Halliburton announced Monday that net income for the first quarter of 2011 was US$557 million, excluding the Libya charge of $46 million, after-tax, related primarily to reserving certain assets as a result of recent political sanctions. This charge does not include the operating losses incurred in Libya during the first quarter.
Reported net income for the first quarter of 2011 was $511 million. This compares to net income for the first quarter of 2010 of $206 million. The first quarter of 2010 results were negatively impacted by $41 million, associated with the devaluation of the Venezuelan Bolívar Fuerte, the company said in a statement.
Halliburton’s consolidated revenue in the first quarter of 2011 was $5.3 billion, compared to $3.8 billion in the first quarter of 2010. Consolidated operating income was $814 million in the first quarter of 2011, compared to $449 million in the first quarter of 2010.
These increases were attributable to increased activity in United States land, as the unabated shift to unconventional oil and liquids-rich basins more than offset geopolitical issues in North Africa and the ongoing effects of the suspension of deepwater activity in the Gulf of Mexico, the statement said.
“I am extremely pleased with our Q1 results, as overall revenue in the first quarter set a company record of $5.3 billion. North America delivered strong performance as margins progressed due to increased activity while Eastern Hemisphere operating income was significantly impacted by geopolitical events in North Africa, delays in Iraq, and typical seasonality,” said Dave Lesar, chairman, president and chief executive officer.
“In North America, rig activity increased 2% from the prior quarter, while revenue and operating income grew 13% and 16%, respectively. This is a result of our continued strategic investment in oil and liquids-rich growth areas where service intensity continues to grow.
Lesar said that the company was confident about the robust outlook in North America and that the prospect of higher activity in the subsequent quarters gave Halliburton to be bullish for “2011 and beyond”.
Eastern hemisphere margins to improve
On the international scene, Lesar admitted that revenue has decreased by 9% from the piror quarter with the company’s operating income declining by $252 million.
“The decline was primarily driven by approximately $110 million in weather related issues and the typical seasonal slowdowns of software and direct sales, approximately $105 million from political unrest and other disruptions in North Africa, including asset reserves for Libya, and approximately $20 million for project delays due to customers’ logistical challenges in Iraq.
“We expect our Eastern Hemisphere margins to improve in the second quarter but they will continue to be impacted by the situation in Libya and by competitive pricing,” he cautioned.
Lesar struck a more optimistic note for the second half of the year saying that as activity accelerates, Halliburton should see margins returning to 2010 levels.
“In North Africa, we expect that Libya will continue to be challenged while Egypt appears to be returning to prior activity levels. In Iraq, our delayed integrated drilling projects are now scheduled to begin in the second or third quarter of this year. We remain very optimistic about this market and expect to be profitable in 2011.”
