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Which of Halliburton’s Segments Have Weakened the Most?

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Dec. 20 2016, Updated 10:36 a.m. ET

Halliburton’s operating income

In the previous part of this series, we discussed Halliburton’s (HAL) revenues. In terms of operating income, HAL’s Drilling and Evaluation (or D&E) segment fell 62% in 3Q16 over 3Q15 due primarily to low rig count, lower pricing for HAL’s products and services, and upstream producers’ budget cuts.

The Completion and Production (or C&P) segment’s operating income fell 85% in 3Q16 over 3Q15, which was primarily due to decreased pressure pumping services revenue, lower activity in the Gulf of Mexico, and lower completion tool sales in Nigeria. Higher United States land stimulation activity partially mitigated these negative effects.

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What affected Halliburton’s reported earnings?

In the first nine months of 2016, Halliburton’s reported net loss deteriorated to $5.6 billion compared to a $643 million net loss in the first nine months of 2015. Halliburton’s bottom line was negatively affected by the following factors:

  • ~$4.0 billion pre-tax Baker Hughes termination-related costs
  • ~$3.2 billion impairment and other charges (pre-tax)

By comparison, Schlumberger’s (SLB) net loss was ~$1.5 billion, while Baker Hughes’s (BHI) net loss was $2.3 billion in the first nine months of 2016. Nabors Industries’ (NBR) net loss was $694 million during the same period. Halliburton makes up 0.46% of the iShares S&P 500 ETF (IVE).

Next, we’ll discuss Halliburton’s indebtedness.

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