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Released October 20, 2015 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Few industry observers will be surprised to learn that weak commodity prices continue to put Halliburton Company's (NYSE:HAL) (Houston, Texas) numbers in the red, as a decline in North American drilling, logging and completion services led a global reduction in activity. The company eliminated 4,000 jobs worldwide during the quarter, including 2,000 in the past month. Industrial Info is tracking $5.63 billion in projects involving Halliburton.
Among the projects tracked is a major venture in Iraq: the $250 million expansion of the Zubair Crude Oil Production Field in al-Basrah. The owner, Eni SpA (NYSE:E) (Rome, Italy), plans to increase field output, currently at 320,000 barrels per day (BBL/d), to 1.2 million BBL/d by 2017, by overhauling 63 old wells. Halliburton, along with Baker Hughes Incorporated (NYSE:BHI) (Houston) and Iraqi Drilling Company (Bagdad, Iraq), is serving as a contractor.
Halliburton's capital expenditures for the quarter were reported to be $1.75 billion, compared with $2.28 billion in third-quarter 2014.
The company is at work on a $35 billion acquisition of Baker Hughes, nominally set to close in December. However, Halliburton stressed in a quarterly release that it can push back the closing date, if necessary. Industrial Info is tracking more than $5 billion in projects involving Baker Hughes, including Statoil ASA's (NYSE:STO) (Stavanger, Norway) $200 million construction of an offshore production platform in the Johan Sverdrup oil field in the North Sea, near Norway. Maersk Oil (Copenhagen, Denmark) and Odfjell Drilling (Bergen, Norway) also are serving as contractors.
Halliburton reported a net loss of $54 million for the third quarter, compared with net income of $1.2 billion for third-quarter 2014. Total revenues stood at $5.58 billion, a 35.84% drop from the same period last year. In addition to the activity decline in North America, which included steep price reduction in pumping-related product lines, similar scale-backs were seen in Latin America, particularly Mexico; and the Eastern Hemisphere, where stimulation business weakened in the Middle East and Asia, and sales for pressure-pumping and completion tools declined in Europe and Africa. Drilling and offshore testing services declined globally.
Also weighing on results were $257 million in company-wide charges related largely to asset write-offs and severance costs from the job cuts, and $62 million in costs related to the pending acquisition of Baker Hughes, all after-tax.
"We remain confident this deal will be approved," said Dave Lesar, the chairman and chief executive officer of Halliburon, in a conference call. "We continue to target a 2015 close, but the transaction could move into 2016, which is allowed under the merger agreement. We are enthusiastic about--and fully committed to closing--this compelling transaction and achieving our annual cost synergy target of nearly $2 billion. I want to be clear, this $2 billion will be on top of any cost reductions that we've made to date. We are very excited about the benefits of this combination, and what it will provide to the shareholders, customers, and other stakeholders of both companies."
Since the decline in activity levels seems unlikely to be reverse anytime soon, Halliburton executive announced that the company will cut its capital expenditure guidance by an additional $200 million to $2.4 billion for full-year, a drop of about 27% from 2014. Halliburton also plans to divest its expandable liner hangers business, currently part of the Completion & Production segment, as part of the agreement to acquire Baker Hughes.
"Looking ahead to the fourth quarter, visibility is murky at best," Lesar said. "Based on current feedback, we believe most operators have exhausted their 2015 budgets, and will take extended breaks, starting as early as Thanksgiving. Therefore our activity levels could drop substantially in the last five weeks of the year."
He added: "Internationally, for 2016, we expect to see a continuation of trends from 2015. Land-based activity, including mature fields should be the most resilient, while we expect offshore to see additional project delays."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five 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.
Among the projects tracked is a major venture in Iraq: the $250 million expansion of the Zubair Crude Oil Production Field in al-Basrah. The owner, Eni SpA (NYSE:E) (Rome, Italy), plans to increase field output, currently at 320,000 barrels per day (BBL/d), to 1.2 million BBL/d by 2017, by overhauling 63 old wells. Halliburton, along with Baker Hughes Incorporated (NYSE:BHI) (Houston) and Iraqi Drilling Company (Bagdad, Iraq), is serving as a contractor.
Halliburton's capital expenditures for the quarter were reported to be $1.75 billion, compared with $2.28 billion in third-quarter 2014.
The company is at work on a $35 billion acquisition of Baker Hughes, nominally set to close in December. However, Halliburton stressed in a quarterly release that it can push back the closing date, if necessary. Industrial Info is tracking more than $5 billion in projects involving Baker Hughes, including Statoil ASA's (NYSE:STO) (Stavanger, Norway) $200 million construction of an offshore production platform in the Johan Sverdrup oil field in the North Sea, near Norway. Maersk Oil (Copenhagen, Denmark) and Odfjell Drilling (Bergen, Norway) also are serving as contractors.
Halliburton reported a net loss of $54 million for the third quarter, compared with net income of $1.2 billion for third-quarter 2014. Total revenues stood at $5.58 billion, a 35.84% drop from the same period last year. In addition to the activity decline in North America, which included steep price reduction in pumping-related product lines, similar scale-backs were seen in Latin America, particularly Mexico; and the Eastern Hemisphere, where stimulation business weakened in the Middle East and Asia, and sales for pressure-pumping and completion tools declined in Europe and Africa. Drilling and offshore testing services declined globally.
Also weighing on results were $257 million in company-wide charges related largely to asset write-offs and severance costs from the job cuts, and $62 million in costs related to the pending acquisition of Baker Hughes, all after-tax.
"We remain confident this deal will be approved," said Dave Lesar, the chairman and chief executive officer of Halliburon, in a conference call. "We continue to target a 2015 close, but the transaction could move into 2016, which is allowed under the merger agreement. We are enthusiastic about--and fully committed to closing--this compelling transaction and achieving our annual cost synergy target of nearly $2 billion. I want to be clear, this $2 billion will be on top of any cost reductions that we've made to date. We are very excited about the benefits of this combination, and what it will provide to the shareholders, customers, and other stakeholders of both companies."
Since the decline in activity levels seems unlikely to be reverse anytime soon, Halliburton executive announced that the company will cut its capital expenditure guidance by an additional $200 million to $2.4 billion for full-year, a drop of about 27% from 2014. Halliburton also plans to divest its expandable liner hangers business, currently part of the Completion & Production segment, as part of the agreement to acquire Baker Hughes.
"Looking ahead to the fourth quarter, visibility is murky at best," Lesar said. "Based on current feedback, we believe most operators have exhausted their 2015 budgets, and will take extended breaks, starting as early as Thanksgiving. Therefore our activity levels could drop substantially in the last five weeks of the year."
He added: "Internationally, for 2016, we expect to see a continuation of trends from 2015. Land-based activity, including mature fields should be the most resilient, while we expect offshore to see additional project delays."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five 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.
