Fourth quarter sales in the company's Completion and Production segment fell 8% to $3.83 bln, a decrease of $338 mln, or 8%, when compared to the third quarter of 2018, while operating income in the segment was $496 mln, a sequential decrease of $117 mln, or 19%. The segment’s operating income also declined year/year, though revenues improved slightly from the prior year quarter’s $3.80 bln.
Weakness was driven by lower activity and pricing for stimulation services in North America, partially offset by stimulation activity increases in Argentina and year-end completion tool sales internationally.
Meanwhile, in the Drilling and Evaluation segment, sales rose 5% to $2.1 bln in the quarter, an increase of $102 mln, or 5%, versus the third quarter of this year, while operating income increased sequentially by $4 mln to $185 mln, a 2% gain.
Gains in this segment were driven by year-end software sales, increased fluids activity in the Gulf of Mexico, and improved project management activity in Latin America.
Geographically, performance in North America softened, but recovery in the company’s international business continued.
However, looking ahead, the company is looking to cut capital spending.
CEO Jeff Miller said, "As North American oil production reaches historic highs, operators focus on returns over growth, and the international recovery continues, Halliburton is well prepared to thrive. We intend to dynamically respond to the changing market environment, reduce capital spending, develop differentiating technologies, and generate strong cash flow."
No color has been provided so far regarding the company’s upcoming first quarter. However, know that oil prices will be a key driver going forward. Higher oil prices will create incentive for oil and gas producers to raise their capital spending, which is positive for oil and gas equipment services companies such as HAL.
The biggest peers of HAL include Schlumberger (SLB) and Baker Hughes (BHGE).