A Review of the Nigerian Energy Industry

Halliburton sees $18m loss despite record revenue

The company logo of Halliburton oilfield services corporate offices is seen in Houston22 April 2013, Houston – US oil services giant, Halliburton, recorded a $18 million net loss in the first quarter of the year despite achieving a record revenue figure in the first three months of the year.

The loss was the effects of settlements related to the Deepwater Horizon blowout disaster in the Gulf of Mexico in 2010.
The company was also deeply in the red on operating profit due to exceptional items.

The net loss for the period to the end of March was $18 million as against a profit of $627 million in the comparable period a year earlier.

Halliburton booked pre-tax charges of $1 billion and $300 million in the first quarter related to the blowout at the Macondo well in the Gulf of Mexico which saw the Deepwater Horizon rig explode, killing 11 rig workers.

“With respect to the ongoing multi-district litigation trial regarding the Macondo well incident, we have recently participated in court-facilitated settlement discussions with the goal of resolving a substantial portion of private claims,” said Dave Lesar, chairman, president and chief executive officer.

“We are pursuing these settlement discussions because we believe that an early and reasonably-valued resolution is in the best interests of our shareholders.

“Our most recent offer includes both stock and cash, with the cash components payable over an extended period of time. Discussions are at an advanced stage but have not yet resulted in a settlement.

“As a result, during the first quarter we recorded an after-tax charge of $637 million which, when added to the $191 million after-tax charge recorded in the first quarter of 2012, is based on where we are in the negotiations at the present time. Our reserve estimate also does not include any potential insurance recovery.”

Revenue for the period was, however, up slightly to a record of $6.97 billion as against $6.87 billion a year earlier.

This was despite a rig count decline in North America – 3% in the US alone – and “pricing headwinds” in the region also, Halliburton said.

These were, however, more than offset by results from international operations where most regions contributed more to the rersult and international revenues were up 21%.

“The eastern hemisphere grew operating income by an outstanding 39% relative to the first quarter of 2012,” Lesar continued.

“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.

“In Europe/Africa/CIS, we saw revenue increase 17% and operating income increase 25% relative to the first quarter of 2012, driven by higher activity levels in the North Sea, Eurasia, Nigeria, and Central Africa markets.

“Latin America revenue was up 21% but operating income was down 11%, compared to the first quarter of 2012. Results were impacted in the quarter by several one-time items, including severance costs in Argentina, mobilisation costs on new contracts in Brazil, and a reduction in the rig count on our Mexico projects as we wait on contracts to be retendered. We expect margins to improve moderately in the second quarter, and average in the upper teens for the second half of the year.

“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.
“We continue to focus on strengthening our global position in the deepwater, unconventional, and mature fields markets, and we will be relentlessly focused on returns.”

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