Halliburton swings to Q1 loss of $13 million due to $637 million Macondo litigation charge
HOUSTON – Halliburton has announced that income from continuing operations for the first quarter of 2013 was $624 million, or $0.67 per diluted share, excluding a $637 million charge, after-tax, or $0.68 per diluted share, to increase a reserve related to the Macondo litigation.
Income from continuing operations for the first quarter of 2012 was $826 million, or $0.89 per diluted share, excluding a $191 million charge, after-tax, or $0.20 per diluted share, for a reserve related to the Macondo litigation.
Reported loss from continuing operations for the first quarter of 2013 was $13 million, or $0.01 per diluted share. Reported income from continuing operations for the first quarter of 2012 was $635 million, or $0.69 per diluted share.Halliburton's total revenue in the first quarter of 2013 was $7.0 billion, compared to $6.9 billion in the first quarter of 2012. Operating income, adjusted for the Macondo charge, was $902 million in the first quarter of 2013, compared to $1.3 billion in the first quarter of 2012. Reported operating loss was $98 million for the first quarter of 2013, compared to reported operating income of $1.0 billion in the first quarter of 2012.
“I am pleased with our operational results, as total company revenue of $7.0 billion represents a record Halliburton first quarter,” commented Dave Lesar, chairman, president and chief executive officer. “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 approximately 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.
“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, mobilization 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.
“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. 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,” concluded Lesar.