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Financial Highlights - Halliburton full year and 4Q Highlights

Source: www.gulfoilandgas.com 1/26/2007, Location: North America

Halliburton announced today that revenue was $22.6 billion for the full year 2006, an increase of 12% from the full year 2005, and operating income was $3.5 billion, an increase of 33% from the full year 2005. Income from continuing operations for the full year of 2006 was $2.3 billion, or $2.16 per diluted share, compared to 2005 income from continuing operations of $2.3 billion, or $2.24 per diluted share, as significant tax benefits were recorded in 2005.

Net income in 2006 was $2.3 billion, or $2.23 per diluted share, compared to 2005 net income of $2.4 billion, or $2.27 per diluted share. Net income in 2006 included $76 million, or $0.07 per diluted share, in after-tax income from discontinued operations related primarily to the gain on the sale of KBR’s Production Services Group. Income from discontinued operations in 2005 was $31 million, or $0.03 per diluted share, related primarily to KBR’s Production Services Group operating results.

In the fourth quarter of 2006, income from continuing operations was $667 million, or $0.65 per diluted share. This compares to income from continuing operations of $1.1 billion, or $1.03 per diluted share, in the fourth quarter of 2005. The fourth quarter of 2005 included $540 million, or $0.51 per diluted share, of income related to a reduction in a deferred tax asset valuation allowance. Net income in the fourth quarter of 2006 was $658 million, or $0.64 per diluted share, compared to net income in the fourth quarter of 2005 of $1.1 billion, or $1.04 per diluted share.

Revenue in the fourth quarter of 2006 was $6.0 billion, up 8% from the fourth quarter of 2005. This increase was largely attributable to higher activity in the Energy Services Group (ESG), particularly in the United States and Europe/Africa/CIS, partially offset by lower revenue in KBR, primarily due to decreased activity on government services projects for the United States military.

Operating income was $1.0 billion in the fourth quarter of 2006 compared to $766 million in the fourth quarter of 2005. Operating income in the fourth quarter of 2006 was positively impacted by a $48 million gain on the sale of lift boats in West Africa and the North Sea. Operating income for the fourth quarter of 2005 included a $24 million gain related to a patent infringement case settlement.

“For Halliburton, 2006 was an exciting year as the oilfield experienced exceptional growth in energy services. The ESG benefited from strong global demand, resulting in record revenue, operating income, and operating income margins for 2006. Although we experienced weather-related activity decreases and holiday impacts in the United States during the fourth quarter, we expect demand for our services to remain strong throughout 2007. We will continue to invest in equipment and infrastructure, with a focus on international growth in areas such as the Middle East, Africa, and Asia,” said Dave Lesar, chairman, president, and chief executive officer of Halliburton. “KBR had its Initial Public Offering last November and is off to a great start as a public company. We anticipate completing the separation of KBR from Halliburton within the next three months.”

2006 Fourth Quarter Segment Results

Energy Services Group
ESG posted record revenue of $3.5 billion in the fourth quarter of 2006, a $661 million or 23% increase over the fourth quarter of 2005. ESG posted operating income of $959 million, up $281 million or 41% from the same period in the prior year. ESG’s operating margin was 27.3% during the fourth quarter of 2006, a 350 basis point improvement from the fourth quarter of 2005. Included in the fourth quarter of 2006 operating results was the $48 million gain on sale of the lift boats. The fourth quarter of 2006 results also included $38 million for business interruption resulting from the 2005 Gulf of Mexico hurricanes, offset by activity declines in the western United States due to severe winter weather and holidays.

Production Optimization posted operating income in the fourth quarter of 2006 of $443 million, including the lift boat gains, an increase of $149 million or 51% over the fourth quarter of 2005. Production Enhancement services operating income grew 27%, driven by strong demand for well stimulation services, improved pricing, high equipment utilization in the United States, and increased activity in Asia. Results were partially offset by United States weather-related activity decreases and higher holiday impacts during the fourth quarter of 2006, and decreased activity in Canada. Completion Tools operating income improved 55% over the prior year fourth quarter, with improvements in all regions.

Fluid Systems operating income for the fourth quarter of 2006 was $209 million, a $52 million or 33% increase over the fourth quarter of 2005. Fourth quarter of 2006 results were positively impacted by insurance proceeds related to the 2005 Gulf of Mexico hurricanes, partially offset by increased start-up costs for new Eastern Hemisphere contracts. Cementing services operating income increased due to strength in the United States land, recovery of Gulf of Mexico, and increased rig activity in Africa.

Drilling and Formation Evaluation posted record operating income for the fourth quarter of 2006 of $230 million, a $69 million or 43% increase over the prior year fourth quarter. Operating income in the fourth quarter of 2005 included a $24 million gain related to a patent infringement case settlement. Sperry Drilling Services operating income increased 72% with improvement in all regions, led by increased activity in Europe, Africa, and the Middle East. Sperry’s Geo-Pilot® and GeoTap® technologies continued to show solid revenue growth over the prior year quarter. Wireline and Perforating Services operating income increased 56% due to increased activity, pricing, and improved asset utilization in the United States, Latin America, Africa, and Asia Pacific. Security DBS Drill Bits operating income was positively impacted by increased sales in all regions, reflecting improved fixed cutter bit activity.

Digital and Consulting Solutions posted record operating income in the fourth quarter of 2006 of $77 million, an increase of $11 million or 17% compared to the prior year quarter, driven by strong international software sales and consulting services.

KBR
KBR revenue for the fourth quarter of 2006 was $2.5 billion compared to $2.7 billion in the fourth quarter of 2005. Operating income for the fourth quarter of 2006 was $120 million compared to operating income of $108 million in the prior year fourth quarter.

Energy and Chemicals posted operating income of $59 million in the fourth quarter of 2006 compared to $54 million in the fourth quarter of 2005. Significant contributors to fourth quarter of 2006 results were a gas-to-liquids project in Qatar, liquefied natural gas projects in Nigeria, Indonesia, and Yemen, and an ammonia plant in Egypt.

Government and Infrastructure operating income for the fourth quarter of 2006 was $61 million, compared to $54 million in the fourth quarter of 2005. The increase was attributable to higher income related to the DML shipyard, which was offset partially by a $12 million loss on an embassy project for the U.S. State Department in Macedonia.

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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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