Halliburton 2015 Annual Report Download - page 6

In 2015, lower oil and gas prices led to substantial reductions in global upstream oil
and gas activity levels resulting in the most challenging year in decades. Halliburton’s
commitment to superior execution, our broad service offerings, and our long-standing
customer relationships enable us to manage through business cycles and prepare for the
market’s eventual recovery.
The downturn materialized very quickly, beginning in late 2014. As of December 31, 2015, the
activity level measured by the Baker Hughes U.S. land rig count declined by 64 percent from
the 2014 peak, and we experienced substantial declines in our international markets as well.
As our customers’ capital spend declined, so did Halliburton’s activity and the prices paid
for our products and services.
But this is a market that Halliburton knows well, and we have experienced these cycles
before. We have focused relentlessly on managing our costs. While this required difficult
staffing decisions, we are committed to aligning our cost structure with the market, and we
believe the actions and decisions taken in 2015 will enable Halliburton to emerge from this
downturn prepared to deliver competitive growth and returns.
Our playbook for a downturn is simple – we control what we can control, preserve our market
position and live within our cash flow. We continued to execute our key strategies in the
unconventionals, deep water and mature fields markets on a near real-time basis. We also
looked beyond the cycle, investing in strategic initiatives and preparing for future recovery.
Our international operations performed well given the global industry headwinds. Revenues
were lower than in 2014, compared with an 18 percent decline in the international drilling and
completion spend by our customers. However, aggressive cost control enabled the company
to maintain our international margins even with downward pressure on prices.
Halliburton traditionally has been aligned with operators that have strong balance sheets
and fairway acreage in the most important oil and gas basins in North America and across the
globe. We are engaged with our customers in their efforts to reduce the cost of producing
each barrel of oil equivalent, and have continued to offer them products, services and
technologies that are more efficient, reduce non-productive time and improve performance.
Frac of the Future™ is a prime example. While industry crew sizes have increased in recent
years because of higher hydraulic fracturing intensity, Halliburton’s average crew size has
been essentially flat. At year end, Frac of the Future™ spreads represented 60 percent of our
fleet – a more efficient, low-cost delivery platform that offers a clear competitive advantage
both in challenging times and during the recovery.
We drive this improvement by lowering costs at every step. We help operators optimize bit
designs and fluid compositions, reduce drilling days, and improve surface efficiency. We also
help increase estimated ultimate recoveries by collaborating with our customers to identify
the best targets and utilize the right chemistry to produce more barrels.
Halliburton is the execution company, and 2015 marked another year of improvement in
safety and service quality metrics, with significant, double-digit reductions from 2014 in both
areas. Even while the market is forcing us to streamline our footprint in the field, we are
improving our performance rates.
To Our Shareholders
Halliburton 2015 Annual Report
www.halliburton.com
4
We are engaged with our
customers in their efforts to
reduce the cost of producing
each barrel of oil equivalent,
and have continued to offer
them products, services and
technologies that are more
efficient, reduce non-productive
time and improve performance.
“