Performance of Halliburton’s Completion and Production segment
From 1Q16 to 1Q17, revenue for Halliburton’s (HAL) Completion and Production (or C&P) segment rose 12.0%. The segment improved a phenomenal 3.9x in operating income in 1Q17 over 1Q16, primarily due to better pricing in its US onshore pressure pumping business. Halliburton makes up 0.19% of the iShares S&P 500 Value (IVE).
On a quarter-over-quarter basis, the C&P segment registered a 15.0% rise in revenue due to increased drilling activity and higher utilization in North America onshore. However, a seasonal fall in completion tool sales across the Eastern Hemisphere partially offset the segment’s growth.
Performance of Halliburton’s Drilling and Evaluation segment
From 1Q16 to 1Q17, revenue for Halliburton’s Drilling and Evaluation (or D&E) segment fell ~11.0%. The segment’s operating income also fell a huge 49.0% in 1Q17 over 1Q16. That was primarily due to lower software sales, lower pricing, and fewer fluid sales in the Middle East.
On a quarter-over-quarter basis, the D&E segment registered a 4.0% fall in revenue. Improved fluid sales and higher project management activity in Mexico partially offset the negative factors affecting the segment.
HAL makes up 0.20% of the SPDR S&P 500 ETF (SPY). SPY tracks the price and yield performances of the S&P 500 Index (SPX-INDEX), which tracks 500 top companies. The energy sector makes up 6.6% of SPX-INDEX. The index rose 14.0% in the past year compared to a 17.0% rise in HAL stock.
Positives in Halliburton’s performance
Let’s look now at what’s positive about Halliburton’s performance:
- strong US onshore operations leading to higher pressure pumping and well construction product sales
- higher revenue from Latin America due primarily to increased activity in well completion and fluid services
Negatives in Halliburton’s performance
Now let’s see what’s negative about Halliburton’s performance:
- reduced pricing and lower activity in the Middle East and Asia
- fall in revenue from Europe, Africa, and CIS (Commonwealth of Independent States)
In the next part of this series, we’ll look at Halliburton’s returns.