Halliburton Company — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023; comparisons are with Q1 2022 unless otherwise noted. Halliburton provides products and services to the energy industry through Completion and Production and Drilling and Evaluation. Amounts below are in millions of dollars, except per-share data and percentages.
Financial performance and position
| Metric | Q1 2023 | Q1 2022 / prior date |
|---|---|---|
| Revenue | $5,677 | $4,284; up 33% |
| Operating income | $977 | $511; up 91% |
| Operating margin | 17.2% | 11.9% |
| Net income attributable to Halliburton | $651 | $263 |
| Diluted EPS | $0.72 | $0.29 |
| Cash from operations | $122 | $(50) |
| Capital expenditures | $268 | $189 |
| Cash and equivalents | $1,879 at March 31, 2023 | $2,346 at December 31, 2022 |
| Long-term debt | $7,929 at March 31, 2023 | $7,928 at December 31, 2022 |
Revenue grew across both segments: Completion and Production rose 45% to $3,409, with operating income of $666; Drilling and Evaluation rose 17% to $2,268, with operating income of $369. North America revenue increased 44% to $2,765; international revenue rose 23%. The U.S. accounted for 47% of revenue, versus 43% a year earlier.
Operating cash flow included a $728 million net use of cash from receivables, inventories, and accounts payable, primarily reflecting higher receivables and inventory. Cash declined by $467 million in the quarter. Halliburton paid $145 million in dividends and repurchased $100 million of stock under its repurchase program. Current assets were $11,245 and current liabilities $5,266 at quarter-end.
Changes, outlook, and risks
- Management attributed growth primarily to higher North American pressure-pumping activity and pricing, along with stronger drilling-related, wireline, testing, and completion activity in international markets. Results were partly offset by the sale of Russian operations in Q3 2022.
- Management expects 2023 capital spending of approximately 5–6% of revenue and targets returning at least 50% of annual free cash flow to shareholders through dividends and repurchases. The quarterly dividend rate was $0.16 per share.
- Management expected international exploration and production activity to grow 17–19% in 2023 versus 2022, and North American customer spending to increase at least 15%. These are expectations, not guarantees. Management cited commodity-price volatility, demand and economic uncertainty, geopolitical conditions, and supply-chain lead times as relevant factors.
- Reported Q1 average WTI and Brent prices were $76.08 and $81.17 per barrel, respectively, below 2022 averages. Management noted inflation in frac sand, chemicals, cement, and logistics costs, and said it seeks to pass much of the cost increases to customers.
- Liquidity included $1.9 billion of cash and $3.5 billion of available committed revolving credit, expiring in April 2027. Management described its debt maturity profile as manageable, with approximately $500 million coming due beginning in 2025 through 2027. Credit ratings were BBB+ / A-2 from S&P and Baa1 / P-2 from Moody’s, both with stable outlooks.
- Receivables from Halliburton’s primary Mexican customer were approximately 11% of total receivables at March 31, 2023; the company reported payment delays but said amounts were not in dispute and it did not expect material write-offs. Supplier-finance obligations included in accounts payable were $321 million.
- As a subsequent event, Halliburton began Blue Chip Swap transactions in Argentina in April to remit cash. The company estimated these transactions could produce a $60 million investment loss in Q2 2023, reflecting Argentina’s currency controls and the gap between official and parallel exchange rates.
- Approximately $2.1 billion of letters of credit, bank guarantees, and surety bonds were outstanding. Some letters of credit could require cash collateral under specified triggering events; none had occurred. Management said ordinary-course legal matters were not expected to materially adversely affect results or financial position, while acknowledging outcomes are uncertain.
- The filing reported no material changes to previously disclosed risk factors, no material change in market-risk exposure, and effective disclosure controls as of March 31, 2023. Results for the quarter may not indicate full-year results.
Important facts for investors to verify
- Whether revenue and margin growth persists, particularly as North American activity, pricing, and international demand evolve.
- Whether working-capital investment and receivable collections convert reported earnings into stronger operating cash flow.
- Whether planned capital spending and shareholder returns remain consistent with the stated free-cash-flow framework and liquidity needs.
- The realized Q2 impact of Argentina’s Blue Chip Swap transactions and any changes in customer payment delays or credit exposure.
- How commodity prices, supply-chain costs, customer spending, and geopolitical developments affect the company’s outlook and segment performance.