Halliburton was established in 1919 and incorporated under the laws of the State of Delaware in 1924 and is one of the world’s largest diversified energy services companies. With approximately 60,000 employees the company represents 140 nationalities in more than 80 countries. In 2017 the company had 55,000 employees in approximately 70 countries. Halliburton serves oil and natural gas companies throughout the world and operates under two divisions, the Completion and Production segment and the Drilling and Evaluation segment.
Completion and Production delivers cementing, stimulation, intervention, pressure control, specialty chemicals, artificial lift and completion products and services. Drilling and Evaluation provides field and reservoir modelling, drilling, evaluation and precise wellbore placement solutions that enable customers to model, measure, drill and optimize their well construction activities.
2018 was successful for the Halliburton´s oil and gas industry, the Company strengthened its business in 2018 and continued to build for a longer-term industry recovery. It successfully maintained global market share in 2018, which was accomplished by investments in strategic growth areas.
According to the Annual Financial Report the company´s revenue grew by $3.4 billion or by 16% from $20.6 billion in 2017 to 24.0 billion in 2018. In 2016 the revenue of the company amounted to $15.9 billion. In 2018 the Completion and Production segment improved by 22%, and the Drilling and Evaluation segment improved by 6%.
The total company´s operating income amounted to $2.5 billion in 2018, an 80% increase from operating income of $1.4 billion in 2017, compared to significant operating losses of $6.8 billion in 2016 and $165 million in 2015. These improvements were primarily associated with pressure pumping services, drilling activity and artificial lift in North America, as well as drilling activity in the Eastern Hemisphere. Operating results were also impacted by $265 million and $647 million of impairments and other charges related to Venezuela were recorded during 2018 and 2017, respectively.
During 2018, Halliburton had approximately $2.0 billion of capital expenditures, an increase of 48% from 2017, which were predominantly made in the Production Enhancement, Sperry Drilling, Artificial Lift, Wireline and Perforating, and Cementing product service lines. In 2018 the company also paid $630 million in dividends to its shareholders. In 2019 Halliburton intends to reduce its capital expenditures by 20% to approximately $1.6 billion and to focus them on key technologies and capabilities, such as Halliburton´s new directional drilling platform.
At the end of 2018 the company had $2.0 billion of cash and equivalents, compared to $2.3 billion on December 31, 2017. In 2018 the company generated approximately $3.2 billion in operating cash flow and retired $400 million in senior notes during 2018.
Corporate and other expenses were $291 million in 2018 as compared to $330 million in 2017. Corporate and other expenses in 2017 included approximately $42 million of charges for litigation settlements, primarily associated with the resolution of an SEC investigation, and executive compensation costs.
Impairments and other charges were $265 million in 2018 compared to $647 million of impairments in 2017, relating to a write-down of all of remaining investment in Venezuela. Research and development costs were $390 million in 2018, $360 million in 2017, and $329 million in 2016.
Segmentally, the company´s revenue for Completion and Production was $16.0 billion in 2018, an increase of $2.9 billion, or 22%, compared to 2017. Operating income was $2.3 billion in 2018, a 40% increase compared to $1.6 billion in 2017. Operating results improved significantly due to increased activity across all product service lines, primarily associated with pressure pumping and artificial lift in North America. International operating results improved due to increased well completion services in Europe/Africa/CIS and well intervention services in the Middle East.
The company´s revenue for Drilling and Evaluation was $8.0 billion in 2018, an increase of $479 million, or 6%, from 2017. Operating income was $745 million in 2018, an increase of $19 million, or 3%, compared to 2017. Operating results improved for drilling services in North America due to increased drilling, logging and fluids activity in the Middle East.
Halliburton operates worldwide and the business operations are organized around four primary geographic regions: North America, Latin America, Europe/Africa/CIS and the Middle East/Asia. In 2018, 2017 and 2016 consolidated revenue from the United States amounted to 58%, 53% and 41%, respectively. No other country accounted for more than 10% of the total revenue during these periods.
The company´s international business delivered annual revenue growth for the first time since 2014, with a 6% improvement from 2017 to 2018. Improvements in revenue were driven primarily by increased drilling and well intervention activity in the Middle East.
Geographically, the North America revenue was $14.4 billion in 2018 and increased by 25% compared to 2017, the average North American rig count grew by 13%. Revenue from North America was 60% of consolidated revenue in 2018 and 56% of consolidated revenue in 2017. This improvement was driven by increased activity throughout the United States land sector in the majority of product service lines, primarily related to higher activity in pressure pumping, artificial lift, specialty chemicals, and drilling services.
Latin America revenue was $2.1 billion in 2018, a 2% decrease compared to 2017, resulting primarily from reduced activity in Venezuela, Mexico and Brazil, partially offset by increases in the majority of product service lines in Argentina, Colombia and Ecuador.
Europe/Africa/CIS revenue was $2.9 billion in 2018, a 6% increase compared to 2017. The increases were due to increased activity throughout the region, primarily related to improvements in the majority of product service lines in the North Sea and Ghana.
Middle East/Asia revenue was $4.6 billion in 2018, a 9% increase compared to 2017, primarily resulting from improvements in drilling, stimulation and well intervention services in the Middle East and higher project management activity in India.
Halliburton is well-positioned for continued growth as a result of the significant investments the company made to grow its global footprint in the last cycle, which included increasing product service line operations in various geographies, expanding manufacturing capacity in Singapore and opening technology centers in Saudi Arabia, India and Brazil.