Halliburton Strong Abroad, Less So at Home in 2013, Expects $3 Billion in Capex in 2014

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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 mixed results for fourth-quarter and full-year 2013, as the company reported record annual revenues from added international projects, particularly in the Eastern Hemisphere, but dealt with challenging markets in North America. Net income was reported to be $793 million for the quarter, an 18.54% increase from fourth-quarter 2012, and $2.13 billion for the year, a 19.35% decrease from 2012.

Total revenues stood at $7.64 billion for the quarter, a 4.79% increase from the same period last year, and $29.4 billion for the year, a 3.15% increase from 2012. Halliburton saw its strongest growth for the full year in the Eastern Hemisphere, while record revenue for the fourth quarter was to be found in the Middle East/Asia and Europe/Africa/former Soviet regions. The Completion & Production (C&P) segment reported sharply improved international activity and sales, particularly with stronger cementing and stimulation work in Latin America. However, activity in North America dipped following weather- and holiday-related disruptions, as well as decreased overall business in the U.S. land market. Pricing pressures also played a role in the weaker North American results.

Capital expenditures for 2013 were reported to be $2.93 billion, compared with $3.57 billion in 2012. The company also continued to incur costs related to BP plc's (NYSE:BP) (London, England) Gulf of Mexico drilling disaster in April 2010.

Industrial Info is tracking more than $8.6 billion in active projects involving Halliburton, including the $1.65 billion West Qurna Oil Field development project near Basrah, Iraq. The project, led by ExxonMobil (NYSE:XOM) (Irving, Texas), is expected to boost output from the field by drilling approximately 1,500 new wells to reach a final target of 8.7 billion barrels of oil per day.

"In 2013, North America played out as we predicted," said Dave Lesar, the chairman, president and chief executive officer of Halliburton, in a conference call. "We saw a market driven by increased drilling and completion efficiencies, with a relatively flat overall rig count and industry overcapacity. The volatility of the past few years has evolved into a more stable market environment."

Capital expenditures for 2014 are expected to be about $3 billion, basically unchanged from the past year, with stronger emphasis on international projects. Halliburton executives expect to see continued growth in the Eastern Hemisphere, with higher revenue margins each quarter. Lesar said that the average U.S. land rig count is expected to increase steadily, due in part to a shift to horizontals in the Permian Basin. The company also plans to increase activity in the Gulf of Mexico.

"[U.S.] storage levels are back near the five-year average, but production levels remain elevated, both with associated gas in the liquids plays, and continued robust activity in the Marcellus Basin," Lesar said in the conference call. "Continued strength in natural gas prices could provide upside potential, but we are not optimistic that there will be a meaningful uptick in gas activities in the near term."

Lesar also said Latin America will be a challenging region in 2014, with declining activity in Mexico and downward pressure on margins in Brazil.

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