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A Peek at Halliburton’s Post-3Q17 Net Debt

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Dec. 11 2017, Updated 10:31 a.m. ET

Halliburton’s net debt

In 3Q17, Halliburton’s (HAL) total debt fell 11% from the year prior, while its cash and marketable securities fell 42%. Its net debt remained at ~$9.0 billion. Despite a decrease in total debt, a steep decline in cash and marketable securities prevented any sharp fall in HAL’s net debt.

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Is HAL’s credit rating changing?

Moody’s maintained Halliburton’s “Baa1” long-term debt rating in 3Q17, suggesting it is subject to moderate credit risk. During 1Q17, HAL redeemed $1.4 billion in debt through early extinguishment, improving its credit profile.

Net debt for Halliburton’s peers

While Fairmount Santrol’s (FMSA) net debt was $606 million at the end of 3Q17, McDermott International’s (MDR) was $124 million. Halliburton makes up 2.9% of the iShares North American Natural Resources ETF (IGE). Since September 29, 2017, IGE has risen 1%, while Halliburton stock has fallen 5%.

Halliburton’s indebtedness

Halliburton’s trailing-12-month net-debt-to-adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) ratio rose 4% to ~3.6x between 3Q16 through 3Q17. Although Halliburton’s net debt fell, its EBITDA fell more, leading to slightly higher indebtedness in 3Q17. Next, we’ll discuss Halliburton’s free cash flow.

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