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Is Halliburton’s Post-4Q17 Free Cash Flow a Concern?

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Halliburton’s operating cash flow

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Halliburton’s free cash flow

Between 4Q16 and 4Q17, HAL’s capital expenditure increased 1.5x. With higher capex and lower CFO, Halliburton saw its FCF (free cash flow) fall 35% to $572 million from $886 million. Halliburton’s FCF has been positive in nine of the past 13 quarters.

Halliburton’s capex plans 

In 2017, Halliburton had capex of nearly $1.4 billion. During 2017, HAL acquired Summit ESP, Ingrain, and Optimization Petroleum Technology, paying a total of ~$630 million in 3Q17 for the acquisitions.

In Halliburton’s 4Q17 earnings call, management stated that it expects “capital expenditures to be approximately in line with our depreciation and amortization expense in 2018.” It added that “this CapEx guidance includes deployment of new Sperry Drilling tools and the continued investment in our artificial lift and production chemical product lines and industry-leading pressure pumping fleet.” Next, we’ll discuss Halliburton’s dividends and dividend yields.

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