Halliburton (NYSE:HAL) announced today that net income for the third quarter of 2007 was $727 million, or $0.79 per diluted share. This compares to net income of $611 million, or $0.58 per diluted share, in the third quarter of 2006. Included in third quarter 2007 results are a $133 million, or $0.15 per diluted share, favorable income tax impact from the ability to recognize United States foreign tax credits that were previously assumed would not be fully utilizable and $21 million, or $0.02 per diluted share, in after-tax charges for additional reserves related to environmental matters. Income from continuing operations in the third quarter of 2007 was $726 million, or $0.79 per diluted share, compared to $603 million, or $0.57 per diluted share in the third quarter of 2006.
Halliburton’s consolidated revenue in the third quarter of 2007 was $3.9 billion, up 16% from the third quarter of 2006. This increase was attributable to increased worldwide activity, particularly in the Eastern Hemisphere.
Consolidated operating income was $910 million in the third quarter of 2007 compared to $870 million in the third quarter of 2006. The increase in operating income was generated primarily by increased customer activity and new international contracts. Third quarter of 2007 operating income included $32 million in charges for additional reserves primarily related to Dresser legacy environmental matters.
“I am pleased with the continuing very strong performance of our Eastern Hemisphere operations this quarter,” said Dave Lesar, chairman, president, and chief executive officer. “Our deployment of capital into these international markets has resulted in Eastern Hemisphere revenue growth of 29% and operating income growth of 40% as compared to the third quarter of 2006. Our sequential Eastern Hemisphere results were also strong with revenue increasing 5% and operating income increasing 16%. Our Eastern Hemisphere operating margins improved to 24%. North America posted record third quarter 2007 quarterly revenue, and we are experiencing strong demand for our services in the United States land market. Our North America revenue grew 6% sequentially despite the loss of two weeks of work in the Gulf of Mexico due to storms and pricing declines for some services in the United States land market.”

As a result of Halliburton’s organizational restructuring during the third quarter of 2007, the company is now reporting two operating segments: the Completion and Production (C&P) segment and the Drilling and Evaluation (D&E) segment. The Completion and Production segment is comprised of completion tools, production enhancement, and cementing. The Drilling and Evaluation segment is comprised of Sperry Drilling Services, wireline and perforating services, Security DBS Drill Bits, Baroid Fluid Services, Landmark, and project management. Additionally, certain amounts were reclassified between the segments/regions and Corporate and Other. All prior periods have been reclassified to conform to the new segment presentation.
2007 Third Quarter Results
Completion and Production operating income in the third quarter of 2007 was $596 million, an increase of $32 million or 6% from the third quarter of 2006. Europe/Africa/CIS C&P operating income increased 39% from completion tools deliveries to large offshore projects in West Africa. Cementing results were also favorable, particularly in the North Sea, as a result of better pricing, increased activity, and a more profitable product mix. Production enhancement results improved throughout the region, with increased profitability in offshore activity. Middle East/Asia C&P operating income increased 66% with higher completion tools sales in Asia and increased activity and more favorable job mix for production enhancement. North America C&P operating income decreased 6% due to reduced activity in Canada.
Drilling and Evaluation operating income in the third quarter of 2007 was $372 million, essentially flat over the prior year third quarter due primarily to $24 million for environmental charges and decreased activity in Canada and the Gulf of Mexico, partially offset by improved activity and increased horizontal drilling in the United States land market. Europe/Africa/CIS D&E operating income increased 60%, benefiting from increased deepwater application of Sperry Drilling Services Pilot® fleet of tools in the North Sea and expansion of directional drilling in Russia. Also benefiting Europe/Africa/CIS D&E was increased Baroid Fluid Services sales in the North Sea and the introduction of the Security DBS Drill Bits XR™ Reamer hole enlargement tool. Middle East/Asia D&E operating income increased 11% with improved wireline and perforating services and increased demand for Sperry Drilling Services in Asia. Latin America D&E operating income increased 7% on improved activity for wireline and perforating services.
During the third quarter of 2007, under the company’s share repurchase program, Halliburton purchased approximately 11 million shares at an average price of $33.71 for a total cost of approximately $374 million. Since the inception of the program, Halliburton has purchased 77 million shares for a total cost of approximately $2.6 billion. There is approximately $2.4 billion remaining under the program.
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