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).
The segment profit margins for the period between 2014 and 2018 exhibit divergent trajectories, characterized by high volatility in the Completion and Production segment and a steady contraction in the Drilling and Evaluation segment.
- Completion and Production Profit Margin
- This segment experienced significant fluctuations, beginning with a margin of 17.82% in 2014. A sharp decline followed, with margins falling to 7.81% in 2015 and reaching a trough of 1.20% in 2016. Subsequently, a strong recovery phase occurred, with margins rebounding to 12.40% in 2017 and further improving to 14.26% by 2018. This pattern indicates a period of severe margin compression followed by a successful operational or market-driven recovery.
- Drilling and Evaluation Profit Margin
- The Drilling and Evaluation segment demonstrated greater relative stability but followed a generally downward trend after an initial increase. The margin rose from 13.24% in 2014 to a peak of 15.26% in 2015. However, a consistent decline was observed over the following three years, with margins dropping to 11.33% in 2016, 9.52% in 2017, and ending at 9.29% in 2018. Unlike the Completion and Production segment, there was no evidence of recovery toward the end of the analyzed period.
Comparatively, while Completion and Production started as the higher-margin segment and suffered the most acute decline, it also showed the most resilience through its recovery. In contrast, Drilling and Evaluation provided a more consistent margin profile in the short term but faced a long-term erosion of profitability.
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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%
The Completion and Production segment experienced significant volatility between 2014 and 2018, characterized by a sharp contraction in both scale and profitability followed by a steady phased recovery.
- Revenue and Operating Income Trends
- A substantial decline in financial performance is observed from 2014 to 2016. Revenue fell from a peak of 20,253 million US dollars in 2014 to a low of 8,882 million US dollars in 2016. During this same period, operating income plummeted from 3,610 million US dollars to 107 million US dollars, indicating a severe impact on the segment's ability to generate profit from its core operations.
- Segment Profit Margin Volatility
- The profit margin exhibited a precipitous drop, falling from 17.82% in 2014 to 1.20% in 2016. This contraction suggests that costs remained relatively high or pricing power diminished significantly as revenues declined. The margin compression peaked in 2016, where profitability reached its lowest point in the observed period.
- Recovery and Margin Expansion
- A recovery trend emerged starting in 2017, with both revenue and operating income returning to growth. Revenue increased to 13,077 million US dollars in 2017 and further to 15,973 million US dollars in 2018. Consequently, the segment profit margin rebounded strongly to 12.40% in 2017 and reached 14.26% by the end of 2018, although it remained below the 2014 peak.
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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%
The Drilling and Evaluation segment experienced a significant contraction in both top-line revenue and operational profitability between 2014 and 2018. While a modest recovery in revenue was observed in the final two years of the period, the segment failed to return to its 2014 performance levels, and profit margins exhibited a consistent downward trajectory after 2015.
- Revenue Trends
- A sharp decline in revenue occurred between 2014 and 2016, falling from 12,617 million US$ to 7,005 million US$. This represents a contraction of approximately 44% over two years. A gradual recovery followed, with revenue increasing to 7,543 million US$ in 2017 and 8,022 million US$ in 2018, though these figures remained substantially below the initial 2014 baseline.
- Operating Income Performance
- Operating income followed a general downward trend, decreasing from 1,671 million US$ in 2014 to a low of 718 million US$ in 2017. Despite the recovery in revenue starting in 2017, operating income remained depressed, showing only a marginal increase to 745 million US$ in 2018. This suggests that the revenue growth observed in the latter period did not translate into a proportional recovery of operational earnings.
- Segment Profit Margin Analysis
- The profit margin exhibited a non-linear progression. An initial increase was observed in 2015, where the margin rose to 15.26% despite a decline in revenue, indicating a period of effective cost optimization. However, this trend reversed sharply in 2016, with margins falling to 11.33%. A continuous decline followed, reaching 9.52% in 2017 and closing at 9.29% in 2018. The sustained erosion of the margin through 2018 indicates that the cost structure became less efficient relative to revenue generation over time.
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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).
The segment return on assets (ROA) for the period between 2014 and 2018 demonstrates divergent performance patterns between the Completion and Production segment and the Drilling and Evaluation segment, characterized by high volatility in the former and a structural step-down in the latter.
- Completion and Production
- This segment experienced significant fluctuation, beginning with a peak ROA of 22.52% in 2014 before undergoing a sharp decline to a low of 1.03% by 2016. Following this trough, a strong recovery trend is evident, with returns ascending to 13.20% in 2017 and reaching 17.22% by 2018. The trajectory suggests a high degree of sensitivity to external market conditions and a subsequent operational recovery.
- Drilling and Evaluation
- The ROA for this segment exhibited greater stability but a general downward shift. After maintaining relatively steady returns between 14.87% in 2014 and 14.42% in 2015, the ROA decreased to 9.37% in 2016. Performance remained plateaued thereafter, with marginal fluctuations resulting in 9.16% in 2017 and 9.27% in 2018, indicating a lower baseline for asset productivity compared to the 2014-2015 period.
Comparative analysis reveals that while Completion and Production achieved the highest individual peak return, it also suffered the most severe contraction. In contrast, Drilling and Evaluation maintained a more consistent return profile from 2016 through 2018, albeit at a level significantly below its initial 2014 performance.
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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 Completion and Production segment exhibited a V-shaped performance trajectory between 2014 and 2018. A significant period of contraction occurred from 2014 to 2016, characterized by a sharp decline in both profitability and the asset base, followed by a consistent recovery phase in the subsequent two years.
- Operating Income Trends
- Operating income experienced a precipitous decline, falling from 3,610 million US$ in 2014 to a low of 107 million US$ in 2016. This represents a substantial erosion of operating profitability over a two-year period. A recovery phase began in 2017, with income rising to 1,621 million US$ and further increasing to 2,278 million US$ by 2018.
- Asset Base Fluctuations
- Total assets decreased from 16,033 million US$ in 2014 to 10,349 million US$ in 2016, suggesting a period of downsizing, asset impairments, or divestments during the downturn. Following the 2016 trough, assets grew steadily to 12,276 million US$ in 2017 and 13,231 million US$ in 2018.
- Segment Return on Assets (ROA) Analysis
- The segment ROA mirrored the volatility of the operating income, plummeting from 22.52% in 2014 to 1.03% in 2016. The magnitude of this drop indicates that the decrease in operating income was far more severe than the reduction in the asset base. However, efficiency improved significantly in the latter two years, with ROA rebounding to 13.20% in 2017 and 17.22% in 2018, signaling a return toward pre-contraction productivity levels.
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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%
The Drilling and Evaluation segment experienced a significant contraction in both profitability and asset base between 2014 and 2017, followed by a period of relative stabilization in 2018. The most pronounced decline occurred between 2015 and 2016, during which operating income and asset efficiency dropped sharply.
- Operating Income Trends
- Operating income declined from a peak of 1,671 million US dollars in 2014 to a low of 718 million US dollars in 2017. The most substantial reduction occurred between 2015 and 2016, where income fell by approximately 47.5%. A slight recovery was observed in 2018, with operating income increasing to 745 million US dollars.
- Asset Base Utilization
- Total assets showed a consistent downward trend from 2014 to 2017, decreasing from 11,237 million US dollars to 7,837 million US dollars. This reduction suggests a strategic downsizing or asset impairment period. In 2018, total assets grew slightly to 8,037 million US dollars, mirroring the marginal recovery seen in operating income.
- Segment Return on Assets (ROA)
- The segment ROA decreased from 14.87% in 2014 to 9.16% in 2017. The sharpest deterioration in asset productivity took place between 2015 and 2016, where the ratio dropped from 14.42% to 9.37%. From 2016 through 2018, the ROA remained remarkably stable, fluctuating within a narrow band between 9.16% and 9.37%, indicating that the segment achieved a new, lower equilibrium of asset efficiency.
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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).
An analysis of segment asset turnover ratios reveals a synchronized cyclical trend across both reportable segments between 2014 and 2018. Both segments experienced a significant contraction in asset efficiency that bottomed in 2016, followed by a consistent recovery phase through the end of the period.
- Completion and Production
- This segment exhibited a V-shaped trend in asset utilization. The turnover ratio declined from 1.26 in 2014 to a period low of 0.86 in 2016. A subsequent recovery is observed, with the ratio increasing to 1.07 in 2017 and reaching 1.21 by December 31, 2018, nearly returning to its initial 2014 efficiency level.
- Drilling and Evaluation
- A similar trajectory is observed in this segment, although it consistently maintained lower turnover ratios than the Completion and Production segment. The ratio decreased from 1.12 in 2014 to a minimum of 0.83 in 2016. The subsequent recovery saw the ratio rise to 0.96 in 2017 and 1.00 in 2018, though it did not fully return to the 2014 baseline by the end of the analyzed period.
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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 financial performance of the Completion and Production segment between 2014 and 2018 was characterized by a significant contraction followed by a period of recovery. The relationship between revenue generation and the asset base shifted markedly over this five-year period, reflecting cyclical volatility in operational efficiency.
- Revenue and Asset Trends
- A sharp decline in revenue is observed from 2014 to 2016, with values falling from US$ 20,253 million to US$ 8,882 million. Total assets followed a similar downward trajectory during this period, decreasing from US$ 16,033 million to US$ 10,349 million. Starting in 2017, both metrics entered a recovery phase, with revenue reaching US$ 15,973 million and assets increasing to US$ 13,231 million by the end of 2018.
- Segment Asset Turnover Analysis
- The asset turnover ratio experienced a consistent decline from 1.26 in 2014 to a low of 0.86 in 2016. This suggests that revenue declined at a faster rate than the segment was able to reduce its asset base, resulting in a temporary decrease in asset productivity. Following 2016, the ratio rebounded to 1.07 in 2017 and further improved to 1.21 in 2018, demonstrating a restoration of efficiency in utilizing assets to drive top-line growth.
- Operational Efficiency Insight
- The volatility in the turnover ratio indicates a high sensitivity of the segment's revenue to external market conditions, while the asset base exhibited greater relative rigidity. The recovery observed in 2017 and 2018 indicates that the segment successfully leveraged its asset base to recapture market demand, nearly returning to the efficiency levels recorded in 2014.
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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
The Drilling and Evaluation segment experienced a period of significant contraction followed by a gradual recovery in operational efficiency between 2014 and 2018. The segment asset turnover ratio reflects a U-shaped trend, declining from a peak in 2014 to a trough in 2016 before trending upward through 2018.
- Revenue Trends
- A substantial decrease in revenue occurred between 2014 and 2016, with values falling from 12,617 million US$ to 7,005 million US$, representing a decline of approximately 44%. This downward trajectory reversed after 2016, with revenue climbing to 7,543 million US$ in 2017 and reaching 8,022 million US$ by 2018.
- Total Asset Management
- Total assets followed a general downward trend for most of the period, decreasing from 11,237 million US$ in 2014 to 7,837 million US$ in 2017. The asset base remained relatively stable between 2017 and 2018, ending the period at 8,037 million US$. The reduction in assets was less aggressive than the initial drop in revenue, which contributed to the temporary decline in asset utilization efficiency.
- Segment Asset Turnover Performance
- The asset turnover ratio declined from 1.12 in 2014 to 0.83 in 2016, indicating that the segment generated less revenue per unit of asset during the market downturn. However, efficiency improved in the subsequent two years, rising to 0.96 in 2017 and returning to 1.00 in 2018. This recovery suggests that the segment successfully optimized its asset base or benefited from renewed revenue growth while maintaining a leaner cost structure.
The overall analysis indicates that while the segment suffered a significant loss of productivity between 2014 and 2016, the subsequent alignment of revenue growth and asset stabilization led to a near-complete recovery of the asset turnover ratio by the end of 2018.
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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 capital expenditures to depreciation ratios for both reportable segments exhibit a significant cyclical trend between 2014 and 2018, characterized by an initial decline, a period of asset base contraction, and a subsequent recovery.
- Completion and Production
- The ratio began at 1.68 in 2014, indicating that capital spending significantly exceeded depreciation. This figure declined steadily to a low of 0.56 in 2016, signifying a period where depreciation outpaced new investment. However, a recovery began in 2017 with a ratio of 1.17, continuing upward to 1.29 by 2018, suggesting a return to an expansionary capital investment strategy.
- Drilling and Evaluation
- A similar downward trajectory is observed, starting at 1.39 in 2014 and falling to 1.02 in 2015. The segment experienced a sustained period of contraction where capital expenditures remained below depreciation levels for two consecutive years, reaching a trough of 0.46 in 2017. A sharp reversal occurred in 2018, with the ratio rising to 1.28, aligning closely with the recovery seen in the Completion and Production segment.
Comparative analysis reveals that while both segments suffered a contraction in capital spending relative to depreciation, the Completion and Production segment returned to a growth posture more rapidly, achieving a ratio above 1.0 by 2017. In contrast, the Drilling and Evaluation segment remained in a contractionary phase until 2018.
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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
The investment profile for the Completion and Production segments exhibits significant volatility between 2014 and 2018, characterized by a sharp contraction in capital spending followed by a gradual recovery phase.
- Capital Expenditure Trends
- Capital expenditures peaked in 2014 at 1,953 million USD and experienced a precipitous decline to a low of 500 million USD by 2016. This represents a substantial reduction in asset investment during that specific window. A subsequent recovery was observed, with expenditures increasing to 1,111 million USD in 2017 and 1,364 million USD in 2018.
- Depreciation, Depletion, and Amortization
- Depreciation remained relatively stable in comparison to the volatility of capital spending. Values fluctuated between a high of 1,162 million USD in 2014 and a low of 900 million USD in 2016. The relative steadiness of these figures indicates a consistent base of depreciable assets throughout the five-year period.
- Segment Capital Expenditures to Depreciation Ratio
- The ratio illustrates a distinct cycle of contraction and expansion. In 2014, a ratio of 1.68 indicated aggressive asset growth. This trend reversed sharply, reaching a nadir of 0.56 in 2016, which suggests that capital investments were insufficient to replace the value of assets being depreciated. From 2017 onward, the ratio recovered to 1.17 and 1.29, indicating a return to a sustainable level of investment where capital spending once again exceeded depreciation.
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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
The financial trajectory of the Drilling and Evaluation segment from 2014 to 2018 is characterized by a period of significant capital contraction followed by a recovery in investment levels during the final year of the period.
- Capital Expenditure Trends
- Capital expenditures experienced a steep decline from 1,297 million US dollars in 2014 to a low of 261 million US dollars in 2017. This represents a substantial reduction in the acquisition of new assets. However, a sharp reversal occurred in 2018, with expenditures increasing to 657 million US dollars.
- Depreciation and Amortization Patterns
- Depreciation, depletion, and amortization exhibited a consistent downward trend throughout the analyzed period, decreasing from 934 million US dollars in 2014 to 512 million US dollars in 2018. This steady decline reflects the gradual wearing down of the asset base and the impact of the reduced investment levels seen in the preceding years.
- Segment Capital Expenditures to Depreciation Ratio
- The ratio provides a metric for asset replacement and growth. In 2014, the ratio of 1.39 indicated that capital investment exceeded depreciation. This figure declined to 1.02 in 2015 and reached a minimum of 0.46 by 2017, signaling a period where capital spending was insufficient to replace the value of depreciating assets. In 2018, the ratio rebounded to 1.28, indicating a return to a strategy of asset expansion and modernization.
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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).
Total revenue experienced a significant contraction between 2014 and 2016, falling from US$ 32,870 million to a period low of US$ 15,887 million. This represent a total decline of approximately 51.7% over two years. A recovery trend followed in 2017 and 2018, with total revenue climbing back to US$ 23,995 million by the end of the 2018 fiscal year.
- Completion and Production Segment Performance
- This segment served as the primary contributor to total revenue throughout the period. It experienced a sharp decline from US$ 20,253 million in 2014 to US$ 8,882 million in 2016. However, the recovery in this segment was robust, with revenue increasing to US$ 13,077 million in 2017 and reaching US$ 15,973 million in 2018.
- Drilling and Evaluation Segment Performance
- Revenue in this segment also followed a downward trajectory from 2014 to 2016, decreasing from US$ 12,617 million to US$ 7,005 million. Unlike the Completion and Production segment, the recovery phase for Drilling and Evaluation was more gradual, with modest annual increases to US$ 7,543 million in 2017 and US$ 8,022 million in 2018.
- Comparative Segment Analysis
- While both segments suffered losses during the initial downturn, the recovery of total revenue was driven predominantly by the Completion and Production segment. By 2018, Completion and Production accounted for approximately 66.6% of total revenue, compared to 38.4% in 2014, indicating a shift in the revenue mix toward completion and production services over the five-year period.
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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).
Total operating income exhibited significant volatility between 2014 and 2018, characterized by a severe contraction followed by a phased recovery. A peak of US$ 5,281 million in 2014 was followed by a steep decline to a trough of US$ 901 million in 2016, before rebounding to US$ 3,023 million by the end of 2018.
- Completion and Production Segment Performance
- This segment demonstrated the highest degree of variance across the analyzed period. Operating income plummeted from US$ 3,610 million in 2014 to a low of US$ 107 million in 2016. A strong recovery trend emerged thereafter, with income rising to US$ 1,621 million in 2017 and further increasing to US$ 2,278 million in 2018.
- Drilling and Evaluation Segment Performance
- The Drilling and Evaluation segment showed a more gradual decline compared to the Completion and Production segment. After starting at US$ 1,671 million in 2014, operating income decreased steadily to US$ 718 million in 2017. By 2018, the segment reached a state of relative stabilization at US$ 745 million, although it remained significantly below its 2014 levels.
- Comparative Segment Contribution
- The trajectory of total operating income was primarily dictated by the Completion and Production segment. While Drilling and Evaluation provided a relative buffer during the initial downturn in 2015, the subsequent recovery observed in 2017 and 2018 was driven almost exclusively by the resurgence of the Completion and Production business.
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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).
Total capital expenditures exhibited a significant V-shaped trajectory between 2014 and 2018. After reaching a peak of US$ 3,283 million in 2014, aggregate spending declined sharply to a trough of US$ 798 million in 2016, before entering a recovery phase that brought expenditures to US$ 2,026 million by the end of 2018.
- Completion and Production Segment
- This segment represented the primary driver of capital allocation throughout the period. Expenditure decreased from US$ 1,953 million in 2014 to a low of US$ 500 million in 2016, marking a substantial contraction. A subsequent rebound was observed, with investment increasing to US$ 1,111 million in 2017 and reaching US$ 1,364 million by 2018.
- Drilling and Evaluation Segment
- Investment in this segment experienced a more severe and prolonged decline compared to other operations. Spending fell from US$ 1,297 million in 2014 to US$ 261 million in 2017, representing a period of continuous year-over-year contraction. Recovery in this segment began in 2018, with capital expenditures rising to US$ 657 million.
- Corporate and Other Expenditures
- Capital spending within the corporate and other category remained marginal relative to the primary operational segments. Expenditures declined from US$ 33 million in 2014 to US$ 1 million in 2016 and 2017, before showing a slight increase to US$ 5 million in 2018.
- Aggregate Investment Patterns
- The overarching trend indicates a period of aggressive capital preservation peaking in 2016, followed by a strategic increase in spending. The Completion and Production segment consistently maintained a higher share of total capital expenditures than the Drilling and Evaluation segment, particularly during the recovery years of 2017 and 2018.
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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).
Total depreciation, depletion, and amortization expenses exhibited a significant contraction between 2014 and 2016, followed by a period of modest recovery through 2018. The total expenditure decreased from 2,126 million in 2014 to a low of 1,503 million in 2016, before increasing to 1,606 million by the end of the period.
- Completion and Production Segment
- This segment consistently represents the largest share of total expenses. Following a period of stability between 2014 and 2015, a sharp decline occurred in 2016, where expenses fell to 900 million. A recovery phase followed, with expenditures rising to 953 million in 2017 and reaching 1,058 million by 2018.
- Drilling and Evaluation Segment
- A continuous downward trend is observed in this segment throughout the entire analysis period. Expenses decreased from 934 million in 2014 to 512 million in 2018, indicating a steady reduction in the asset base or depreciation requirements associated with these operations.
- Corporate and Other Segment
- Expenses for this category remained relatively stable and immaterial relative to the operational segments, fluctuating minimally between 30 million and 40 million from 2014 to 2018.
The overall financial pattern suggests that while the Drilling and Evaluation segment experienced a permanent decline in expenses over the five-year span, the Completion and Production segment drove the total recovery observed after 2016.
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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).
Total assets experienced a peak in 2015 at $36,942 million before entering a period of contraction. A sharp reduction occurred between 2015 and 2017, with total assets falling to $25,085 million, representing a decline of approximately 32% from the peak. A slight recovery was noted in 2018, with total assets rising to $25,982 million.
- Completion and Production Segment
- Assets in this segment showed a downward trend from 2014 to 2016, falling from $16,033 million to $10,349 million. However, a recovery phase followed, with assets climbing back to $13,231 million by 2018, indicating a rebound in the asset base for this specific operation.
- Drilling and Evaluation Segment
- A consistent contraction is observed in this segment from 2014 through 2017. Assets decreased from $11,237 million to $7,837 million during this period. A marginal increase to $8,037 million occurred in 2018, though the segment remained significantly below its 2014 levels.
- Corporate and Shared Assets
- This category exhibited significant volatility, characterized by a substantial spike in 2015 to $12,783 million. This was followed by a steady reduction over the subsequent three years, returning to $4,714 million by 2018, which is nearly aligned with the initial 2014 value of $4,970 million.
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