uploads/2015/10/9M15-net-incoe1.jpg

Analyzing Halliburton’s 9M15 Performance

By

Updated

Halliburton’s 9M15 revenues

After analyzing Halliburton’s (HAL) 3Q15 financial results, we will now discuss Halliburton’s 9M15 performance in this article, covering the nine months from January–September 2015. The company recorded total revenues of $18.55 billion for 9M15, down 23% from $24.1 billion recorded in 9M14.

During 9M15, the company’s North American upstream E&P (exploration and production) operations slowed down. During the first nine months of 2015, 1,016 crude oil and natural gas rigs were idled—that’s down nearly 56%.

Year-over-year, North America revenues declined by 33% in 9M15 against an 11.5% decrease in Halliburton’s revenues from all its remaining international operations put together. In HAL’s Middle East–Asia region, in particular, the company’s revenues remaining unchanged between 9M14–9M15.

Article continues below advertisement

Halliburton’s YTD net income

Halliburton’s year-to-date (or YTD) net income swung to a loss of $643 million, compared to $2.60 billion net income a year ago. With respect to its geographical regions, the company’s 9M15 operating income decreased mostly in its North American operations. There, it declined by 82% over 9M14. On the other hand, HAL’s Middle East–Asia region did well, rising by 20% during the same period.

Halliburton’s 9M15 net income margin also deteriorated to -3.5% from 10.8% in 9M14. In 9M15, it recorded $2.1 billion pretax impairment and other charges. No such charges were recorded in 9M14.

More divestiture opportunities for Halliburton

In September 2015, Halliburton (HAL) and Baker Hughes (BHI) announced that they would sell additional businesses in connection with the pending Halliburton–Baker Hughes merger. For more on Halliburton’s recent asset sales. please refer to Halliburton’s Asset Sales and Cash Flows.

Dave Lesar, Halliburton’s chairman and chief executive officer commented, “But let me remind you, as we approach the finish line on the Baker Hughes acquisition, we continue to maintain North American infrastructure well beyond current market needs, incurring a cost which we would have otherwise eliminated. This cost impacted North America margins by approximately 400 basis points in the third quarter.”

If the company is able to sell its assets, its cash position should increase. By the end of 9M15, HAL’s cash and cash equivalents equalled $2.25 billion, nearly unchanged from the beginning of 2015. Halliburton accounts for 2.1% of the Vanguard Energy ETF (VDE).

Next, we will discuss analyst recommendations on Halliburton.

Advertisement

More From Market Realist