Third Quarter 2018 Update

Transcription

1 Third Quarter 2018 Update Investor Relations Contacts: Lance Loeffler, Vice President Marina Matselinskaya, Director or NYSE Stock Symbol: HAL Common Dividend: $0.18 per quarter Shares Outstanding: 876 Million as of 10/19/2018

2 Safe Harbor The statements in this presentation that are not historical statements, including statements regarding future financial performance, are forward-looking statements within the meaning of the federal securities laws. These statements are subject to numerous risks and uncertainties, many of which are beyond the company's control, which could cause actual results to differ materially from the results expressed or implied by the statements. These risks and uncertainties include, but are not limited to: the continuation or suspension of our stock repurchase program, the amount, the timing and the trading prices of Halliburton common stock, and the availability and alternative uses of cash; changes in the demand for or price of oil and/or natural gas; potential catastrophic events related to our operations, and related indemnification and insurance matters; protection of intellectual property rights and against cyber-attacks; compliance with environmental laws; changes in government regulations and regulatory requirements, particularly those related to offshore oil and natural gas exploration, radioactive sources, explosives, chemicals, hydraulic fracturing services, and climate-related initiatives; the impact of federal tax reform, compliance with laws related to income taxes and assumptions regarding the generation of future taxable income; risks of international operations, including risks relating to unsettled political conditions, war, the effects of terrorism, foreign exchange rates and controls, international trade and regulatory controls and sanctions, and doing business with national oil companies; weather-related issues, including the effects of hurricanes and tropical storms; changes in capital spending by customers; delays or failures by customers to make payments owed to us; execution of longterm, fixed-price contracts; structural changes in the oil and natural gas industry; maintaining a highly skilled workforce; availability and cost of raw materials; agreement with respect to and completion of potential acquisitions and integration and success of acquired businesses and operations of joint ventures. Halliburton's Form 10-K for the year ended December 31, 2017, Form 10-Q for the quarter ended September 30, 2018, recent Current Reports on Form 8-K, and other Securities and Exchange Commission filings discuss some of the important risk factors identified that may affect Halliburton's business, results of operations, and financial condition. Halliburton undertakes no obligation to revise or update publicly any forward-looking statements for any reason. 2

3 Agenda Company Overview Returns-focused Strategy Unconventionals Mature Fields Deep Water Financial Review 3

4 Halliburton Global Footprint Founded 1919 Employees 60, Nationalities TC TC TC TC Operational Countries TC TC TCT TC TC C TC >80 TC Research Centers TC Locations TC Technology Centers TC Corporate Headquarters Corporate Headquarters 16 Houston 4

5 Product Service Lines Drilling and Evaluation Completion and Production Baroid Drill Bits & Services Cementing Completion Tools Production Enhancement Consulting & Project Management Landmark Sperry Drilling Testing & Subsea Wireline & Perforating Artificial Lift Multi-Chem Pipeline & Process Services Production Solutions 5

6 Returns-Focused Strategy Achieve superior growth and returns for our shareholders by delivering technology and services that improve efficiency and maximize recovery for our customers Provide a full range of the highest returning oilfield services globally Focus on technology, safety, and superior service quality Strategic Markets»Well productivity»surface efficiency»lowest cost per BOE Unconventionals Invest in innovative technologies and selective acquisitions in order to: improve efficiency and maximize recovery for our customers allow Halliburton to grow market share and obtain superior pricing and margins Mature Fields Deep Water»Well production optimization»improved asset recovery»well abandonment»increased efficiency»reduced uncertainty»lowest cost per foot reservoir delivery 6

7 Unconventionals Lowering Cost per BOE for Our Customers Well Productivity Efficiency Environmental Sustainability 7

8 Unconventionals Well Productivity Technologies Prodigi Intelligent Fracturing Platform Prodigi AB Intelligent Fracturing Service Breaks down all available clusters Intelligent Algorithm Increases number of fracture initiations Improves production Reduces risk of frac hits Fracturing Automation Software-based Controls Lowers treating pressure Reduces screen-out risk Shortens treatment time Eliminates need for acid 8

9 Unconventionals Drilling Optimization Technologies icruise Intelligent Maximize Rotary Steerable your System Asset Value Drilling Automation Accurate Well Placement Fast Drilling Utilizes BHA digital twin and machine learning to control vibration, avoid hazards, and optimize well trajectory for reliable, repeatable performance even without human intervention. Built-in high-speed processors and intelligent algorithms help steer the well precisely in the productive zone, increasing reservoir exposure. Helps reduce well construction time with the highest mechanical specs on the market. Cuts maintenance time and improves asset velocity with selfdiagnostics capabilities. 9

10 Unconventionals Surface Efficiency Solutions 20% LESS CAPITAL 35% LESS PERSONNEL 40% LESS COMPLETION TIME Q10 Pump ExpressKinect WCU ExpressSand System Snapshot TM Software Significantly lowers downtime and maintenance costs Reduces rig-up time, increases safety and operational efficiency Reduces footprint at wellsite, significantly lowers operational and capital costs Streamlines wellsite processes and increases back-office efficiencies 10

11 Mature Fields Leading the Recovery in International Markets 70% of oil & gas production comes from mature fields Requires collaboration with our customers Utilizes a variety of drilling, diagnostics, completion, and production technologies Mature Field Thousand Barrels per Day Primary Recovery Secondary Recovery Improved Recovery Enhanced Oil Recovery 11

12 Mature Fields Well and Asset Production Optimization Solutions Well Production Optimization Improved Asset Recovery Well Abandonment P&A Conformance Diagnostics (wireline, coil tubing) Remediation and cleanout (paraffin, scale, corrosion, and sand removal; tubing and casing repairs) Resolution of gas migration issues Artificial lift Infill drilling Sweep efficiency Enhanced stimulation EOR Solutions Automation and production analytics 12 Safe and compliant operations Well integrity Reliable barrier assurance

13 Deep Water Delivering the Lowest Cost-per-foot Reservoir Increased Efficiency Reduced Uncertainty Lowest Costper-foot Reservoir Delivery 13

14 Deep Water Technologies for Reduced Uncertainty EarthStar Ultra-deep Resistivity Service GEOSTOP GEOSTEER GEOMAP Reduces well time by eliminating pilot holes Optimizes well placement to improve production Enhances reservoir understanding with industry s deepest-reading geomapping service 200 ft into the formation 14

15 3Q18 Revenue Breakdown Middle East/Asia Middle East/Asia revenue increased 4% sequentially, largely resulting from increased completion tool sales and well intervention services throughout the region, partially offset by pricing pressure for stimulation services in the Middle East. 19% 61% North America North America revenue decreased 2% sequentially. This was primarily driven by lower pricing for stimulation services in the US land sector and reduced drilling fluids activity in North America, partially offset by increased activity in the production chemicals and artificial lift product service lines in the US land sector. 12% Europe/Africa/CIS Europe/Africa/CIS revenue increased 4% sequentially, primarily driven by higher pipeline services across the region, coupled with increased completion tool sales in the North Sea. 8% 15 Latin America Latin America revenue increased 9% sequentially, resulting primarily from increased activity for stimulation services in Mexico and drilling-related services throughout the region, particularly in Argentina, Brazil and Ecuador. These increases were partially offset by decreased software sales in Mexico.

16 Financial Metrics Total Revenue (Normalized) Return on Average Capital Employed* 1Q14 to 3Q to 3Q18 TTM** 140 Peer Group HAL 17% HAL Peer Group % % 80 6% 6% 7% 60 Q = 100 1% 1% 2% 3% 40 1Q14 1Q15 1Q16 1Q17 1Q Q18 * Excludes certain charges. See slide 18 for reconciliation of adjusted return on average capital employed to return on average capital employed. Return on Average Capital Employed is defined as net income attributable to company plus after tax interest expense divided by debt plus shareholders' equity (average values from the beginning and end of the period). ** Trailing twelve months Peer Group includes Schlumberger and Baker Hughes, a GE Company 16

17 Segment and Geographic Results Millions of dollars Revenue Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q YTD By segment results: Completion and Production $ 2,324 $ 2,114 $2,176 $2,268 $2,604 $3,132 $3,537 $3,804 $3,807 $4,164 $4,170 $ 8,882 $13,077 $ 12,141 Drilling and Evaluation 1,874 1,721 1,657 1,753 1,675 1,825 1,907 2,136 1,933 1,983 2,002 7,005 7,543 5,918 Total $ 4,198 $ 3,835 $3,833 $4,021 $4,279 $4,957 $5,444 $5,940 $5,740 $6,147 $6,172 $15,887 $20,620 $ 18,059 By geographic region: North America $ 1,794 $ 1,516 $1,658 $1,802 $2,231 $2,770 $3,163 $3,400 $3,517 $3,834 $3,739 $ 6,770 $11,564 $ 11,090 Latin America ,860 2,116 1,458 Europe / Africa / CIS ,993 2,781 2,199 Middle East / Asia 1,085 1,048 1,016 1, ,000 1,029 1,149 1,050 1,108 1,154 4,264 4,159 3,312 Total $ 4,198 $ 3,835 $3,833 $4,021 $4,279 $4,957 $5,444 $5,940 $5,740 $6,147 $6,172 $15,887 $20,620 $ 18,059 Operating Income/(Loss) Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q Completion and Production $ 32 $ (34) $ 24 $ 85 $ 147 $ 397 $ 527 $ 554 $ 500 $ 669 $ 613 $ 107 $ 1,625 $ 1,782 Drilling and Evaluation Corporate and other (46) (60) (47) (111) (66) (114) (71) (79) (69) (71) (78) (265) (330) (218) Impairments and other charges (2,766) (423) (169) (262) (385) (265) (3,357) (647) (265) Merger-related costs (538) (3,519) (4,057) Total $(3,079) $(3,880) $ 128 $ 60 $ 203 $ 146 $ 642 $ 383 $ 354 $ 789 $ 716 $ (6,771) $ 1,374 $ 1,859 CAPEX $ 234 $ 213 $ 178 $ 173 $ 265 $ 327 $ 342 $ 439 $ 501 $ 565 $ 409 $ 798 $ 1,373 $ 1,475 DDA ,503 1,556 1,184 17

18 Reconciliation of As Reported ROACE to Adjusted ROACE ($millions) TTM 3Q 2018 As reported net income attributable to company $3,500 $(671) $(5,763) $(463) $167 Interest expense, after-tax As reported operating profit, after-tax 3,789 (341) (5,234) Adjustments, after-tax (15) 1,972 5,621 1,440 1,579 Adjusted operating profit, after-tax (a) $3,774 $1,631 $ 387 $ 1,494 $2,213 Average capital employed (b) 22,785 27,606 26,378 20,561 19,383 As reported ROACE (c) 17% (1%) (20%) 0% 3% Adjusted ROACE (c) 17% 6% 1% 7% 11% (a) (b) Management believes that operating income adjusted for certain charges is useful to investors to assess and understand operating performance, especially when comparing results with previous and subsequent periods or forecasting performance for future periods, primarily because management views the charges to be outside of the company's normal operating results. Management analyzes operating income without the impact of these charges as an indicator of performance, to identify underlying trends in the business, and to establish operational goals. See slide 17 for further details on these adjustments, pre-tax. Average capital employed is a statistical mean of the combined values of debt and shareholders equity for the beginning and end of the period. (c) As reported return on average capital employed (ROACE) is calculated as: As reported operating profit, after-tax divided by Average capital employed. Adjusted ROACE is calculated as: Adjusted operating profit, after-tax divided by Average capital employed. 18

19 Summary Best-in-Class Unconventional Solutions Comprehensive Mature Fields Capabilities Robust Deepwater Services Portfolio Expanded Platform for Superior Growth, Margins and Returns 19

20 Third Quarter 2018 Update NYSE Stock Symbol: HAL Common Dividend: $0.18 per quarter Shares Outstanding: 876 Million as of 10/19/ Investor Relations Contacts: Lance Loeffler, Vice President Marina Matselinskaya, Director or