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Last Update: 22-Apr-13 07:40 ET
Halliburton shares rise 5% following beat on earnings
Halliburton (HAL $39.01 +1.80) reported first quarter earnings of $0.67 per share, ex-a $637 mln charge, after-tax, or $0.68/share, to increase a reserve related to the Macondo litigation, $0.10 better than the Capital IQ consensus of $0.57, while revenues rose 1.5% year/year to $6.97 billion versus the $6.88 billion consensus. "The rig count decline and pricing headwinds in North America were more than offset by our expanding international business... From a product line perspective, our Sperry Drilling, Multi-Chem, and Baroid product lines achieved record quarterly revenues, with Baroid and Drill Bits setting quarterly operating income records... In North America, sequential revenue was down 1% and operating income increased 30%, compared to a 3% decline in the United States rig count.
Margins improved ~400 basis points as we began to benefit from lower cost guar, increased customer activity, internal cost efficiencies, and higher service intensity. For these reasons, we expect margins to continue to expand over the course of the year, and we believe we may see modest pricing increases as customers adopt new technology to improve well production. We also saw activity levels benefit from shifts to pad well activity and improved utilization around 24-hour operations. We believe that modest rig count improvements, coupled with a continued drive towards efficiency, will bode very well for us in the coming years, as no other company has the ability to execute factory-type operations as well as Halliburton... Our international revenue grew by 21% compared to the first quarter of 2012. Compared to our two primary competitors, we have delivered industry-leading year-over-year international growth for the last four quarters. In addition, the Eastern Hemisphere grew operating income by an outstanding 39% relative to the first quarter of 2012... Middle East/Asia revenue and operating income increased 25% and 51%, respectively, compared to the prior year first quarter. This significant improvement was led by growth in the Australia, China, and Saudi Arabia markets. For the full year, we continue to expect total international revenue growth in the low teens relative to 2012, and expect full year international margins to average in the upper teens."
Margins improved ~400 basis points as we began to benefit from lower cost guar, increased customer activity, internal cost efficiencies, and higher service intensity. For these reasons, we expect margins to continue to expand over the course of the year, and we believe we may see modest pricing increases as customers adopt new technology to improve well production. We also saw activity levels benefit from shifts to pad well activity and improved utilization around 24-hour operations. We believe that modest rig count improvements, coupled with a continued drive towards efficiency, will bode very well for us in the coming years, as no other company has the ability to execute factory-type operations as well as Halliburton... Our international revenue grew by 21% compared to the first quarter of 2012. Compared to our two primary competitors, we have delivered industry-leading year-over-year international growth for the last four quarters. In addition, the Eastern Hemisphere grew operating income by an outstanding 39% relative to the first quarter of 2012... Middle East/Asia revenue and operating income increased 25% and 51%, respectively, compared to the prior year first quarter. This significant improvement was led by growth in the Australia, China, and Saudi Arabia markets. For the full year, we continue to expect total international revenue growth in the low teens relative to 2012, and expect full year international margins to average in the upper teens."
