Why Halliburton’s 4Q16 Improvements Still Couldn’t Beat Last Year’s Performance


Jan. 25 2017, Updated 7:38 a.m. ET

Drilling and Evaluation segment performance

From 4Q15 to 4Q16, Halliburton’s (HAL) D&E (Drilling and Evaluation) segment’s revenue fell 22%. In operating income, the D&E segment fell 41% YoY (year-over-year) in 4Q16, primarily due to low rig count.

On a quarter-over-quarter basis, the D&E segment registered a 5.8% revenue rise, due to higher drilling activity in North America onshore, and increased earnings from consulting and project management activity in some parts of Africa.

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Completion and Production segment performance

From 4Q15 to 4Q16, the C&P (Completion and Production) segment revenue fell ~20%. The C&P segment’s operating income fell 41% YoY in 4Q16. This was primarily due to the effect of seasonality in pipeline and process services in many regions where HAL operates, reduced cementing activity in some parts of Europe and Asia, and fewer completion tool sales in Europe, Africa, and the CIS (Commonwealth of Independent States) region.

However, on a quarter-over-quarter basis, the C&P segment registered a 4% revenue rise, due to stronger utilization of HAL’s products in North America, and higher completion tools sales in the Gulf of Mexico offshore market.

What affected HAL’s 2016 performance?

In fiscal 2016, Halliburton’s revenues fell 33% YoY to $15.9 billion. Its reported net loss deteriorated to $5.7 billion in 2016, as compared to $671 million net loss in 2015. In 2016, Halliburton’s bottom line was negatively affected by the following:

  • ~$4.1 billion pre-tax Baker Hughes termination related costs
  • ~$2.6 billion impairment charges (pre-tax)

Notably, Halliburton makes up 0.22% of the iShares S&P 500 ETF (IVE).

Now let’s discuss Halliburton’s returns.


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