Halliburton Q1 2025 Earnings Report

Halliburton EPS Results

• Actual EPS: $0.60
• Consensus EPS: $0.60
• Beat/Miss: Met Expectations
• One Year Ago EPS: N/A

Halliburton Revenue Results

• Actual Revenue: $5.42 billion
• Expected Revenue: $5.28 billion
• Beat/Miss: Beat by +$136.09 million
• YoY Revenue Growth: N/A

Halliburton Announcement Details

• Quarter: Q1 2025
• Date: 4/22/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, April 22, 2025
• Conference Call Time: 9:00AM ET

Halliburton (NYSE:HAL) Company is a multinational corporation that provides various services and products to the energy industry. Founded in 1919 and headquartered in Houston, Texas, the company operates in over 80 countries, with its primary business lines including drilling and evaluation, completion and production, hydraulic fracturing and other services. The company's customers include major oil and gas companies and independent operators in the energy industry.

Halliburton has achieved several key milestones over the years, including being the first company to log a well in the Gulf of Mexico and the first to perform hydraulic fracturing in the Permian Basin.

Halliburton's current CEO and Chairman of the Board is Jeff Miller, who has been with the company for over 30 years, having served as the president and chief operating officer. In 2020, Halliburton announced that it was changing its executive leadership team, adding several new members, including Mark Richard, the President of the Western Hemisphere.

In recent years, Halliburton's financial performance has been impacted by the oil and gas industry downturn, which has resulted in lower demand for its services and products. Halliburton's profit margins have also been affected by the downturn. However, despite this downturn, Halliburton has been beating earnings-per-share and revenue expectations in most quarters. Halliburton's valuation metrics suggest the company might be slightly undervalued compared to its peers. 

Halliburton's stock performance has been impacted by the downturn in the energy industry, with the company's share price declining by 46% in 2020. However, the company's stock price has rebounded, with the share price increasing from 2020 - 2022. Halliburton's trading volume has also decreased in recent months, averaging a daily trading volume of 8 million shares. 

The energy industry has faced several challenges recently, including declining oil prices, increased regulatory scrutiny and growing concerns over climate change. These challenges have impacted the industry's profitability and have led to increased competition among industry players. Halliburton's primary competitors in the energy services industry include Schlumberger, Baker Hughes and National Oilwell Varco. The company has been focused on improving its competitive position by investing in new technologies and expanding its global footprint.

Despite the challenges facing the energy industry, Halliburton has several growth opportunities that it is pursuing. One of the company's key growth drivers is the development of new technologies that can improve the efficiency and productivity of the energy industry. Halliburton has invested heavily in digitalization, automation and artificial intelligence to improve its services and products. The company is also focused on expanding its global footprint, particularly in emerging markets such as China and India.

Halliburton faces several risks and challenges in the current business environment. One of the most significant challenges facing the company is the volatility of oil prices, which can substantially impact the demand for its services and products. In addition, the industry is facing increasing regulatory scrutiny, particularly around issues such as climate change and environmental impact. This could result in increased costs and regulatory compliance requirements for the company.

Another challenge for Halliburton is the increasing competition in the industry. The company's primary competitors are investing heavily in research and development and expanding their global footprint, which could impact Halliburton's market share and profitability. Furthermore, the ongoing geopolitical tensions and trade disputes could also impact the company's operations, particularly in emerging markets.

Halliburton Q1 2025 Earnings Call Transcript

Key Takeaways

• Halliburton delivered Q1 revenue of $5.4 B with a 14.5% adjusted operating margin, generated $377 M in cash from operations, $124 M in free cash flow and repurchased ~$250 M of stock.
• International revenue fell 2% YoY (down 19% in Latin America due to Mexico) but grew mid-single digits ex-Mexico, fueled by offshore awards from Shell in Brazil, Suriname and West Africa and strength in unconventionals, artificial lift, intervention and directional drilling.
• North America revenue was down 12% YoY but rose 1% sequentially, underpinned by >40% of the ZEUS frac fleet on term contracts and the successful debut of ZEUS IQ, the first closed-loop autonomous fracturing system that optimizes reservoir performance in real time.
• Despite recent trade uncertainty and OPEC supply impacts, Halliburton expects international revenues to be flat to slightly down, North America to outperform its market, and to generate solid free cash flow in 2025 while returning at least $1.6 B to shareholders.
• Q1 severance and environmental charges of $356 M support future margin rationalization, capex is guided around 6% of revenue, and ongoing tariff mitigation efforts aim to preserve profitability.

Presentation

[Operator]

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the First Quarter twenty twenty five Halliburton Company Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. At this point, I would like to turn the conference over to Mr.

[Operator]

David Coleman. Sir, please begin.

[David Coleman, Senior Director of Investor Relations at Halliburton Company]

Hello, and thank you for joining the Halliburton first quarter twenty twenty five conference call. We will make the recording of today's webcast available for seven days on Halliburton's website after this call. Joining me today are Jeff Miller, Chairman, President and CEO and Eric Carre, Executive Vice President and CFO. Some of today's comments may include forward looking statements reflecting Halliburton's views about future events. These matters involve risks and uncertainties that could cause our actual results to materially differ from our forward looking statements.

[David Coleman, Senior Director of Investor Relations at Halliburton Company]

These risks are discussed in Halliburton's Form 10 ks for the year ended 12/31/2024, recent current reports on Form eight ks and other Securities and Exchange Commission filings. We undertake no obligation to revise or update publicly any forward looking statements for any reason. Our comments today also include non GAAP financial measures. Additional details and reconciliation to the most directly comparable GAAP financial measures are included in our first quarter earnings release and in the Quarterly Results and Presentations section of our website. Now I'll turn the call over to Jeff.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

Well, thank you, David, and good morning, everyone. I'll begin today's discussion with our highlights from the first quarter. We delivered total company revenue of $5,400,000,000 and adjusted operating margin of 14.5%. International revenue was $3,200,000,000 a decrease of 2% year over year due to lower activity in Mexico. Excluding Mexico, international revenues grew by mid single digits.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

North America revenue was $2,200,000,000 12 percent lower than the first quarter of twenty twenty four. Finally, during the first quarter, we generated $377,000,000 of cash flow from operations, dollars 124,000,000 of free cash flow and repurchased approximately $250,000,000 of our common stock. Before we take a closer look at our geographic results, I'd like to take a moment and talk about the macro environment for oil and gas. The last three weeks have been highly dynamic as the trade environment injected uncertainty into markets, raised broad economic concerns, and along with faster than expected return of OPEC production weighed on commodity prices. These market forces impact us all, but here's what I know to be true.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

First, oil and gas will play a fundamental role in global economic growth and prosperity. Second, the world is consuming more oil and gas than ever before. And finally, decline curves are real, and in many basins, significant, and adequate supplies today do not guarantee adequate supplies tomorrow without ongoing investment. Given these realities, I know that our technology will continue to transform the industry, and it will unlock new sources of value for us and our customers. I know our unique collaborative approach improves outcomes and deepens customer relationships.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

And finally, I know that safety and service quality form the cultural bedrock of Halliburton, and they are key differentiators to our customers. On that note, I would like to take a moment to thank the Halliburton employees for their outstanding safety and service quality performance last quarter. I firmly believe that despite recent pressures on the energy macro, Halliburton's consistent focus on technology, collaboration and service quality execution create value for our customers and drive long term success for Halliburton under any market conditions. Turning to our results. I'll begin with the international markets, where Halliburton delivered solid quarterly revenue of $3,200,000,000 As I look at the balance of this year, while our overall international outlook has not materially changed, it is reasonable to assume that there is more risk embedded in our outlook today than three months ago.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

As a result, I expect our year over year international revenue to be flat to slightly down. Our Q1 international tender activity remains strong. Halliburton won meaningful work extending through 2026 and beyond. Customers awarded Halliburton several contracts that demonstrate the strength of our value proposition and the power of our service quality execution. Shell awarded Halliburton significant scopes of work this quarter, including development and intervention work for Gato De Mato in Brazil and exploration work in Suriname and West Africa.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

Halliburton also won additional integrated offshore exploration work with another major in Suriname. These integrated offshore contracts rely on Halliburton's advanced technologies like our intelligent completions and comprehensive directional drilling technology, including the iCruise and Logix drilling automation and remote operation platform among multiple other well construction, reservoir evaluation and intervention product lines. Furthermore, I expect that projects like these awarded based on the demonstrated execution of our value proposition will be the core of how Halliburton wins integrated work with customers. Our value proposition to collaborate and engineer solutions to maximize asset value for our customers resonates with customers and is directly tied to our company culture. It is core to our competitive advantage, and I am pleased it is winning in the marketplace.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

In addition to these offshore examples, our international growth engines also delivered in Q1. Over the next several years, we expect these engines, unconventional, artificial lift, intervention and directional drilling, to grow faster than other parts of our business. To give you a few examples of our progress in these areas, in unconventionals, we mobilized ZEUS equipment to The Middle East and expect trials in the near term. In artificial lift, we were direct awarded new offshore work in Ghana, and we expect strong double digit international growth in this product line in 2025. In intervention, we closed the acquisition of OpTime Subsea, a technology we expect will transform deepwater interventions.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

And finally, in directional drilling, with our partners, we delivered a first closed loop automated drilling system and drilled a well with it in Norway. Then we did it again in The Middle East. To summarize international markets, we had a solid start in 2025. Our first quarter contract awards add visibility and give me confidence for this year and beyond. Our growth engines are strong, and my discussions with customers tell me we are focused on the right things, collaboration, execution and technology, and I am confident in the future of our international business.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

Turning to North America. Our first quarter revenue increased 1% sequentially. Seasonal increases in frac activity were offset by seasonal declines in Gulf Of America completion tool sales. Looking forward, many of our customers are in the midst of evaluating their activity scenarios and plans for 2025. Activity reductions could mean higher than normal white space for committed fleets, and, in some cases, the retirement or export of fleets to international markets.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

Nevertheless, I expect Halliburton to outperform the North America services market, and I believe this because our clear strategy to maximize value in North America has demonstrated success under a variety of market conditions. Our Zoos fleets, which represent more than 40% of our overall frac fleet, operate under term contracts. And finally, our technology is highly differentiated and drives value for our customers. Halliburton's recognized leadership was on display recently when, in partnership with our customer Range Resources and others, we were honored to host Secretary of the Interior, Doug Burgum, on a field visit in Pennsylvania. The visit featured our Zoos electric frac equipment, which we proudly build in Duncan, Oklahoma, and demonstrated the industry's ability to deliver reliable and affordable energy in The United States and around the world.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

We were pleased to host Secretary Burgham, and I was energized by his vision and support for advancing American energy. I am also excited by the adoption of our latest technologies, which are a cornerstone of our strategy to maximize value in North America. In the first quarter, we achieved a significant milestone with the successful completion of the first closed loop autonomous fracturing operation in the world. To put it plainly, closed loop means that the ZEUS platform utilizes real time feedback from the reservoir that directs pump activity to control where water and sand are placed, all without human intervention, effectively reading and responding to the reservoir. I expect that this technology, known as Zoos IQ, will change the game in unconventionals.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

I believe Zoos IQ provides customers both the measurements and controls critical to their journey to improve productivity and production per lateral foot. I am excited about the future of this technology, and we have several other deployments now underway. I would like to thank our Zoos IQ customers for sharing our vision and bringing this technology to the forefront. We look forward to our continued collaboration to improve asset performance with this unique technology. To finish my thoughts on North America, our strategy to maximize value is unchanged.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

This strategy means we focus on returns, not share. Our plan is to retire or reallocate equipment rather than operate it on economic levels. We focus on safety, service quality and efficiency. We maintain equipment and invest in training. I am confident that our customers value our execution, and it differentiates Halliburton in this market.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

We lead technology innovation in North America, which means we develop technologies that maximize the value of our customers' assets and deploy them at scale. Before I turn the call over to Eric, let me close with this. I am confident in our strategy to maximize value in North America, drive our growth engines internationally and deliver technology that creates value for our customers and Halliburton. I expect Halliburton generates solid free cash flow in 2025, and we are on pace to return at least $1,600,000,000 of cash to shareholders through buybacks and dividends. With that, I'll now turn the call over to Eric to provide more details on our financial results.

[Eric Carre, Executive VP & CFO at Halliburton Company]

Eric? Thank you, Jeff, and good morning. Our Q1 reported net income per diluted share was $0.24 Adjusted net income per diluted share was $0.60 Total company revenue for Q1 twenty twenty five was $5,400,000,000 a decrease of 7% when compared to Q1 twenty twenty four. Adjusted operating income was $787,000,000 and adjusted operating margin was 14.5%. During the quarter, we recognized a pre tax charge of $356,000,000 as a result of severance costs, impairment of assets held for sale and real estate and other items primarily related to legacy environmental reserves.

[Eric Carre, Executive VP & CFO at Halliburton Company]

We expect our cost rationalization efforts to be supportive of our margins going forward. Now turning to the segment results. Beginning with our Completion and Production division, revenue in Q1 was $3,100,000,000 a decrease of 8% when compared to Q1 twenty twenty four. Operating income was $531,000,000 a decrease of 23% when compared to Q1 twenty twenty four and operating income margin was 17%. These results were primarily driven by decreased pressure pumping activity and lower completion tool sales in the Western Hemisphere.

[Eric Carre, Executive VP & CFO at Halliburton Company]

In our Drilling and Evaluation division, revenue in Q1 was $2,300,000,000 a decrease of 6% when compared to Q1 twenty twenty four. Operating income was $352,000,000 a decrease of 12% when compared to Q1 twenty twenty four and operating income margin was 15%. These results were primarily driven by decreased activity in Mexico and Saudi Arabia. Now let's move on to geographic results. Our Q1 international revenue decreased 2% year over year.

[Eric Carre, Executive VP & CFO at Halliburton Company]

Europe Africa revenue in Q1 was $775,000,000 an increase of 6% year over year. This increase was primarily driven by improved activity across multiple product service lines in Norway and higher well construction activity in Namibia. Middle East Asia revenue in Q1 was $1,500,000,000 an increase of 6% year over year. This improvement was due to higher activity across multiple product service lines in Kuwait and improved completion and production performance in Saudi Arabia. Latin America revenue for Q1 was $896,000,000 a 19% decrease year over year, primarily due to lower activity across multiple product service lines in Mexico.

[Eric Carre, Executive VP & CFO at Halliburton Company]

In North America, Q1 revenue was $2,200,000,000 a 12% decrease year over year. This decrease was primarily driven by lower stimulation activity in U. S. Land and decreased completion tool sales in the Gulf Of America. Moving on to other items, in Q1, our corporate and other expense was $66,000,000 We expect our Q2 corporate expenses to be about flat.

[Eric Carre, Executive VP & CFO at Halliburton Company]

In Q1, we spent $30,000,000 or about $03 per diluted share on SAP S4 migration, which is included in our results. For Q2, we expect SAP expense to be about flat. Net interest expense for the quarter was $86,000,000 For Q2, we expect net interest expense to increase about $5,000,000 Other net expense for Q1 was $39,000,000 For Q2, we expect this expense to increase about $5,000,000 Our normalized effective tax rate for Q1 was 22.1%. Based on our anticipated geographic earnings mix, we expect our Q2 effective tax rate to be approximately 23%. Capital expenditures for Q1 were $3.00 $2,000,000 For the full year 2025, we expect capital expenditures to be about 6% of revenue.

[Eric Carre, Executive VP & CFO at Halliburton Company]

Our Q1 cash flow from operations was $377,000,000 and free cash flow was $124,000,000 Moving on to other items that will impact free cash flow, we're following the trade situation closely. While the situation is fluid, our initial estimates are for an impact of about $02 to $03 per share in the second quarter, which is included in our guidance. We will provide an estimate of the full year impact next quarter. Now, let me provide you with comments on our expectations for Q2. In our Completion and Production division, we anticipate sequential revenue to increase 1% to 3% and margins to remain approximately flat.

[Eric Carre, Executive VP & CFO at Halliburton Company]

In our Drilling and Evaluation division, we expect revenue to be flat to down 2% and margins to decline 125 basis to 175 basis points, primarily due to the seasonal roll off of software sales and higher mobilization expenses related to contract startups. I will now turn the call back to Jeff.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

Thanks, Eric. Here are the key points I would like you to take away from our discussion today. While there is more uncertainty in the market than there was three months ago, Halliburton's consistent execution of our strategy has driven results that give me confidence that Halliburton will continue to outperform. In international markets, we had a solid start in 2025 with significant contract awards and strong delivery on our growth engines. Our value proposition resonates with customers, and I expect it to deliver further incremental wins throughout the year.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

In North America, we have expanded our technology leadership with the Zoos IQ closed loop autonomous frac system. I am confident our unique technologies and high percentage of contracted fleets will drive our outperformance in the North America market. Finally, I firmly believe Halliburton's consistent focus on technology development, collaboration and service quality execution will create value for our customers and drive long term success for Halliburton and our shareholders through any market. And now let's open it up for questions.

[Operator]

Thank you. Again, if you have a question or comment, please press star one one on your telephone keypad. Please stand by while we compile the q and a roster. Our first question or comment comes from the line of Neil Mehta from Goldman Sachs. Your line is open, sir.

[Neil Mehta, Head of Americas Natural Resources Equity Research at Goldman Sachs]

Yeah. Good morning, Jeff and team, and thank you for the time here. Couple of North America questions. Morning, Jeff. A couple of North America questions.

[Neil Mehta, Head of Americas Natural Resources Equity Research at Goldman Sachs]

You spend a lot of time with your customer base in between these calls and we've had a lot of volatility in the last couple of weeks. But as you think about U. S. Activity through the balance of the year, if we stay in this type of commodity price environment, how do you think about the rig count and the completion count? And what type of oil price do you think would really change customer behavior in a meaningful way?

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

Yes. Thanks, Neil. Look, I think that customers right now are working through that. I mean, what a lot's happened in three weeks. It's been a busy three weeks from a commodity price standpoint and also tariffs and what that might mean.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

So, yes, talk to customers all of the time, but what we really see are customers digesting information. I think duration is a part of that thinking as well. And so, look, when I think about the market inactivity sort of in the 60s, I think some important things are going on. One, I'd I'd you know, from from our perspective anyway, you know, the market's not building new equipment. So I think that, you know, we're in a good place there.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

I think that, activity itself, if it slows down much, starts to have a production impact as well. And so and I think that's a bit of a governor on what does activity I think we're in some sort of range here and it's not look, think it'll get digested, but the types of operators in North America are biased to working through things, I think largely today as opposed to what we've seen in the past. And I think that much of a decline in activity then is sort of underpinned pretty quickly by its impact on production.

[Neil Mehta, Head of Americas Natural Resources Equity Research at Goldman Sachs]

Thanks, Jeff. We'll see E and Ps report in the next couple of weeks. We'll definitely be asking the same question. Then you mentioned Mexico a couple of times the prepared remarks and it had impacts on margins, it looks like in both C and P and D and E. So just give us a lay of the land there.

[Neil Mehta, Head of Americas Natural Resources Equity Research at Goldman Sachs]

How do you think about the trajectory over the course of this year into 2026? And do you see a path to resolution?

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

Yes. Thanks. And look, and I was just there meeting with Victor Padilla, the new CEO, and have spent some time with them. Clearly not settled at this point as we look forward. And I think they have a plan, but I also think that it's going to be tough for a while.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

And I say tough for a while, I don't see immediate recovery in Mexico. Just as the new administration and Pemex themselves work through, what does all of this mean? But I do know this and what's very important is oil and gas to the economy of Mexico. And so I do expect they find their footing at some point. It's too early to call when that point is, But I do think the decline rates are pretty meaningful in that market and I think that that's going to drive recovery.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

I wish I were clear around the timing on that, Neil. But I do believe they're working through what plans are, but obviously, the execution of those plans are dependent on a range of things, including kind of what the market does and what the performance does.

[Neil Mehta, Head of Americas Natural Resources Equity Research at Goldman Sachs]

Okay. Thanks, Jeff. Appreciate the color.

[Operator]

Thank you. Our next question or comment comes from the line of David Anderson from Barclays. Your line is open.

[J. David Anderson, Managing Director at Barclays]

Great. Thank you very much. Jeff, maybe start with a question on Saudi. There's a little bit of some moving pieces in there. The stimulation was about drilling and well construction down.

[J. David Anderson, Managing Director at Barclays]

Do you see Saudi growing in the Halliburton portfolio this year? There are a number of tenders for GeForward to be announced. Is that the big swing factor for the year? Could you just talk about that within the context of flat international, for the year, please? Thank you.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

Sure. And I think that, I mean, number one, Saudi is a huge market. And we expect growth for our portfolio in 2025 in Saudi, just to be clear. You know, I think there's some exciting opportunities. You mentioned one of them, but there are others.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

We do a lot in that market, certainly in Sephora, but beyond Sephora, like our performance there, like the opportunity to put technology to work there both in unconventionals and other parts of the market. And so I think when I think about Saudi, that's one of those places where we are going to grow in those growth engines and we see a lot of where we have unique strength in those growth engines, whether it's unconventionals, intervention and artificial lift, see all three of those positively in Saudi as well. So hope that clarifies that.

[J. David Anderson, Managing Director at Barclays]

That's helpful. So good to see some positive stuff. I know a lot of concerns on the North American side. Eric,

[J. David Anderson, Managing Director at Barclays]

I want

[J. David Anderson, Managing Director at Barclays]

to ask you a bit more about the margin progression. Margins came down this quarter in both segments below the guidance that we were expecting. You're looking towards next second quarter coming down again. Usually, first quarter is the bottom. How are you thinking about kind of margin progression through the rest of the year?

[J. David Anderson, Managing Director at Barclays]

I'm particularly thinking about the context of white space in North America, particularly on I think most of your equipment is locked down, but help us understand kind of how margins how you're thinking about margins and maybe where we could exit the year from here? Thank you.

[Eric Carre, Executive VP & CFO at Halliburton Company]

Yes. So, let me start with giving you a bit of a walk through from Q1 to Q2, and then I'll give you a little bit of color on the full year margins by division. So, if we look at Q2, as we guided for the starting with the C and P division, we're looking at fairly flat revenue in North America, but a pickup in our international business for the C and P division. Margin is flat, keep in mind as well that includes the tariff impact. When we look at tariffs, we kind of mentioned on the prepared remark, $02 to $03 impact, about 60% of that is in the C and P division, forty percent of that is in the D and E division.

[Eric Carre, Executive VP & CFO at Halliburton Company]

So that's for C and P. On the D and E side of the business, it is really, I mean, you look at Q2 over Q1, we're basically dropping about $40,000,000 in profits. And that can be explained fairly specifically, we have about $10,000,000 in tariff, 20,000,000 in mobilization, and that is incremental mobilization costs over Q1, as we get geared up for growth in the second half of the year in quite a few of the regions. And then we have $10,000,000 that's a mix issue with software business coming down in Q1, our drilling business coming back up a bit, but the delta of that is about $10,000,000 So I think what's important to realize for the Q2 guidance is that the guidance is really not new run rate is really a couple of specific items. If we think about the second half of the year to kind of give you some color there, we're at this stage forecasting that our second half twenty five, the margin levels in Q3 and Q4 will be in the same zip code as they were in 2024.

[Eric Carre, Executive VP & CFO at Halliburton Company]

So that's kind of for B and E. If we look at C and P, we're not going to guide the year. The international business for C and P is about 40% of our business, 60% in NIM. As Jeff mentioned in the remarks and in a couple of comments here, we're expecting our growth engine to perform really well in the international market that's on the Intervention, Lyft and Conventional. A lot of these growth engines sit in the C and P division.

[Eric Carre, Executive VP & CFO at Halliburton Company]

For the North America business, it's a bit less clear as we explained in the prepared remarks.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

Maybe I'll add some color, because specifically regarding North America. I think I do mean that the customers are still digesting what precisely that means and at what price range and duration of commodity price. But that being said, I mean, we have a different looking customer base today than we've ever had in the past, particularly given the Zoos, not only the contract terms, but the who it works for and the what it's able to do. I also know from a technology perspective that there's a lot of demand for the technology that we have. And we really have a different operating model than we've had going into any other period of time.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

Given the just the ability to move up down to take a clear view on what's really required to perform the services. And the automation continues to take cost out of the process for us. So again, a lot of digesting of data going on, but I think from our perspective, in a really strong position, certainly relative to the market.

[J. David Anderson, Managing Director at Barclays]

Great. Thank you, Jeff and Eric.

[Operator]

Thank you. Our next question or comment comes from the line of Arun Jayaram from JPMorgan. Your line is open.

[Arun Jayaram, Analyst at JPMorgan Chase]

Yes, Jeff, good morning. Jeff, I wanted to maybe see if you could elaborate on what you're seeing internationally. You highlighted how it's possible that international spending is down a little bit year over year, which is maybe a little bit softer than your previous outlook of relatively flat with obviously Mexico being a headwind. With OPEC clearly bringing on some barrels, could you talk to us what parts of the non OPEC food chain do you expect to see maybe some spending, you know, impacts?

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

Yeah. Look, I look. When I let me just start with how we see international with a little more specificity. You know? And I when I think about our operating plan today, it looks flat.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

I mean, sans Mexico. And then overall, it, excuse me, overall looks flat with Mexico in there. But the key is we do see a bit more risk creeping into the models in the last three weeks or certainly the last three months. But when I think about non OPEC parts of the world, Norway, we see a lot of activity. We see solid growth there.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

We've been quite successful in Brazil. This is where some of the mobilization cost is both for P and A and for integrated drilling and then talked about the Shell integrated projects and other operators in Suriname. It's really the deep collaboration model that I'm describing that is gaining work and just winning and developing different types of relationships. So when I think about how do you how do we land there, look, I see the second half of the year Europe and Africa making the biggest jump in Q3 and that's with contract startups and we see the Middle East growth engines having an impact there, the growth engines in The Middle East. And then in Q4, Latin America has a pretty stout uplift as well, just because we'll see the full quarter of the contract startups that we're mobilizing for in Q2 and that I described.

[Arun Jayaram, Analyst at JPMorgan Chase]

Great. That's helpful. Maybe one for Eric. Eric, I wanted to maybe zero in on the cash flow statement. You announced a $345,000,000 equity investment, looks like a minor acquisition.

[Arun Jayaram, Analyst at JPMorgan Chase]

So I wondering if you could describe those two, plus you had about a $350,000,000 outflow in other operating items. So maybe you could give us a little bit of color on those items in the cash flow statement.

[Eric Carre, Executive VP & CFO at Halliburton Company]

Yes. So there was one to start with the investing activities. There was one that was related to the UpTime acquisition that we commented on. The second number to $3.45 relates to an increase in ownership in Vault of Grid. And I'll let Jeff elaborate on this one.

[Eric Carre, Executive VP & CFO at Halliburton Company]

Going back to the operating activities, the big item that you see in other operating activities is actually the combination of the typical incentive payout, cash tax payments, etcetera, but also the cash portion of our restructuring charge in Q1.

[Arun Jayaram, Analyst at JPMorgan Chase]

Got it. Got it. That's helpful.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

And I would just say with respect to the increased position in Voltogrid this quarter, look, we like the power business. We have a front row seat through our exposure in the Volt2Grid investment, but we also see many other exciting opportunities for us in that space. But want to be crystal clear, we're very prudent and it's one step at a time for us.

[Arun Jayaram, Analyst at JPMorgan Chase]

Great. Thanks a lot, Jeff.

[Eric Carre, Executive VP & CFO at Halliburton Company]

Yeah.

[Operator]

Thank you. Our next question or comment comes from the line of Roger Read from Wells Fargo Securities. Your line is open.

[Roger Read, Senior Energy Analyst at Wells Fargo Securities]

Yeah, thank you. Good morning. I was hoping, Jeff, you could come back and give us a little more on the North American market and how Zoos and how you think Zoos IQ really ought to work in terms of, you mentioned earlier, a changed customer mix a little bit, but how we should think about, if you want to call it a growth opportunity, maybe not right now, but the way to sustain margins through this kind of softer period.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

Look, thank you. The key to Zoos IQ is it's things we have been working on for some time. So in some ways it's a culmination of Octave Auto Frac, sensory, the ability to read the reservoir, control the equipment, and then analyze in real time. I say analyze, but solve for that and better than real time at the pace of AI time, for where does the sand and the water need to go. And look, this precisely addresses what kind of the greatest challenges in hydraulic fracturing, which is how to improve recovery rates and almost under any conditions, meaning rock we know over time gets degrades.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

Okay, the best rock gets fragged first. But how does that get read and manipulated and addressed in a way that creates better outcomes. And this is really important technology and the types of customers that are taking it up are the kind that have a very long view of North America, clearly appreciate the importance of recovery over a long period of time. And yes, I think it drives growth in even this market. We actually put a new Zeus fleet to work in Q1.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

And I think that it creates not just stickiness, but clearly it creates more value, which is value that accrues to us.

[Roger Read, Senior Energy Analyst at Wells Fargo Securities]

Appreciate that. Eric, maybe a question for you on how we should think about uses of free cash flow in this environment. So obviously dividend priority, but how are you thinking about the share repurchase side of things? And what's the right way for us to think about that with the updated guidance?

[Eric Carre, Executive VP & CFO at Halliburton Company]

Yes, mean, at this stage, obviously, with the updated guide, we're looking at a overall free cash flow for the year, which is on the kind of lower end of what we had given some color on in Q1. But I really don't see anything today that changes our perspective on cash returns and buybacks. So, we're still on a pace that is very similar to what it was last year.

[Roger Read, Senior Energy Analyst at Wells Fargo Securities]

Appreciate that. Thank you.

[Operator]

Thank you. Our next question or comment comes from the line of Sarra Pant from Bank of America. Your line is open.

[Saurabh Pant, Analyst at Bank of America]

Hi. Good morning, Jeff and Eric.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

Morning, Jeff

[Saurabh Pant, Analyst at Bank of America]

or Eric, maybe I want to start with the tariff side of things. I know you said $02 to $03 impact on the second quarter, and we'll get more color on the back half later on as you get more visibility, right? But maybe you can elaborate a little bit on what businesses, what exact components or maybe I'm thinking businesses like chemicals and baroids specifically, what parts of your businesses are seeing the most impact from tariffs? Then how are you looking to mitigate that going forward?

[Eric Carre, Executive VP & CFO at Halliburton Company]

Yes, I'll take that one, Saurabh. So, as we said, it's really early days. So, we have reasonable visibility of what is going to happen in Q2. And that is about an impact of $02 to $03 And as we indicated, we are doing a lot of work on mitigating the impact of tariffs. We have a well diversified supply chain.

[Eric Carre, Executive VP & CFO at Halliburton Company]

We have a lot of levers we can pull. But really to be more clear in terms of the overall impact, we need a bit more clarity and stability in the structure of tariffs, so that we can really understand what levers we can pull and then what the overall outcome is going to be. So there's just a lot of moving parts right now. And I think we'll be able to give you more color in three months from now. In terms of the impact of product lines, I'm not going to go into a lot of details, but broadly speaking, we're looking at about 60% in C and P with some impact on our lift business, some chemicals, etcetera, 40% on our D and E business, you're looking at parts like collars for drilling and gun bodies for perforating business.

[Eric Carre, Executive VP & CFO at Halliburton Company]

That's the type of components that are being affected by tariffs at this stage.

[Saurabh Pant, Analyst at Bank of America]

Perfect. Eric, a quick clarification on that. I think it responds to a prior question you said, for margins, D and E, you think 3Q and margins can go back to the same ZIP code as last year. Does that include any of the tariffs impacts reversing?

[Eric Carre, Executive VP & CFO at Halliburton Company]

Broadly speaking, yes, with what we know today. Yeah.

[Saurabh Pant, Analyst at Bank of America]

Okay. Okay. Perfect. I got it. And then, Jeff, quickly one for you on the international side of things.

[Saurabh Pant, Analyst at Bank of America]

If I'm doing my math right, it sounds like Mexico might have been down 70%, seventy five %, which is a massive number year over year, right? But excluding that, I think you said mid single digits, rest of international, right? It's pretty healthy growth considering the environment we are in. Maybe talk to what countries, what regions drove that growth, Jeff? And what should we expect from those regions going forward?

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

Yes. Look, I think I mentioned that, but I think we'll see the solid jump in Europe, Africa in Q3 as we start a number of contracts. Middle East, I expect our growth engines are kicking in as well, whether that's intervention, which is an important business for us in The Middle East as well as some activity startup around lift in new countries. Again, we expect that that's a meaningful part of our business and it's continuing to grow. And I think that we'll continue to see activity around drilling and I've described some of the drilling technology, but that's becomes more and more meaningful.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

And then in Q4, we really see Latin America making a big step up, and again, very focused in Brazil, Argentina, a number of places where we have very strong business. So I would say that Mexico certainly is the outlier, but very excited about our business and the type of it's really the strategic approach that we have around collaboration and maximizing asset value, which aligns us very well with our customers, creates opportunity for us. I expect we'll see more growth in the North Sea, maybe even outside of the Norwegian sector. So I think that for us, we see a great opportunity in the second half of the year.

[Saurabh Pant, Analyst at Bank of America]

Okay, fantastic. No, it's good to see that momentum continue, Jeff. Okay, I'll turn it back. Thank you.

[Eric Carre, Executive VP & CFO at Halliburton Company]

You. Thank

[Operator]

you. Our next question or comment comes from the line of Scott Gruber from Citigroup. Your line is open.

[Scott Gruber, Director - Oilfield Services & Equipment Research at Citi]

Yes, good morning.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

Good morning, Scott.

[Eric Carre, Executive VP & CFO at Halliburton Company]

Good morning.

[Scott Gruber, Director - Oilfield Services & Equipment Research at Citi]

Jeff, you highlighted some emerging risks to second half activity. Eric, you reiterated CapEx being about 6% of sales. Obviously, there's a bit of risk to sales. But at 6% of sales, your CapEx is still trending above DD and A. You just speak to the need for spending above DD and A?

[Scott Gruber, Director - Oilfield Services & Equipment Research at Citi]

Is that really helping to drive the share gains that you're targeting? And what factors would cause you to adjust that rate of spend? I realize second half spending more impacts your fleet of tools in 2026 and therefore reflects the 2026 outlook. But what factors would cause you to kind of reconsider the rate of spend in the second half?

[Eric Carre, Executive VP & CFO at Halliburton Company]

Yes, so a couple of things on CapEx. So there is a somewhat of a self regulating element around CapEx as we look at it as a percentage of revenue. So as revenue fluctuates over time, the dollar CapEx spend adjust to it. And I'm saying over time, intentionally in the sense that, there is a time element there, like most of the CapEx that we are going to spend in 2024 is the result of orders that were placed in 2024. So there is, it takes time to kind of adjust things.

[Eric Carre, Executive VP & CFO at Halliburton Company]

And we're probably not going to be able to adjust very much if the activity ends up changing. And as we said right now, most of the like international CapEx, we're not seeing we're seeing still the activity fairly flat. So, if we adjust, we'll start adjusting really for 2026. The other thing to keep in mind as well, that we have not qualified either is a potential impact on CapEx number coming from tariffs as some of the parts get incorporated into the capital build.

[Scott Gruber, Director - Oilfield Services & Equipment Research at Citi]

Got it.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

Yes, guess I would follow that. Just a little bit of addition around that in terms of the technology that's generating the outperformance, whether it's an IWI or these growth engine areas, I mean, we are allocating capital to those things that are growing. And so we're very thoughtful about that and that will allow us to adjust capital up and down over time. And so I would expect that we continue to be effective allocators of capital sort of under any conditions here.

[Scott Gruber, Director - Oilfield Services & Equipment Research at Citi]

I got it. Appreciate it. And turning back to Voltigrid, what's the end game here with VoltaGrid? Do you intend to just keep it as an equity investment? Or are you interested in ultimately becoming the majority owner?

[Scott Gruber, Director - Oilfield Services & Equipment Research at Citi]

And do you see benefits to how being the majority owner, could you help accelerate the capture of non oilfield work with a more data center contracts, more industrial contracts? Is there a international expansion annual that you could push forward as majority owner? Just kind of how do you think about that investment longer term?

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

Yes. Look, in my view, that's optionality. And so not predetermined on any direction and I want to be clear that I'm not, we're not. But again, that's one avenue that we're looking that we're participating in now. Obviously, I think that that's an opportunity for growth.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

Over time, we're gonna address it prudently. As I said, we look at lots of options, not just that by any means. And we also are, you know, clear around what's strategically where does that distributed power go as opposed to is it one area or another. I think there are multiple areas that, you know, demonstrate some growth. But just chasing after the thing of the day, we're really careful not to do those things.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

And so again, prudence and sort of the kinds of things we do at Halliburton are always going to be deeply thought out and have an executable clear strategy around it. And right now, we see a lot of opportunity broadly in that area and we want to keep those options wide open.

[Scott Gruber, Director - Oilfield Services & Equipment Research at Citi]

Yes. I appreciate the color, Jeff and Eric. Thank you.

[Eric Carre, Executive VP & CFO at Halliburton Company]

Yes. Thank you. Thank you.

[Operator]

Thank you. Our next question or comment comes from the line of Derek Potheiser from Piper Sandler. Your line is open.

[Derek Podhaizer, Senior Research Analyst at Piper Sandler Companies]

Hey, good morning. I just wanted to ask about your outlook for the gas basin activities. Maybe just if you could expand on how your conversations have progressed over the last three months. Just trying to think about the equipment market to service those areas. I mean, we still have LNG takeaway, powering the AI movement, maybe just some overall comments around how you're seeing the gas markets progressing now.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

Yes. Look, I'm positive on the gas markets for sure. And I think that the structural change that you described, both power demand and LNG exports will continue to structurally drive more demand, which is going to increase activity in the gas markets. And I've had dialogue with gas operators. They certainly like the price where it is better than where it had been.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

We've come a long way. The strip today or at least the current price today is moving around, but I think some of that is a result of a lot of the digestion of data that's coming at a high rate is having an impact on that. None of that changes though the structural demand for gas, which clearly is the most reliable, scalable and affordable form of power. So I think we'll continue to see improvement there. But like I've said for many quarters, I'm not going to pick the date that we see the inflection, but we have had more inbounds from gas operators than we've had in some time.

[Derek Podhaizer, Senior Research Analyst at Piper Sandler Companies]

Got it. That's helpful. And this this might be more of a bigger picture question, but, you know, I was thinking about last year when we're talking about the international cycle, you talked about Halbern being better positioned than last cycle was talking about artificial lift chemicals. I mean, now we have deepwater offshore starting to pick up. So maybe if you could spend some time talking to us about Halbern's position attacking this offshore cycle versus prior offshore cycle, just given the commentary you laid out in the release and on the calls, it's pretty strong.

[Derek Podhaizer, Senior Research Analyst at Piper Sandler Companies]

Your outlook seems pretty constructive. So maybe just some thoughts around your position this time around than than prior cycles.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

Yeah. Look, I think it's technically, we're in a much better place than any other cycle, and that's why I described we're winning offshore exploration, integrated offshore exploration work. Really, all the contract wins, all of the contract wins I described are offshore projects, some development, some exploration. And I do that just to demonstrate from an example perspective, there are others. A, how technical we are and why we are competing so well in the offshore space, that's one.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

And then second, the value proposition is really meaningful internationally or in deepwater because the stakes are much higher, the alignment is much more important, the type of ways we work and plan together with our customers. You know, the clarity around asset value, creating asset value for our customer creates amazing alignment. And culturally, we are aligned around delivering that, which gives customers a lot of confidence that we're going to show up and do the best thing for them. We are going to be aligned with them and so those two things put us in a very different position internationally and in deep water and for that reason I am very I am optimistic around where we sit and how we will perform.

[Derek Podhaizer, Senior Research Analyst at Piper Sandler Companies]

Great. Appreciate the color. I'll turn it back.

[Eric Carre, Executive VP & CFO at Halliburton Company]

Yeah. Thank you.

[Operator]

Thank you. Our next question or comment comes from the line of Doug Becker from Capital One. Mr. Becker, your line is open.

[Douglas Becker, Analyst at Capital One Financial]

Thank you. Eric, I wanted to circle back to your comment that second half twenty twenty five D and E margins would be in the same ZIP code as second half twenty twenty four. If I'm interpreting that correctly, might imply about 300 basis points of margin improvement from the second quarter. So wanted to make sure I got that right. And if so, that still seems pretty aggressive, even trying to take into account the unique caliber and growth drivers and just some seasonal improvement.

[Douglas Becker, Analyst at Capital One Financial]

So anything you could expand on the drivers there?

[Eric Carre, Executive VP & CFO at Halliburton Company]

No, you are correct. That is what I said. And again, you're looking at a significant impact from mobilization in Q2 and we're mobilizing equipment, because we have one additional work. So all of that kind of go together, we'll have less cost as we get into the second half of the year. We'll have incremental work that we're mobilizing for.

[Eric Carre, Executive VP & CFO at Halliburton Company]

So that's what our operational forecast tells us at this point in time.

[Douglas Becker, Analyst at Capital One Financial]

Does that assume any decrease in activity in the second half?

[Eric Carre, Executive VP & CFO at Halliburton Company]

That includes it reflects the forecast that we are seeing right now in terms of the top line. As Jeff indicated, there is obviously more uncertainty because of the macro picture right now. So, if the macro picture has significant impacts on the international market, then that will differ, but that's not what we're seeing at this point in time. Understood.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

Nor is that the feedback we're getting from customers internationally. That feedback is much clearer.

[Douglas Becker, Analyst at Capital One Financial]

Got it. And then just very quickly on the severance charge over $100,000,000 in the first quarter, you had a $60,000,000 or so severance charge in the third quarter. Just any color on how that might be helping on the margin front going forward?

[Eric Carre, Executive VP & CFO at Halliburton Company]

Yes. Overall, I would say that it is included in the guidance that we're giving. So that's how it will materialize itself. And then you can think about the overall severance impact to have a payback of less than one year.

[Douglas Becker, Analyst at Capital One Financial]

Okay, got it. Thank you very much. Welcome.

[Operator]

Thank you. Our next question or comment comes from the line of Stephen Gengaro from Stifel. Your line is open.

[Stephen Gengaro, Managing Director at Stifel Financial Corp]

Thanks. Good morning, everybody. So two things for me. I think the first, when we think about sort of the evolution of the pressure pumping business over the last five to ten years and the increased probably resiliency in margins, Can you talk about what you're seeing right now kind of on the pricing side? And maybe even if there's any color you could give on how these longer term contracts are in place on the e fleets you may or may not kind of reprice on a quarterly or annual basis.

[Stephen Gengaro, Managing Director at Stifel Financial Corp]

How are there any color you can give us there as we think about margin progression in C and

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

extend these contracts sort of throughout and they continue to be price consistent with the value that they're creating, including the technology that I've been describing. So look, I think that it is a much more resilient market for us and that is from a strategic perspective is why that happens. I was pretty clear in my remarks in terms of what maximize value looks like. And so, think it'll be it's competitive, but at the same time, we decide a lot of what we do and our view is it has to make a good return. And so with 40% and our target 50% being under contract and being at the high end of the technology range and the technology that goes with it, I think puts us in a different position.

[Stephen Gengaro, Managing Director at Stifel Financial Corp]

Okay, great. Thank you. And then just a follow-up on the question that came up on VoltaGrid. One of the things that we're trying to understand better around power gen is the differentiation it brings. And given how I think the pressure pumping market has become, if it's a word, decommoditized over the last ten years, How do you think about something like VaultaGrid and whether that's a more commoditized service and kind of something that the Haliburton as an entity has kind of been moving away from over time?

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

Yeah. Well, obviously, something we think about and when I think about strategic, obviously, I mean competitive advantage and that's one of the reasons we have a front row seat. But before we take any steps, I'll have to be crystal clear on how that competitive advantage is sustainable over the long term, which is precisely what I told you about frac in terms of we were committed to a differentiated business. We believe that technology drives sustainable differentiation in our case given the investment in it. And so, view that the same way and ergo the reason we're sitting where we are.

[Stephen Gengaro, Managing Director at Stifel Financial Corp]

Okay. Great. Thank you for the color.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

Thank you.

[Operator]

Thank you. That concludes the Q and A session for this call. I would like to turn the conference back over to management for any closing remarks.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

Yes. Thank you, Howard. As we close out today's call, let me close with this. I'm confident in our strategy to maximize value in North America, drive our growth engines internationally and deliver highly differentiated technology that creates value for our customers and Halliburton. I expect Halliburton generates solid free cash flow in 2025 and we are on a pace to return at least $1,600,000,000 of cash in 2025.

[Jeff Miller, Chairman, President and CEO at Halliburton Company]

Look forward to speaking with you next quarter.

[Operator]

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day.

Participants

Executives

• David Coleman, Senior Director of Investor Relations
• Jeff Miller, Chairman, President and CEO
• Eric Carre, Executive VP & CFO

Analysts

• Neil Mehta, Head of Americas Natural Resources Equity Research at Goldman Sachs
• J. David Anderson, Managing Director at Barclays
• Arun Jayaram, Analyst at JPMorgan Chase
• Roger Read, Senior Energy Analyst at Wells Fargo Securities
• Saurabh Pant, Analyst at Bank of America
• Scott Gruber, Director - Oilfield Services & Equipment Research at Citi
• Derek Podhaizer, Senior Research Analyst at Piper Sandler Companies
• Douglas Becker, Analyst at Capital One Financial
• Stephen Gengaro, Managing Director at Stifel Financial Corp