Major oilfield services provider Halliburton Company (HAL - Analyst Report) reported strong fourth-quarter 2014 results, even as oil prices plummeted throughout the quarter. This is primarily owing to improved stimulation work in the U.S. Better drilling operations in the Middle East/Asia region also drove the results.

Earnings per share from continuing operations (excluding restructuring expenses) came in at $1.19, beating the Zacks Consensus Estimate of $1.11. Moreover, the company’s per share profits significantly improved from the fourth-quarter 2013 level of 93 cents.

Halliburton Company - Earnings Surprise | FindTheBest

Following Baker Hughes Inc. and Schlumberger Ltd (SLB - Analyst Report), Halliburton stepped up as the third member of the ‘big 4 oil service companies’ to post above-consensus earnings. The other member Weatherford International Ltd (WFT - Analyst Report) is scheduled to report next month.

Revenues of $8.8 billion reflect a 15% year-over-year improvement. The figure also surpassed the Zacks Consensus Estimate.

During the quarter, North America accounted for approximately 54% of Halliburton’s total revenue and 64% of its operating income.

For the year ended Dec 31, 2014, Halliburton reported income from continuing operations (excluding non-operating items) of $4.02 per share, above the Zacks Consensus Estimate of $3.96. The figure also outpaced the 2013 adjusted earnings of $3.15 per share. Revenues of $32.9 billion were 12% higher than the year-ago number and marginally above the Zacks Consensus Estimate.

Fourth-Quarter Segmental Performance

Completion & Production: Revenues at Halliburton’s Completion and Production segment were almost in line with third-quarter 2014 and increased 21% year over year to $5.5 billion. Improved work related to stimulation in the Middle East/Asia section and in the land market of United States aided results.

The segment’s operating income was $991 million, exhibiting an almost 8% sequential decrease. Reduced profitability from lower activities in Russia, Angola and the North Sea hampered the income.

However, the unit’s profit increased a significant 30% from the year-ago quarter owing to increased cementing work in the U.S.

Drilling & Evaluation: Revenues at Halliburton’s Drilling and Evaluation business were also in a row with the sequential figure. The figure improved 7% year over year to $3.3 billion. The improvement was driven by higher operations in the Middle East/Asia region.

The segment’s operating income fell 10% from the September quarter and 18% from the year-ago period to $408 million on reduced activities and currency weakness in Russia and Norway.

Balance Sheet

Halliburton’s capital expenditure in the fourth quarter was $999 million, bringing the full-year spending to $3.3 billion. As of Dec 31, 2014, the company had approximately $2.3 billion in cash/cash equivalents and $7.8 billion in long-term debt, representing a debt-to-capitalization ratio of 32.5%.

Challenging Drilling Activity in 2015

Halliburton expects oil prices to remain weak throughout 2015. Hence, the company warned investors that although it came out with solid fourth-quarter and full-year 2014 results, it may face difficulties in drilling activities this year due to the free fall in oil.

Zacks Rank

Halliburton currently carries a Zacks Rank #5 (Strong Sell), implying that to the stock will significantly underperform the broader U.S. equity market over the next one to three months.

A better-ranked player in the energy sector is Seadrill Partners LLC (SDLP -Snapshot Report), which sports a Zacks Rank #1 (Strong Buy).