posted October 29, 2006 05:16 PM              

Halliburton's 3Q Income Rises 22 Percent

By STEVE QUINN AP Business Writer
© 2006 The Associated Press

DALLAS — Halliburton Co. watched third-quarter net income rise 22 percent, thanks in part to fewer disruptions from hurricanes, which beset the oil industry last year.

The Houston-based oilfield services conglomerate Sunday posted $611 million, or 58 cents per share, in net income for the June-September quarter, including a $4 million charge from discontinued operations.

That compares to $499 million, or 48 cents a share, for the same period last year, including a $7 million boost from discontinued operations.

Third-quarter revenue rose 19 percent to $5.8 billion.

The results beat the average Wall Street analyst projection of 54 cents a share in earnings on revenue of $5.52 billion, according to Thomson Financial.

The revenue increase was largely attributable to its energy services group, which posted record revenue of $3.4 billion, up 31 percent year-over-year.

Halliburton's construction and engineering unit, KBR, had $2.4 billion in revenue compared to $2.3 billion in the third quarter of 2005.

"This was an exceptional quarter for Halliburton," said Dave Lesar, the company's chairman, president, and chief executive officer in a prepared statement.

"The energy services group improved on its impressive second quarter results, growing revenue 9 percent sequentially," he said. "I'm also pleased with the quarterly performance of KBR, which posted a 7.5 percent operating margin in the energy and chemicals segment."

KBR has kept the company, once led by Vice President Dick Cheney, under lawmakers' microscope for its work in Iraq since the U.S. invaded the country three years ago.

Halliburton's Iraq-related work contributed nearly $1.2 billion in revenue in the third quarter of 2006 and $45 million of operating income, a performance that pleased analysts.

"Iraq was better than expected," said Jeff Tillery, analyst with Pickering Energy Partners Inc. "Overall, there is nothing really to question or be skeptical about. I think the results are very good."

Even as a light hurricane season helped the company, disruptions from the last two years had a chilling effect on the industry this summer, possibly stifling potential business, A.G. Edwards analyst Poe Fratt said.

"Clearly year-over-year it is better because we didn't have as much hurricane activity," Fratt said. "But, because the last two years have been disruptive, companies have been prepared for it and didn't do as much work in the Gulf."

Lesar and other company executives will elaborate on the Sunday afternoon earnings report during a conference call with analysts on Monday morning.

Analysts will be looking for comment on several issues, including:

_ Progress on the company's plans to spin off KBR. Last quarter Halliburton said it would pursue a spinoff rather than a previously announced initial public offering.

_ An update on the company's stock buyback plan. Last month it approved the repurchase of up to an additional $2 billion in stock.

_ A look at energy services operations in North America. Drilling could slow down if natural gas prices don't get a boost from an extremely cold winter.

"International growth looks really good for them, but in North America there is uncertainty until the winter shows up," Fratt said.

Shares of Halliburton fell 60 cents to close Friday at $28.78 on the New York Stock Exchange.

posted October 30, 2006 08:43 AM              

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