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Major oilfield services provider Halliburton Company (HAL - Analyst Report) reported strong fourth-quarter 2013 results, owing to improved cementing operations in Mexico and increased stimulation work in Argentina. Significant increase in drilling demand in the Asia Pacific region also aided the results.   

Earnings per share from continuing operations (excluding restructuring expenses) came in at 93 cents, beating the Zacks Consensus Estimate of 89 cents.

Moreover, the company’s per share profits significantly surpassed the fourth-quarter 2012 level of 63 cents.

Following Baker Hughes Inc. (BHI - Analyst Report) and Schlumberger Ltd (SLB - Analyst Report), Halliburton stepped up as the third member of the ‘big 4 oil service companies’ to post above consensus result. The other member Weatherford International Ltd (WFT - Analyst Report) is scheduled to report next month.

Revenues of $7.6 billion reflected a 4.8% year-over-year improvement. The figure also increased by 1.1% as compared to the Zacks Consensus Estimate.

During the quarter, North America accounted for approximately 50.1% of Halliburton’s total revenue and 51.0% of its operating income.

For the year ended Dec 31, 2013, Halliburton reported income from continuing operations (excluding non-operating items) of $3.16 per share, above the Zacks Consensus Estimate of $3.11. The figure also outpaced the 2012 adjusted earnings of $2.98 per share. Revenues of $29.4 billion were 3.2% above the year-ago number and were also marginally higher than the Zacks Consensus Estimate of $29.3 billion.

Segmental Performance

Completion & Production: Revenues at Halliburton’s Completion and Production segment were up by a nominal 0.9% sequentially and 4.7% year over year. Improved activities along with increased sales of completion tool and equipment in the international market favored the results.

The segment’s operating income was $765.0 million, exhibiting a minor 0.3% sequential increase and a significant 26.9% year-over-year increase, owing to Argentina’s increased stimulation work and Mexico’s improved cementing operations. Hike in pumping work in Australia also supported the result.

Drilling & Evaluation: Revenues at Halliburton’s Drilling and Evaluation business were 4.2% above the third-quarter level. The figure also improved 4.9% year over year to $3.1 billion. The rise was driven by higher software sales and improved operations in the Eastern Hemisphere.

The segment’s operating income rose 10.7% from the September quarter and 2.9% from the year-ago period to $498.0 million on higher software sales in the U.S. and improved work in the U.K. and Canada. Hike in demand for drilling activities in the Asia Pacific region also aided the result.

Balance Sheet

Halliburton’s capital expenditure in the fourth quarter was $859.0 million, bringing the full-year spending to $2.9 billion. As of Dec 31, 2013, the company had approximately $2.4 billion in cash/cash equivalents and $7.8 billion in long-term debt, representing a debt-to-capitalization ratio of 36.5%.

Zacks Rank

Halliburton currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in-line with the broader U.S equity market over the next one to three months.

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