Despite the fact that crude oil resumed its decent during the fourth quarter, Halliburton (NYSE:HAL) reported very resilient earnings. While the quarter itself was a mixed bag of good and bad, the overall picture was positive thanks to the company's focus on cost reductions, which led to a surprising improvement in its margins. This put the company in a solid position to continue to manage through what's expected to be another challenging year for the oil industry.

A look at the numbers
Halliburton reported fourth-quarter revenue of $5.1 billion, which was down roughly $500 million, or 9%, from last quarter. That decline was due to lower oil-field service activities levels around the world, with the company's North American business the hardest hit. Revenue in that key segment fell 13% sequentially due to reduced activity and pricing concessions.

While the general trend of Halliburton's revenue and operating income was down worldwide, there were a couple of bright spots. In the Middle East/Asia region, revenue and operating income were down 5% and 6%, respectively, over last quarter because of lower activity levels in Saudi Arabia and Iraq. However, that weakness was offset by higher sales in China and increased activity in Kuwait and Oman. Meanwhile, revenue and operating income in Latin America were down 6% and 9% respectively, but those results would have been worse if it wasn't for improved activity levels in Mexico.

That said, because of the overall weakness, as well as a number of special items, Halliburton reported a GAAP loss of $28 million, or $0.03 per share for the quarter. That loss was primarily due to a number of special items, including $192 million, or $0.22 per share, in asset write-offs and severance costs; $79 million, or $0.09 per share, in acquisition-related costs due to the pending Baker Hughes (NYSE:BHI) acquisition; and $27 million, or $0.03 per share, in higher interest expense resulting from debt issued to close that acquisition. However, if we adjust for those one-time charges, the company earned $270 million, or $0.31 per share, which was roughly in line with last quarter's results.

While earnings kept pace, adjusted operating income did not, as it declined by 7% to $473 million. However, that outperformed the revenue decline because of stronger-than-expected margins. In fact, operating margins in North America actually improved by 160 basis points. That improvement was driven by cost reduction efforts as well as year-end completions tool sales in the Gulf of Mexico. Also, the company was able to improve its margins despite the fact it's carrying higher costs thanks to its pending acquisition of Baker Hughes.

A look at the outlook
Despite some pockets of improvement and resilience, Halliburton expects 2016 to be a challenging year, especially in light of the weakening oil price through the first few weeks of the year. That said, the company believes it has the right strategy to handle these challenges, which includes delivering best-in-class service quality as well as more efficient technology, which will enable its customers to focus on optimizing their cost per barrel.

The other major part of Halliburton's strategy is the completion of its pending acquisition of Baker Hughes. The company reiterated that it remains "fully committed to closing" this acquisition. Furthermore, it noted in the press release that it continues to have ongoing discussions with regulatory authorities in order to resolve their competition-related concerns. To that end, the company recently offered an enhanced set of divestitures in order to win regulatory approval.

Investor takeaway
While Halliburton's business is clearly being affected by the weakness in the oil market, its underlying results were solid. This is primarily because of the company's ability to control its costs, which has helped it maintain fairly decent margins. That said, challenges still remain given that both the oil market and regulatory agencies will continue to put pressure on the company -- its ability to successfully navigate both will be the key to 2016. 

Matt DiLallo has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Halliburton. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.