Halliburton(US:HAL)2022-01-24 16:52Financial Data and Key Metrics Changes - Halliburton reported total revenue of $15.3 billion for 2021, with an operating income of $1.8 billion, reflecting growth in both revenue and margins across divisions [8][30] - In Q4 2021, total company revenue was $4.3 billion, an 11% increase sequentially, while operating income grew by 20% to $550 million [30][10] - The Completion and Production division achieved a 15% operating margin for the year, while the Drilling and Evaluation division reached 12% margins for the first time since 2014 [8][30] Business Line Data and Key Metrics Changes - The Completion and Production division's revenue in Q4 was $2.4 billion, up 10% sequentially, with operating income increasing by 8% to $347 million [31] - The Drilling and Evaluation division saw revenue rise to $1.9 billion, an 11% increase, with operating income surging 45% to $269 million [32] - Completion tool sales showed significant growth, with the current order book more than doubling from the previous year, indicating strong future profitability [10][48] Market Data and Key Metrics Changes - North America experienced a 10% revenue increase in Q4, driven by higher pressure pumping activity and drilling-related services [33] - Latin America revenue increased by 7%, attributed to higher project management activity and increased drilling services [34] - The Middle East/Asia region saw a 16% revenue increase, driven by higher completion tool sales and wireline activity [35] Company Strategy and Development Direction - Halliburton aims to maximize cash flow in North America while pursuing profitable growth internationally, focusing on high-return opportunities [12][15] - The company is investing in technology and digitalization to enhance asset value and operational efficiency, with over 50 new technologies launched in 2021 [13][18] - Halliburton is committed to advancing a sustainable energy future through initiatives like Halliburton Labs, which supports clean energy startups [20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2022, anticipating strong growth driven by increasing customer urgency and a favorable macro environment [7][22] - The company expects international customer spending to increase by mid-teens in 2022, with significant investment opportunities in the Middle East, Russia, and Latin America [22] - Management highlighted the importance of short-cycle production opportunities to meet rising oil demand, which aligns with Halliburton's service offerings [28] Other Important Information - Halliburton generated $1.4 billion in free cash flow for the full year and ended 2021 with $3 billion in cash, even after retiring $685 million of long-term debt [9][37] - The company announced a quarterly dividend increase to $0.12 per share, reflecting confidence in cash generation capacity [11] Q&A Session Summary Question: Can you discuss the cadence of this cycle and customer urgency? - Management noted the fragility of supply and returning demand, indicating a longer upcycle with increasing activity and pricing [42] Question: How do you view shareholder returns going forward? - Management expects to continue finding opportunities to return cash to shareholders while paying down debt, with a focus on growing shareholder distributions [45] Question: What are the expectations for C&P margins and completion tool orders? - Management expressed satisfaction with 15% margins and highlighted the doubling of completion tool orders as a positive indicator for 2022 [46][48] Question: How do you see e-frac deployment developing? - Management views e-frac as a replacement for current equipment, contingent on favorable terms and conditions [49] Question: What risks do you see for achieving the 400 basis-point margin increase target for 2023? - Management is optimistic about simultaneous growth in North America and international markets, viewing risks as manageable [52] Question: How do you see frac fleet utilization and pricing in the back half of '22? - Management indicated that the market is close to 90% utilized, with expectations for tightening and increased pricing as activity grows [56]