Halliburton Sees Another Year of Record Growth in 2014, Readies for Baker Hughes Acquisition

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Researched by Industrial Info Resources (Sugar Land, Texas)--Halliburton Corporation (NYSE:HAL) (Houston), a major supplier of products and services to the upstream Oil & Gas Industry, saw another year of annual records in 2014 as sales held steady in North America and Europe, and revived in the Middle East and Asia. Net income was reported to be $3.5 billion, compared with $2.13 billion in 2013.

Industrial Info is tracking more than $6.4 billion in active projects involving Halliburton, including Delek Group Limited's (Netanya, Israel) Tamar-1 and Tamar-2 offshore drilling programs, on which Halliburton KBR (Leatherhead, England) is serving as a contractor, in the Mediterranean Sea near Haifa, Israel. Each project is valued at $350 million. The second phase of each project involves drilling seven wells to reach total projected output of 1.2 billion cubic feet. The Tamar-1 and Tamar-2 offshore drilling programs are expected to be completed early in the fourth quarter.

Total revenues stood at $32.87 billion, an 11.8% increase from 2013. Halliburton's North American and Eastern Hemisphere segments reported record revenue growth for the full year, while the company as a whole reported record revenues for the fourth quarter, driven in part by growth in the Middle East/Asia region. The North American and Eastern Hemisphere segments succeeded despite seasonal weather/holiday issues and activity declines in key parts of the Europe/Africa/CIS region, respectively. The Middle East/Asia businesses benefited from strong software and equipment sales, as well as higher project-related demand in India, Indonesia Iraq and Saudi Arabia.

The North American segment also benefited from higher software sales, particularly in the U.S. land market, but saw generally lower drilling activity in the U.S. and Canada. The company's Completion & Production segment benefited from stronger stimulation activity and completion tool sales in the U.S. and the Middle East/Asia, as well as more cementing activity in the U.S., but reported lower activity in all of its Mexican product lines.

Halliburton also upped its role in Latin America by opening the first sand storage and loading facility in Argentina, which is entering the global shale development market.

"This was also a record year for both of our divisions, where 12 of our 13 product lines set new all-time highs," said Dave Lesar, the chairman and chief executive officer of Halliburton, in a conference call. "From an operating income perspective, we achieved new full year records in our Completion Tools, Multi-Chem, Drill Bits and Baroid product lines."

Capital expenditures for 2014 were reported to be $3.28 billion, compared with $2.93 billion in 2013.

In November, Halliburton and Baker Hughes Incorporated (NYSE:BHI) (Houston, Texas) announced a definitive agreement under which Halliburton will acquire all the outstanding shares of Baker Hughes for an equity value of $34.6 billion. Combined, the companies had 2013 revenues of $51.8 billion. Lesar said in an earlier announcement that the deal "will create a bellwether global oilfield services company and offer compelling benefits for the stockholders, customers and other stakeholders of Baker Hughes and Halliburton."

For more information, see January 21, 2015, article - Baker Hughes to Lay Off 7,000 Employees in First-Quarter, Sets $400 Million Quarterly Capex for Year as Merger Nears.

"On the regulatory front we filed the initial Form S-4 with the Securities and Exchange Commission and are proceeding expediently with all the antitrust filings," Lesar said in the conference call. "We continue to expect that we will complete the transaction in the second half of 2015."

Despite these steps forward, Halliburton executives expect 2015 to be a "challenging" year for their industry, and accordingly took on $129 million in restructuring charges in the fourth quarter of 2014 in expectation of weaker activity.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.