Halliburton Earnings Call Nuggets: Key Insights You Must Know
Angie Sedita – UBS: Congratulations on the very strong fourth quarter and clearly for the year as well, particularly in the international markets.
David J. Lesar – Chairman, President and CEO: Thank you Angie, appreciate it. Some folks have been critical of us chasing the international especially the deepwater market aggressively over the past few years, but as I said then and I’ll say now, I think that it’s worth it. These are long-term markets, these are long-term contracts that allow for aggressive use of our technology and aggressive upselling opportunities, so I think you’re starting to see the payoff now and you certainly will see it for the next several years.
Angie Sedita – UBS: I agree, and even better, I would add to that, that you’ve done it on the top line, but you’ve also shown very strong improvements in margins also about the peer group, so a double bonus.
David J. Lesar – Chairman, President and CEO: Yeah, thank you.
Angie Sedita – UBS: So, to follow-up with that, your guidance for Eastern Hemisphere margins average in the high-teens slightly higher than our estimates which is obviously a positive, but I assume Middle East is a big driver of that. However, you referenced E&P spending in the high single-digits for 2013. Would it seem reasonable to you that growth for revenues in 2013 could be in the low to mid double-digits and where do you expect to see the greatest strength?
Mark A. McCollum – EVP and CFO: Angie, this is Mark. The answer is yes and we do expect to outgrow the market in line with our strategies of outgrowing the overall increase in the deepwater market which we think will be a particular strength in 2013, on the back of our market share gains in Latin America as well as some of the increased activity in unconventionals and Saudi Arabia and Australia, and of course I should also reference the deepwater market in the East Africa, those will probably be areas that will be primary growth areas, but we are expecting growth rate in the low single-digits – I mean low double digits, even though, we’re probably a bit more pragmatic about what customer spend rates will increase on a year-over-year basis in the international markets.
Angie Sedita – UBS: Right now, you mention low double digits for revenue growth based on what you see today?
Mark A. McCollum – EVP and CFO: Yes.
Angie Sedita – UBS: Then as an unrelated follow-up, I know in the past you’ve mentioned returning capital to shareholders in 2013 is a priority. I guess the question is, is it still a priority for ’13 and is there a preference for share buybacks versus a dividend or could both be considered and does the Macondo timing have any influence on this decision?
Mark A. McCollum – EVP and CFO: The answer is that, yes it’s still a priority, we as you heard our comments have been very focused on trying to not only just achieve a positive cash flow result but improving that cash flow result as we go into 2013. We’re in the process of finalizing our discussions with the Board and internally about our strategic initiatives for 2013. We’ll have that wrapped up in the coming weeks, and in that discussion I think the answer is that everything is on the table, dividends, share buyback. We certainly are staying tuned to what happens on the Macondo front, but it’s not an issue that will preclude us from consideration of some of those options and so, the best way that I can say is, stay tuned.
Normalized North American Margins
James West – Barclays Capital: A question on North America, as we look at the progression throughout this year, you’ve got clearly some tail winds with your guar, the Gulf of Mexico, some improving U.S. land rig count, but you’ve talked in the past about normalized North American margins much higher than where they are today. Is that something that’s possible to get to in this type of environment where we have slowly growing U.S. rig count or is this more likely when we get back to better environment in ’14?
Mark A. McCollum – EVP and CFO: This is Mark again. I think, James, the answer to that is that probably in the slower growing environment where we continue to see some pressure around frac pricing in the broad market and it is going to be difficult to sort of close up the excess capacity situation until we see some meaningful increase in the gas rig activity. I think that’s also going to mean that it is going to be difficult to get us back to normalized margins which we still believe are in the mid-20s for Halliburton. As we said, we are calling the bottom we see that at least the things that we’ve perceived is tailwinds to our margin situation sort of trump the continued pressure that we will feel in frac pricing and possibly peripherally in some of the other product service lines that are little bit – they are closer to the frac than others. But I think that it’s going to be difficult to drive them up back to those sort of historic normalized levels without what we sort of perceive as a normalized rig count environment which includes a healthy dose of gas activity.
James West – Barclays Capital: But you would suggest though that healthy margin gains just not getting back to that which you see as normalized?
Mark A. McCollum – EVP and CFO: Yes, that’s right.
James West – Barclays Capital: And then just one follow-up from me on the fracture side. Obviously, a few more contracts to rollover, but some of the initial rollovers of your longer term contracts would have happened when pricing was still above where it is today. Can you give us maybe some help on percentage of contracts that maybe above what you think pricing is in the market today and how it may roll over as we go through the year?
Jeff Miller – EVP and COO; and Chief Health, Safety and Environment Officer: This is Jeff. I think those contracts tend to roll each year, so we’re working our way through the bulk of those, and from a competitive standpoint as look out, we have probably 8% of our business under contract and, so we don’t see a huge step down that will occur sort of resetting the prices from the first quarter with last year.
David J. Lesar – Chairman, President and CEO: Yeah, I think James, let me add one thing, obviously, as Jeff said, about 80% of our stuff is under contract and we have some of the stuff that rolled a year ago at this time rolling over now, but if we don’t see a price that’s acceptable to us, we may just roll it on a month-to-month basis. There’s nothing that says, you are required to roll it from year-to-year and in some cases, we won’t do it, because we don’t want to get locked into a price we don’t like, so we’ll just go on more a month-to-month and quarter-to-quarter basis.
A Closer Look: Halliburton Company Earnings Cheat Sheet>>