Analysis of Reportable Segments
Halliburton Co. operates in 2 segments: Completion and Production and Drilling and Evaluation.
Segment Profit Margin
Halliburton Co., profit margin by reportable segment
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | |
|---|---|---|---|---|---|
| Completion and Production | 14.26% | 12.40% | 1.20% | 7.81% | 17.82% |
| Drilling and Evaluation | 9.29% | 9.52% | 11.33% | 15.26% | 13.24% |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
- Completion and Production Segment Profit Margin
- Over the observed periods, the Completion and Production profit margin exhibits a pronounced volatility. Beginning at a relatively high level of 17.82% at the end of 2014, a sharp decline occurred in 2015 to 7.81%, followed by a further drastic drop to a low of 1.2% in 2016. This suggests significant operational or market challenges during this period. However, a recovery trend is observable post-2016, with the margin rising to 12.4% in 2017 and further to 14.26% in 2018, indicating improvement in profitability and possibly enhanced operational efficiency or favorable market conditions in the latter years.
- Drilling and Evaluation Segment Profit Margin
- This segment displays a relatively more stable but generally declining profit margin trend across the timeframe presented. Starting at 13.24% in late 2014, the margin increased slightly to 15.26% in 2015, denoting an improvement. Subsequently, the profit margin decreased consistently each year, dropping to 11.33% in 2016, then to 9.52% and 9.29% in 2017 and 2018, respectively. The downward trend after 2015 suggests diminishing profitability, which could be attributed to increasing costs, pricing pressures, or other industry-specific factors impacting this segment negatively.
- Comparative Insights
- When comparing the two segments, Completion and Production started markedly stronger but experienced significant instability with a notable trough in 2016, followed by a recovery phase. Conversely, Drilling and Evaluation had a more modest start with less dramatic fluctuations but showed a steady decline in profitability after peaking in 2015. This contrast highlights that Completion and Production may be subject to more volatile market or operational conditions, while Drilling and Evaluation faces persistent but gradual profitability challenges during the same period.
Segment Profit Margin: Completion and Production
Halliburton Co.; Completion and Production; segment profit margin calculation
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Operating income (loss) | 2,278) | 1,621) | 107) | 1,069) | 3,610) |
| Revenue | 15,973) | 13,077) | 8,882) | 13,682) | 20,253) |
| Segment Profitability Ratio | |||||
| Segment profit margin1 | 14.26% | 12.40% | 1.20% | 7.81% | 17.82% |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Segment profit margin = 100 × Operating income (loss) ÷ Revenue
= 100 × 2,278 ÷ 15,973 = 14.26%
- Revenue Trends
- Revenue experienced a significant decline from US$20,253 million in 2014 to US$8,882 million in 2016. Following this low, there was a notable recovery over the next two years, with revenue increasing to US$13,077 million in 2017 and further to US$15,973 million in 2018. Despite this recovery, the revenue in 2018 remained below the 2014 level, indicating that full restoration of sales volume or prices was not achieved within the observed period.
- Operating Income (Loss) Patterns
- Operating income reflected a pronounced downturn, decreasing sharply from US$3,610 million in 2014 to a minimal amount of US$107 million in 2016. This mirrored the revenue trend but with even more significant contraction. Subsequently, operating income rebounded considerably, reaching US$1,621 million in 2017 and US$2,278 million in 2018. Despite this improvement, the segment had not fully recuperated to the 2014 operating income levels by the end of 2018.
- Segment Profit Margin Dynamics
- The profit margin showed a clear downward trajectory from 17.82% in 2014 to a very slim 1.2% in 2016, indicating severe margin compression during this period. Recovery began in 2017, with the margin increasing to 12.4%, and further improvement to 14.26% was observed in 2018. This pattern suggests that after facing margin pressure, the segment was able to regain operational efficiency or pricing power but still did not return to its highest margin level seen in 2014.
- Overall Analysis
- The data reveals that the segment encountered significant challenges over the analyzed five-year period, with a peak in performance in 2014 followed by a sharp decline to 2016. Recovery commenced thereafter in revenue, operating income, and profit margins, suggesting a positive response to potentially adverse market or operational conditions. While the improvements between 2017 and 2018 are notable, none of the key financial indicators fully recovered to the levels observed in 2014, implying ongoing pressures or a changed operational environment.
Segment Profit Margin: Drilling and Evaluation
Halliburton Co.; Drilling and Evaluation; segment profit margin calculation
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Operating income (loss) | 745) | 718) | 794) | 1,519) | 1,671) |
| Revenue | 8,022) | 7,543) | 7,005) | 9,951) | 12,617) |
| Segment Profitability Ratio | |||||
| Segment profit margin1 | 9.29% | 9.52% | 11.33% | 15.26% | 13.24% |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Segment profit margin = 100 × Operating income (loss) ÷ Revenue
= 100 × 745 ÷ 8,022 = 9.29%
- Revenue Trends
- The revenue experienced a significant decline from 2014 to 2016, dropping from 12,617 million US dollars to 7,005 million US dollars. Following this decrease, there was a moderate recovery over the next two years, with revenue rising to 7,543 million in 2017 and further to 8,022 million in 2018. Despite this partial rebound, the revenue in 2018 remained below the 2014 level.
- Operating Income (Loss) Trends
- Operating income showed a downward trend in line with the revenue decline. It decreased from 1,671 million US dollars in 2014 to 718 million in 2017. In 2018, a slight improvement was observed as operating income rose to 745 million US dollars. Despite the increase, the operating income in 2018 was significantly lower compared to 2014.
- Segment Profit Margin Trends
- The segment profit margin fluctuated over the period, beginning at 13.24% in 2014 and increasing to a peak of 15.26% in 2015. Subsequently, it declined steadily to 9.29% by 2018. The decrease in margin post-2015 indicates a reduction in profitability relative to revenue, possibly reflecting increased costs or pricing pressures in the segment.
- Overall Analysis
- The segment experienced a challenging period with sharply declining revenue and operating income from 2014 through 2016. Although some recovery was noted in revenue and operating income after 2016, profitability in terms of segment profit margin consistently decreased after 2015. This suggests that while the segment partially regained sales volumes or pricing, the efficiency or cost structure deteriorated, negatively impacting overall profit margins.
Segment Return on Assets (Segment ROA)
Halliburton Co., ROA by reportable segment
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | |
|---|---|---|---|---|---|
| Completion and Production | 17.22% | 13.20% | 1.03% | 7.84% | 22.52% |
| Drilling and Evaluation | 9.27% | 9.16% | 9.37% | 14.42% | 14.87% |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
- Completion and Production Segment ROA
- The Return on Assets (ROA) for the Completion and Production segment showed a significant decline from 22.52% in 2014 to a low of 1.03% in 2016. This represents a substantial drop indicating reduced efficiency or profitability in asset usage during this period. However, there was a notable recovery in subsequent years, with ROA rising to 13.20% in 2017 and further improving to 17.22% in 2018. Although the recovery did not reach the initial 2014 level, the upward trend from 2016 onwards suggests improving operational performance or asset management in this segment.
- Drilling and Evaluation Segment ROA
- The Drilling and Evaluation segment exhibited a relatively stable but modest ROA over the reported periods. Starting at 14.87% in 2014, there was a slight decrease to 14.42% in 2015, followed by a more pronounced decline to 9.37% in 2016. The ROA then remained relatively steady around 9.16% in 2017 and 9.27% in 2018. This indicates a period of reduced returns after 2014 but a stabilization of asset efficiency in the latter years. The segment did not experience the same level of volatility as the Completion and Production segment, maintaining a more consistent albeit lower level of profitability relative to its asset base.
- Comparative Insights
- Comparing the two segments, Completion and Production showed greater variability in ROA with a sharp decline followed by a partial recovery, whereas Drilling and Evaluation demonstrated a more stable but lower ROA profile throughout the period. The Completion and Production segment's recovery after 2016 could point to strategic adjustments or market improvements impacting asset returns positively. In contrast, the Drilling and Evaluation segment's steady but lower ROA suggests consistent operational performance without significant gains or losses in asset utilization efficiency.
Segment ROA: Completion and Production
Halliburton Co.; Completion and Production; segment ROA calculation
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Operating income (loss) | 2,278) | 1,621) | 107) | 1,069) | 3,610) |
| Total assets | 13,231) | 12,276) | 10,349) | 13,628) | 16,033) |
| Segment Profitability Ratio | |||||
| Segment ROA1 | 17.22% | 13.20% | 1.03% | 7.84% | 22.52% |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Segment ROA = 100 × Operating income (loss) ÷ Total assets
= 100 × 2,278 ÷ 13,231 = 17.22%
The reported data reveals notable fluctuations across the examined periods for the “Completion and Production” segment. Operating income experienced a significant decline from 2014 to 2016, dropping sharply from 3,610 million USD to a mere 107 million USD. However, from 2016 onwards, there was a marked recovery, with operating income rising to 1,621 million USD in 2017 and further increasing to 2,278 million USD in 2018.
Total assets followed a generally declining trend from 2014 through 2016, falling from 16,033 million USD to 10,349 million USD, indicating a possible divestment or revaluation of segment assets during this period. In 2017 and 2018, total assets showed a rebound, increasing to 12,276 million USD and then to 13,231 million USD respectively, suggesting repositioning or reinvestment in the segment.
The segment return on assets (ROA) mirrors the trend observed in operating income. It dropped dramatically from a high efficiency of 22.52% in 2014 to a low of 1.03% in 2016, indicating very low profitability relative to the asset base at its nadir. From 2017 onwards, ROA improved substantially to 13.2% and then to 17.22% in 2018, implying enhanced asset utilization and operational efficiency following the prior years of underperformance.
- Operating Income
- Strong decline from 2014 to 2016, followed by significant recovery thereafter.
- Total Assets
- Decline until 2016, suggesting contraction or asset write-downs, followed by asset growth in the two subsequent years.
- Segment ROA
- Parallels the operating income trend, indicating low profitability in mid-period with improved returns by 2018.
Overall, the data depicts a segment facing considerable operational and asset challenges culminating in a trough in 2016. Subsequently, the segment shows substantial recovery and enhanced profitability, supported by an improved asset base and more efficient usage of those assets by the end of the period analyzed.
Segment ROA: Drilling and Evaluation
Halliburton Co.; Drilling and Evaluation; segment ROA calculation
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Operating income (loss) | 745) | 718) | 794) | 1,519) | 1,671) |
| Total assets | 8,037) | 7,837) | 8,473) | 10,531) | 11,237) |
| Segment Profitability Ratio | |||||
| Segment ROA1 | 9.27% | 9.16% | 9.37% | 14.42% | 14.87% |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Segment ROA = 100 × Operating income (loss) ÷ Total assets
= 100 × 745 ÷ 8,037 = 9.27%
- Operating Income (Loss)
- The operating income demonstrates a declining trend from 2014 to 2017, falling from 1,671 million US dollars in 2014 to 718 million US dollars in 2017. There is a slight recovery in 2018, with operating income increasing to 745 million US dollars. Despite this partial rebound in 2018, the overall trend over the five-year period is downward, reflecting significant decreases in profitability.
- Total Assets
- Total assets in this segment decreased steadily from 11,237 million US dollars in 2014 to 7,837 million US dollars in 2017. In 2018, there was a moderate increase to 8,037 million US dollars. This trend indicates a contraction in asset base through 2017, with a minor expansion in the final year observed.
- Segment Return on Assets (ROA)
- The segment ROA follows a pattern consistent with operating income and total assets. It declined from 14.87% in 2014 to 9.16% in 2017, indicating reduced efficiency in generating profit from assets over time. A slight improvement to 9.27% in 2018 suggests a modest recovery in asset utilization efficiency, although it remains significantly below the levels seen at the start of the period.
- Overall Trends and Insights
- The data reflects a period of contraction and reduced profitability in this segment between 2014 and 2017, characterized by decreases in operating income, total assets, and return on assets. The slight improvements in 2018 across all three metrics may indicate early signs of stabilization or recovery. However, the segment's performance in 2018 does not reach the higher profitability and asset levels of 2014 and 2015, pointing to ongoing challenges in restoring previous financial strength.
Segment Asset Turnover
Halliburton Co., asset turnover by reportable segment
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | |
|---|---|---|---|---|---|
| Completion and Production | 1.21 | 1.07 | 0.86 | 1.00 | 1.26 |
| Drilling and Evaluation | 1.00 | 0.96 | 0.83 | 0.94 | 1.12 |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
- Completion and Production Segment Asset Turnover
- The asset turnover ratio for the Completion and Production segment started at 1.26 in 2014, indicating a relatively high efficiency in utilizing assets to generate revenue. However, this ratio declined to 1.00 in 2015 and further to 0.86 in 2016, signaling a reduction in asset utilization efficiency during this period. From 2016 onwards, the ratio showed a recovery trend, increasing to 1.07 in 2017 and reaching 1.21 in 2018, which suggests a gradual improvement in asset turnover and operational performance.
- Drilling and Evaluation Segment Asset Turnover
- The Drilling and Evaluation segment exhibited a similar pattern, with asset turnover starting at 1.12 in 2014 and decreasing to 0.94 in 2015. The downward trend continued to 0.83 in 2016, marking the lowest point in the observed period. Subsequently, the ratio increased to 0.96 in 2017 and slightly improved to 1.00 in 2018. This indicates a recovery in asset efficiency, although it remained slightly below the initial 2014 level by the end of 2018.
- Comparative Insights
- Both segments experienced a decline in asset turnover from 2014 to 2016, reflecting a possible contraction in asset productivity during these years. The decline was more pronounced in the Drilling and Evaluation segment. Starting in 2017, both segments demonstrated improvement, with Completion and Production showing a more robust recovery by 2018. Despite the mid-period setbacks, asset turnover ratios in 2018 reverted close to or slightly below their 2014 levels, suggesting moderate restoration of operational efficiency.
Segment Asset Turnover: Completion and Production
Halliburton Co.; Completion and Production; segment asset turnover calculation
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Revenue | 15,973) | 13,077) | 8,882) | 13,682) | 20,253) |
| Total assets | 13,231) | 12,276) | 10,349) | 13,628) | 16,033) |
| Segment Activity Ratio | |||||
| Segment asset turnover1 | 1.21 | 1.07 | 0.86 | 1.00 | 1.26 |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Segment asset turnover = Revenue ÷ Total assets
= 15,973 ÷ 13,231 = 1.21
The segment experienced notable fluctuations in its financial performance over the five-year period.
- Revenue
- Revenue exhibited a declining trend from 2014 to 2016, falling substantially from 20,253 million USD to 8,882 million USD. Following this trough, revenue began to recover in 2017 and continued to increase in 2018, reaching 15,973 million USD. Despite the recovery, revenue in 2018 remained below the initial 2014 level.
- Total Assets
- Total assets mirrored the revenue trend to some extent, decreasing from 16,033 million USD in 2014 to 10,349 million USD in 2016. After this decline, assets increased gradually over the next two years, reaching 13,231 million USD by the end of 2018. This suggests a partial asset base restoration following a period of contraction.
- Segment Asset Turnover
- The segment asset turnover ratio declined from 1.26 in 2014 to a low of 0.86 in 2016, reflecting decreased efficiency in generating revenue from assets during this downturn. Thereafter, the ratio steadily improved in 2017 and 2018, reaching 1.21. This improvement indicates a recovery in operational efficiency, approaching the level observed at the start of the period.
Overall, the data reflect a cycle of contraction up to 2016, likely influenced by challenging market conditions, followed by a period of recovery through 2018. Both revenue and asset levels contracted significantly before demonstrating signs of rebound, while operational efficiency as measured by asset turnover declined during the downturn and improved during the recovery phase. The trends underscore a resilient segment recovering asset utilization and sales volume following the mid-period trough.
Segment Asset Turnover: Drilling and Evaluation
Halliburton Co.; Drilling and Evaluation; segment asset turnover calculation
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Revenue | 8,022) | 7,543) | 7,005) | 9,951) | 12,617) |
| Total assets | 8,037) | 7,837) | 8,473) | 10,531) | 11,237) |
| Segment Activity Ratio | |||||
| Segment asset turnover1 | 1.00 | 0.96 | 0.83 | 0.94 | 1.12 |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Segment asset turnover = Revenue ÷ Total assets
= 8,022 ÷ 8,037 = 1.00
- Revenue
- The revenue experienced a significant decline from 2014 to 2016, falling from 12,617 million USD to 7,005 million USD. After this steep decrease, revenue showed modest recovery, increasing to 7,543 million USD in 2017 and further to 8,022 million USD in 2018. Despite this rebound, the revenue in 2018 remained well below the 2014 level.
- Total assets
- Total assets followed a downward trend from 2014 through 2017, declining from 11,237 million USD to 7,837 million USD. In 2018, there was a slight increase to 8,037 million USD, indicating some stabilization after the period of asset reduction.
- Segment asset turnover
- The segment asset turnover ratio demonstrated a decreasing trend from 2014 (1.12) to 2016 (0.83), reflecting reduced efficiency in generating revenue from assets deployed. However, an improvement was observed in 2017 (0.96) and further in 2018 (1.00), suggesting a gradual recovery in asset utilization efficiency.
Segment Capital Expenditures to Depreciation
Halliburton Co., capital expenditures to depreciation by reportable segment
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | |
|---|---|---|---|---|---|
| Completion and Production | 1.29 | 1.17 | 0.56 | 1.32 | 1.68 |
| Drilling and Evaluation | 1.28 | 0.46 | 0.52 | 1.02 | 1.39 |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
The analysis of the annual reportable segment capital expenditures to depreciation ratios over the period from 2014 to 2018 reveals several notable trends across the two segments: Completion and Production, and Drilling and Evaluation.
- Completion and Production
- The ratio started at 1.68 in 2014, indicating capital expenditures significantly exceeded depreciation at that time. There was a noticeable decline to 1.32 in 2015, followed by a sharp drop to 0.56 in 2016. This decline suggests a substantial reduction in capital expenditures relative to depreciation during this period. However, in 2017, the ratio rebounded to 1.17, indicating increased capital spending. A further moderate increase to 1.29 was observed in 2018, showing a recovery trend but still below the 2014 level.
- Drilling and Evaluation
- This segment displayed a ratio of 1.39 in 2014, similar to Completion and Production but slightly lower. The ratio decreased steadily to 1.02 in 2015, and then sharply declined to 0.52 in 2016, mirroring the pattern seen in the other segment and indicating reduced investment versus asset depreciation. The ratio further declined to 0.46 in 2017, suggesting capital expenditures were less than half the depreciation amount, representing a period of underinvestment or asset base contraction. However, a significant increase to 1.28 in 2018 reflects a strong recovery in capital expenditures relative to depreciation.
Overall, both segments experienced a decline in capital expenditures relative to depreciation during 2015 and 2016, reaching their lowest points in 2016 and 2017. The data suggests a period of capital discipline or reduced investment during these years. Recovery in capital expenditure intensity began in 2017 and continued into 2018, with both segments returning to or approaching ratios above 1, indicating capital expenditures once again outpaced depreciation. The recovery in 2018 was particularly marked in the Drilling and Evaluation segment.
Segment Capital Expenditures to Depreciation: Completion and Production
Halliburton Co.; Completion and Production; segment capital expenditures to depreciation calculation
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Capital expenditures | 1,364) | 1,111) | 500) | 1,526) | 1,953) |
| Depreciation, depletion and amortization | 1,058) | 953) | 900) | 1,160) | 1,162) |
| Segment Financial Ratio | |||||
| Segment capital expenditures to depreciation1 | 1.29 | 1.17 | 0.56 | 1.32 | 1.68 |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Segment capital expenditures to depreciation = Capital expenditures ÷ Depreciation, depletion and amortization
= 1,364 ÷ 1,058 = 1.29
- Capital Expenditures
- The capital expenditures demonstrate notable variability over the observed period. Beginning at $1,953 million in 2014, the expenditures decreased substantially to $1,526 million in 2015, followed by a sharper decline to $500 million in 2016. The subsequent years show a recovery trend with expenditures increasing to $1,111 million in 2017 and further climbing to $1,364 million in 2018. This pattern suggests a period of significant scaling back followed by a gradual increase in investment activities.
- Depreciation, Depletion and Amortization (DDA)
- The depreciation, depletion, and amortization figures reflect a more stable pattern compared to capital expenditures. The amounts recorded are $1,162 million in 2014 and $1,160 million in 2015, showing virtually no change between these two years. A decrease is observed in 2016 to $900 million, followed by slight increases to $953 million in 2017 and $1,058 million in 2018. Overall, while there is some fluctuation, the DDA maintains moderate stability and does not mirror the sharp declines and recoveries seen in capital expenditures.
- Segment Capital Expenditures to Depreciation Ratio
- The ratio of segment capital expenditures to depreciation reveals the relationship between investment and the consumption of assets over time. Starting at 1.68 in 2014, this ratio declines to 1.32 in 2015 and reaches its lowest point at 0.56 in 2016, indicating that capital expenditures were significantly lower relative to depreciation in that year. In 2017, the ratio increases to 1.17 and further to 1.29 in 2018, suggesting a reinvestment trend and a recovering capital expenditure pattern relative to asset depreciation. This ratio underscores the marked dip in investment in 2016 and the subsequent partial rebound.
Segment Capital Expenditures to Depreciation: Drilling and Evaluation
Halliburton Co.; Drilling and Evaluation; segment capital expenditures to depreciation calculation
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Capital expenditures | 657) | 261) | 297) | 650) | 1,297) |
| Depreciation, depletion and amortization | 512) | 563) | 569) | 638) | 934) |
| Segment Financial Ratio | |||||
| Segment capital expenditures to depreciation1 | 1.28 | 0.46 | 0.52 | 1.02 | 1.39 |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Segment capital expenditures to depreciation = Capital expenditures ÷ Depreciation, depletion and amortization
= 657 ÷ 512 = 1.28
- Capital Expenditures
- The capital expenditures show a significant decline from 2014 to 2017, dropping from 1,297 million USD to 261 million USD. This represents a substantial reduction of approximately 80%. However, in 2018, capital expenditures increased notably to 657 million USD, indicating a partial recovery after several years of tightened spending.
- Depreciation, Depletion and Amortization (DD&A)
- The DD&A figures follow a downward trend throughout the period, decreasing steadily from 934 million USD in 2014 to 512 million USD in 2018. This decline suggests a reduction in the asset base subject to depreciation or changes in the useful life estimates of assets within the segment.
- Segment Capital Expenditures to Depreciation Ratio
- The ratio of capital expenditures to depreciation reveals a corresponding pattern with capital expenditures. Starting at 1.39 in 2014, the ratio declines to a low of 0.46 in 2017, indicating that capital spending was less than half of depreciation expense by then. This suggests the company was not fully reinvesting in assets relative to their consumption during this period. In 2018, the ratio increases again to 1.28, reflecting a renewal of investment activity approaching the levels of asset consumption.
- Overall Analysis
- Between 2014 and 2017, there is a clear trend of cost-cutting and decreased investment in the Drilling and Evaluation segment, likely reflecting strategic adjustments or responses to market conditions. The decline in depreciation expenses further supports an aging or shrinking asset base during this time. The rebound in capital expenditures in 2018, along with the increased expenditure to depreciation ratio, suggests a shift towards reinvestment and potential growth efforts in the segment after a period of consolidation.
Revenue
Halliburton Co., revenue by reportable segment
US$ in millions
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | |
|---|---|---|---|---|---|
| Completion and Production | 15,973) | 13,077) | 8,882) | 13,682) | 20,253) |
| Drilling and Evaluation | 8,022) | 7,543) | 7,005) | 9,951) | 12,617) |
| Total | 23,995) | 20,620) | 15,887) | 23,633) | 32,870) |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
- Revenue Trends in Completion and Production Segment
- The revenue from the Completion and Production segment exhibited a fluctuating trend over the five-year period. Starting at 20,253 million US dollars in 2014, the segment experienced a significant decrease in 2015, falling to 13,682 million US dollars, and continued to decline further in 2016 to 8,882 million US dollars. However, for 2017 and 2018, the segment saw a recovery, with revenues rising to 13,077 million and subsequently to 15,973 million US dollars, indicating a partial rebound towards the end of the period.
- Revenue Trends in Drilling and Evaluation Segment
- The Drilling and Evaluation segment also showed a consistent decline initially, descending from 12,617 million US dollars in 2014 to 9,951 million in 2015, and further to 7,005 million in 2016. Unlike the Completion and Production segment, the decline slowed in 2017 with a moderate increase to 7,543 million US dollars, followed by a slight growth to 8,022 million US dollars in 2018. This segment’s revenue contraction was less steep in the latter years compared to the earlier part of the period.
- Total Segment Revenue
- The aggregate revenue which combines both segments reflected the overall impact of the trends seen at the segment level. The total revenue witnessed a sharp decline from 32,870 million US dollars in 2014 to 15,887 million US dollars by 2016, which represents more than a 50% reduction in just two years. After this trough, the total revenue increased to 20,620 million in 2017 and continued to rise to 23,995 million US dollars in 2018. This pattern suggests an industry or company-specific recovery phase following a period of significant downturn.
- Insights and Observations
- Both segments experienced their lowest revenue figures in 2016, indicating a challenging market environment during that time. The Completion and Production segment showed a more pronounced volatility with steeper declines and sharper rebounds than the Drilling and Evaluation segment, which displayed a somewhat more gradual pattern of decline and stabilization. The recovery phase in the final two years of the period is notable and suggests improving market conditions or successful strategic adjustments by the company. Despite this, neither segment regained their 2014 revenue levels by the end of 2018.
Operating income (loss)
Halliburton Co., operating income (loss) by reportable segment
US$ in millions
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | |
|---|---|---|---|---|---|
| Completion and Production | 2,278) | 1,621) | 107) | 1,069) | 3,610) |
| Drilling and Evaluation | 745) | 718) | 794) | 1,519) | 1,671) |
| Total | 3,023) | 2,339) | 901) | 2,588) | 5,281) |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
- Completion and Production Segment Operating Income (Loss) Trends
- There is a significant decline in operating income from 2014 to 2016, falling sharply from 3,610 million USD to 107 million USD. This decline is followed by a steady recovery in subsequent years, with income increasing to 1,621 million USD in 2017 and further to 2,278 million USD in 2018. Despite the recovery, the 2018 figure remains below the 2014 peak.
- Drilling and Evaluation Segment Operating Income (Loss) Trends
- The operating income for this segment shows a more moderate downward trend compared to the Completion and Production segment. It decreases from 1,671 million USD in 2014 to 794 million USD in 2016, with a slight decline continuing through 2017 (718 million USD) and a marginal increase in 2018 (745 million USD). Overall, the segment experiences a contraction but stabilizes towards the end of the period.
- Total Segment Operating Income (Loss) Trends
- The aggregate operating income of reportable segments declines sharply from 5,281 million USD in 2014 to 901 million USD in 2016. This is followed by a recovery phase, with total income rising to 2,339 million USD in 2017 and further to 3,023 million USD in 2018. Despite this recovery, the total operating income in 2018 remains substantially lower than the 2014 level, indicating persistent challenges or a changed business environment.
- Overall Observations
- The data illustrates a notable downturn in operating income across both segments during the 2014–2016 period, likely reflecting industry-wide or external pressures affecting performance. The subsequent recovery, although encouraging, does not restore operating income to the 2014 highs within the observed timeframe. The Completion and Production segment displays greater volatility and more pronounced changes, whereas the Drilling and Evaluation segment reflects a more gradual decline and stabilization. The overall pattern suggests a period of adaptation and partial recovery rather than full restoration of previous earnings levels.
Capital expenditures
Halliburton Co., capital expenditures by reportable segment
US$ in millions
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | |
|---|---|---|---|---|---|
| Completion and Production | 1,364) | 1,111) | 500) | 1,526) | 1,953) |
| Drilling and Evaluation | 657) | 261) | 297) | 650) | 1,297) |
| Corporate and other | 5) | 1) | 1) | 8) | 33) |
| Total | 2,026) | 1,373) | 798) | 2,184) | 3,283) |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
- Completion and Production
-
The capital expenditures in Completion and Production exhibited a notable decline from 2014 to 2016, dropping from 1,953 million US dollars to 500 million. Following this trough, there was a marked recovery with expenditures rising to 1,111 million in 2017 and further increasing to 1,364 million in 2018. This indicates a period of significant reduction followed by a gradual resurgence in spending within this segment.
- Drilling and Evaluation
-
Expenditures in Drilling and Evaluation experienced a consistent downward trend from 2014 through 2017, decreasing from 1,297 million US dollars to a low of 261 million. In 2018, the trend reversed with capital spending increasing to 657 million, suggesting a renewed focus or increased investment in this area after several years of contraction.
- Corporate and Other
-
The Corporate and other category maintained relatively low and stable capital expenditures throughout the period, with values ranging from a high of 33 million in 2014 to a low of 1 million in 2016 and 2017, and a slight increase to 5 million in 2018. This segment’s spending was minimal compared to others and showed limited volatility.
- Total Capital Expenditures
-
Total capital expenditures followed a pattern reflecting the movements in the major segments. There was a sharp decline from 3,283 million US dollars in 2014 to 798 million in 2016, representing a significant contraction in overall capital investment. Subsequently, expenditures increased to 1,373 million in 2017 and further to 2,026 million in 2018, reflecting a gradual recovery but still remaining below the peak levels observed at the beginning of the period.
Depreciation, depletion and amortization
Halliburton Co., depreciation, depletion and amortization by reportable segment
US$ in millions
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | |
|---|---|---|---|---|---|
| Completion and Production | 1,058) | 953) | 900) | 1,160) | 1,162) |
| Drilling and Evaluation | 512) | 563) | 569) | 638) | 934) |
| Corporate and other | 36) | 40) | 34) | 37) | 30) |
| Total | 1,606) | 1,556) | 1,503) | 1,835) | 2,126) |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
- Completion and Production Segment
- The depreciation, depletion, and amortization expenses for the Completion and Production segment demonstrated a fluctuating trend between 2014 and 2018. Beginning at $1,162 million in 2014, the amount slightly decreased to $1,160 million in 2015. A more noticeable decrease followed in 2016, dropping to $900 million. The figures then showed a recovery, increasing to $953 million in 2017 and further to $1,058 million in 2018, indicating a partial rebound but remaining below the initial 2014 level.
- Drilling and Evaluation Segment
- This segment exhibited a consistent downward trend over the five-year period. Starting at $934 million in 2014, the depreciation, depletion, and amortization expenses reduced considerably each subsequent year: $638 million in 2015, $569 million in 2016, $563 million in 2017, and finally $512 million in 2018. The continuous decline suggests reduced capital asset bases or changes in accounting practices affecting this segment.
- Corporate and Other Segment
- Expenses in the Corporate and other category remained relatively stable throughout the period with minor fluctuations. The values ranged between $30 million and $40 million, starting at $30 million in 2014, peaking at $40 million in 2017, and finishing slightly lower at $36 million in 2018. This stability implies limited changes in capital assets or amortizable items in this segment.
- Total Depreciation, Depletion, and Amortization
- The total aggregation of depreciation, depletion, and amortization expenses declined steadily from $2,126 million in 2014 to a low of $1,503 million in 2016. Following this low point, a moderate increase was observed in subsequent years, reaching $1,606 million by 2018. Overall, this represents a downward trend with some recovery, largely driven by reductions in the Drilling and Evaluation segment and partial offset by increases in Completion and Production.
Total assets
Halliburton Co., total assets by reportable segment
US$ in millions
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | |
|---|---|---|---|---|---|
| Completion and Production | 13,231) | 12,276) | 10,349) | 13,628) | 16,033) |
| Drilling and Evaluation | 8,037) | 7,837) | 8,473) | 10,531) | 11,237) |
| Corporate and shared assets | 4,714) | 4,972) | 8,178) | 12,783) | 4,970) |
| Total | 25,982) | 25,085) | 27,000) | 36,942) | 32,240) |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
The total assets of the segments exhibit notable fluctuations over the five-year period under review. Observing each segment individually reveals distinct trends and variations in their asset base.
- Completion and Production
- This segment shows a decline from US$16,033 million in 2014 to a low of US$10,349 million in 2016. However, it recovers gradually in the following years, reaching US$13,231 million by the end of 2018. The initial decline followed by a moderate recovery suggests a period of contraction and subsequent stabilization or growth in the asset base of this segment.
- Drilling and Evaluation
- The assets in this segment decrease steadily throughout the five years. Starting at US$11,237 million in 2014, the figure diminishes annually to US$8,037 million by 2018. This consistent downward trend indicates a systematic reduction in assets allocated to drilling and evaluation activities.
- Corporate and Shared Assets
- This segment displays the most volatility. Assets more than doubled from US$4,970 million in 2014 to US$12,783 million in 2015, before sharply falling to US$8,178 million in 2016. Subsequently, they decrease further to US$4,972 million in 2017 and slightly decline to US$4,714 million in 2018. Such fluctuations may reflect significant restructuring or reclassification of corporate assets during these years.
- Total Assets
- The aggregate total assets across all segments peaked in 2015 at US$36,942 million. Following this, there was a substantial decline to US$27,000 million in 2016, with a continued decrease to US$25,085 million in 2017. The total assets show a modest rebound to US$25,982 million in 2018. This pattern suggests an overall contraction in the asset base after 2015, with some signs of stabilization emerging towards 2018.