Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. HALLIBURTON CO (45012) 10-Q published on Jul 27, 2018 at 11:05 am
Reporting Period: Jun 29, 2018
At June 30, 2018, we held $414 million of marketable securities, primarily time deposits that mature in July 2018, which are accounted for as held-to-maturity and are categorized within level 1 on the fair value hierarchy. At December 31, 2017, we held $70 million of marketable securities and $36 million of long-term investments in fixed income securities, primarily corporate bonds and other debt instruments, which are accounted for as available-for-sale, recorded at fair value based on quoted prices for identical assets in less active markets, and categorized within level 2 on the fair value hierarchy.
In North America, our business continued to improve during the second quarter of 2018, with revenue increasing 38% and outperforming a 13% increase in average North American rig count, when compared to the second quarter of 2017. The rig count growth, combined with the continued completions intensity, has improved demand across our product service lines, with significant improvements in pressure pumping activity. We generated significant margin improvement and profitability growth as a result of strengthened activity and a supportive commodity price environment. Our United States land sector achieved operating margins approaching 2014 peak levels, despite pricing levels that have yet to fully rebound from the recent down cycle and logistical challenges and cost inflation. Strong U.S. economic activity is creating tightness across the supply chain, particularly in trucking, labor, and maintenance costs. We are actively managing these costs.
In North America, one of our key strategies during the downturn was to build market share based on our strong belief in the long term potential of the North America market and by demonstrating to our customers the benefits of our service quality and technology. We believe we have successfully executed on this strategy and intend to continue to focus on maintaining our market position. We are monitoring the future impact of cost inflation from trucking and increased equipment maintenance expense and are focused on managing these challenges. We will also continue to focus on managing the logistical complexities that come with the growing market by leveraging our supply chain and logistics infrastructure, capturing efficiencies around our repair and maintenance programs and implementing technologies at scale to reduce cost and increase production.
Additionally, we expect temporary challenges in select basins due to pipeline capacity constraints, strong production results, and customer budget limits, creating mixed customer reactions. These include a moderation in customer activity and a shifting of focus between basins. While we believe these challenges are temporary and should be resolved in 2019, they will likely create headwinds for additional upward pricing in the third quarter of 2018. Overall, the market has strong fundamentals and supportive commodity prices are expected to encourage continued long term growth in North America. We will continue our efforts to optimize pricing and utilization, pursue continued technology implementation and control costs.
Effective tax rate. During the six months ended June 30, 2018, we recorded a total income tax provision of $267 million on pre-tax income of $822 million, resulting in an effective tax rate of 32.5%. Our effective tax rate for this period was significantly impacted by the write-down of our investment in Venezuela, which was not tax-deductible, and by additional accrued local Venezuela taxes we recognized in our tax provision. See Note 2 to the condensed consolidated financial statements for further information. Additionally, our effective tax rate for this period was impacted by the lower corporate rate from U.S. tax reform. During the six months ended June 30, 2017, we recorded a total income tax benefit of $54 million on pre-tax losses of $58 million. Our effective tax rate for this period was impacted by a low level of earnings and a net $20 million tax benefit associated with global prior year audits. Our effective tax rates for both periods were also impacted by a geographic mix of earnings for the respective periods.