits position in Halliburton

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Omega Advisors and Halliburton

Omega Advisors has exited its position in Halliburton (HAL) as per the fund’s 13F filings for 4Q14. The stock contributed 1.81%, or $122 million, of the total hedge fund portfolio for 3Q14. You can gain exposure to Halliburton by investing in the Energy Select Sector SPDR Fund (XLE) and the iShares Dow Jones US Energy ETF (IYE). Halliburton accounts for 2.77% of XLE and 2.15% of IYE.

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Overview of Halliburton

Halliburton Company provides services related to the exploration, development, and production of oil and natural gas to companies in 80 countries. The company serves the upstream oil and gas industry. Halliburton has two divisions:

  • Completion and Production
  • Drilling and Evaluation

Halliburton operates in the following geographic segments:

  • North America
  • Latin America
  • Europe, Africa, and CIS (or Commonwealth of Independent States)
  • Middle East and Asia

The company expects the North American market to be volatile for a few quarters as a result of declining oil prices. Halliburton also anticipated headwinds in all of its international regions.

Halliburton to acquire Baker Hughes for $34.6 billion

In November, Halliburton agreed to acquire its major competitor, Baker Hughes (BHI). Halliburton expects to achieve $2 billion in annual cost synergies after completing the deal.

According to the company’s management, the acquisition will add to HAL’s cash flow “by the end of the first year after closing.”

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Halliburton to lay off over 5000 employees

Halliburton announced that it would lay off 5,000 to 6,500 employees apart from its acquisition of Baker Hughes. This decision came about due to declining oil and gas exploration and production activity amid falling oil prices. These job cuts would account for 6.55% to 8.5% of Halliburton’s total workforce.

HAL declares 4Q14 and full-year results

For the fourth quarter of 2014, Halliburton reported revenue of $8.8 billion compared to $8.7 billion for the previous quarter. The 10% revenue increase in the Middle East and Asia segment and the 3% increase in the Latin America segment was offset by the flat revenue in North America and the 8% decline in the Europe, Africa, and CIS segment.

Net income was up 13.6% on a YoY (year-over-year) basis to $901 million or $1.06 per share. Adjusted net income was $1 billion or $1.19 per share. The company took $129 million in restructuring charges in anticipation of an activity decline in 2015.

Halliburton’s revenue was up 12% from 2013 to $32.9 billion. Increased stimulation activity in the United States land market and Macondo-related items drove this growth. The North America segment reported a record revenue increase of 16%.

In 2014, Halliburton returned 33% of operations cash flow to its shareholders. On February 13, the company declared a quarterly dividend of $0.18 per share. This was in line with the previous dividends.

Omega Advisors’ holdings

The hedge fund started new positions in Time Warner (TWX) and Gilead Sciences (GILD), while it sold its positions in Sprint (S), Thermo Fisher Scientific (TMO), and Halliburton (HAL). Omega Advisors increased its position in Ashland (ASH) and Groupon (GRPN). The fund decreased its position in Chimera Investment Group (CIM), JP Morgan Chase (JPM), and Apple (AAPL).

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