Halliburton Q2 2025 Earnings Report

Halliburton EPS Results

• Actual EPS: $0.55
• Consensus EPS: $0.55
• Beat/Miss: Met Expectations
• One Year Ago EPS: $0.80

Halliburton Revenue Results

• Actual Revenue: $5.51 billion
• Expected Revenue: $5.43 billion
• Beat/Miss: Beat by +$83.35 million
• YoY Revenue Growth: -5.50%

Halliburton Announcement Details

• Quarter: Q2 2025
• Date: 7/22/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, July 22, 2025
• Conference Call Time: 9:00AM ET

Halliburton (NYSE:HAL) provides products and services to the energy industry worldwide. It operates through two segments, Completion and Production, and Drilling and Evaluation. The Completion and Production segment offers production enhancement services that include stimulation and sand control services; cementing services, such as well bonding and casing, and casing equipment; and completion tools that offer downhole solutions and services, including well completion products and services, intelligent well completions, and service tools, as well as liner hanger, sand control, and multilateral systems. This segment also provides electrical submersible pumps, as well as artificial lift services; production solutions comprising coiled tubing, hydraulic workover units, downhole tools, and pumping and nitrogen services; pipeline and process services, such as pre-commissioning, commissioning, maintenance, and decommissioning; and specialty chemicals and services. The Drilling and Evaluation segment offers drilling fluid systems, performance additives, completion fluids, solids control, specialized testing equipment, and waste management services; drilling systems and services; wireline and perforating services consists of open-hole logging, and cased-hole and slickline; and drill bits and services comprising roller cone rock bits, fixed cutter bits, hole enlargement, and related downhole tools and services, as well as coring equipment and services. This segment also provides cloud based digital services and artificial intelligence solutions on an open architecture for subsurface insights, integrated well construction, and reservoir and production management; testing and subsea services, such as acquisition and analysis of reservoir information and optimization solutions; and project management and integrated asset management services. Halliburton Company was founded in 1919 and is based in Houston, Texas.

Halliburton Q2 2025 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: In Q2 Halliburton observed a softer oilfield services market driven by schedule gaps in North America and reduced international activity, leading to plans to stack uneconomic fracturing fleets and cut variable and fixed costs.
• Positive Sentiment: Halliburton’s advanced technologies—including Zeus IQ fracturing, iCruise and Logix automation, and EarthStar 3DX—saw rapid adoption and delivered unique value to customers in both drilling and completion services.
• Positive Sentiment: International revenue grew 2% sequentially in Q2 with strength in Latin America and Europe/Africa, and the company expects growth in Brazil, Norway and offshore frontier basins despite a mid-single-digit year-on-year revenue decline.
• Negative Sentiment: North America revenue was flat sequentially in Q2 but full-year North America revenue is forecasted to decline low double-digits due to lower drilling/completion activity, pricing headwinds and fleet stacking in oil-directed operations.
• Positive Sentiment: In Q2 Halliburton generated $582 million of free cash flow, repurchased $250 million of stock, and maintained a full-year free cash flow outlook of $1.8–2.0 billion, underpinning strong capital discipline and shareholder returns.

Presentation

[Operator]

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Halliburton Second Quarter twenty twenty five 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 time, I would like to turn the conference over to Mr. David Coleman. Sir, please begin.

[David Coleman, Senior Director - IR at Halliburton Company]

Hello, and thank you for joining the Halliburton second 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 that reflect 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 - IR at Halliburton Company]

These risks are discussed in Halliburton's Form 10 ks for the year ended 12/31/2024, Form 10 Q for the quarter ended 03/31/2025, 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 second 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]

Thank you, David, and good morning, everyone. I will open today's call with a discussion of the oilfield services market, which appears very different today than it did only ninety days ago. In the second quarter, commodity markets were volatile driven by trade and tariff uncertainty, geopolitical unrest, and the accelerated return of OPEC plus production cuts. Against this backdrop, here's what I observe in the market today, which directly influences my outlook. In North America, multiple operators, even large and established customers, are now planning meaningful schedule gaps in the second half of twenty twenty five.

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

In international markets, particularly among some large NOCs, we continue to see reductions in activity and lower discretionary spend typical of much lower commodity price environments. And finally, we've seen several well publicized reorganizations and cost reduction efforts by large independent operators and IOCs. To put it plainly, what I see tells me the oilfield services market will be softer than I previously expected over the short to medium term. We will, of course, take action to address this near term softness. That said, I believe the demand fundamentals remain strong for both oil and gas.

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

I expect conditions will improve as additional OPEC plus production is absorbed by the market and operators around the world work to replace declining production and meet increasing demand. As I look ahead, I believe that Halliburton is well aligned with the themes that I expect will define the next several years. First, unconventionals will continue to be a critical component of the supply picture. I expect that advanced technology to maximize recovery and returns will expand both in The United States and around the world. Second, production related services like intervention and stimulation along with artificial lift will grow alongside increased global production of both oil and gas.

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

Third, I expect demand will rise for complex drilling and well construction services to access available resources. This requires advanced tools and automation technologies for efficient development and delivery. I believe our strategic alignment with these themes positions Halliburton to deliver industry leading returns. I fully expect that the strategic execution that delivered performance in recent markets will continue to deliver outperformance in the future. Now let's move on to our geographic results.

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

I'll start with the international markets, where Halliburton delivered quarterly revenue of $3,300,000,000 The second quarter demonstrated 2% sequential growth with activity increases in Latin America and Europe Africa offset by activity reduction in Saudi Arabia. As we look at the full year 2025, I expect our international revenue will contract by mid single digits year on year, primarily driven by activity reductions in Saudi Arabia and Mexico. Despite the ongoing softness in these large markets, I do expect Halliburton to demonstrate growth in Brazil and Norway, as well as offshore frontier basins where we secured key wins last quarter through our technology, operational excellence, and collaborative approach. Thinking broadly about our international business going forward, our growth engines, unconventionals, drilling, production services, and artificial lift remain key to our international strategy, and we believe Halliburton has unique opportunities to grow in each of these areas as evidenced by our recent progress. In unconventionals, we continue to see adoption of North America style development, multi well pads, long laterals, and large completions in several international unconventional basins, which reinforces our confidence in our unique ability to lead in unconventionals.

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

In Argentina, we achieved a record quarterly stage count and performed our first sensory fiber optic fracture monitoring service, a milestone in expanding our leading unconventional technologies outside of North America. In Australia, we recently completed a 67 stage stimulation, the largest job to date in the Bidiloo Basin. And in The Middle East, we drilled the longest well in the region's largest unconventional play. Turning to drilling services. ICruise, Logix Automation, and the iStar platform delivered strong performance and introduced unique capabilities in several technically demanding markets.

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

Globally, we surpassed half a million feet drilled with Logix closed loop automation and completed an important trial with a customer in The Middle East. In Norway, we recently utilized iCruise and Logix to drill the longest well in the Norwegian continental shelf to a measured depth of over 10 kilometers. In reservoir mapping, we launched EarthStar three d x. It builds on our leading EarthStar x and BrightStar mapping technologies and provides a three-dimensional map ahead of the bit while drilling. This unique capability allows proactive steering around hazards and precision wellbore placement for optimum drilling efficiency and recovery.

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

Next, in Production Services, we had several activity highlights during the second quarter. In Brazil, we began operations on our largest integrated well intervention contract, which highlights the expansion of our collaborative model from well construction to production. In Norway, we expanded our riserless coil tubing services beyond our initial pilot and completed a three well intervention campaign for a customer. Finally, in artificial lift, Halliburton secured its largest international ESP contract to date from a Middle East NOC. Middle East Asia remains our largest and fastest growing international lift region, with strong year over year growth also achieved in Latin America and Europe Africa.

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

We expect international artificial lift revenue to grow over 20% this year and plan to double the installed base of Intellivate, our remote operations and automation platform. It has been a strong start to the year, and I expect to exit the year with an international franchise that is larger than all of Summit at the time of acquisition, a significant milestone in our growth journey. To conclude my thoughts on the international market, while activity reductions in a few large markets will likely overshadow the solid performance of other geographies, I am confident our strategy is the right one and our growth engines remain key to that strategy. Now let's turn to North America, where our second quarter revenue of 2,300,000,000 was roughly flat to first quarter. Seasonal improvements in completions were offset by lower service pricing and reduced artificial lift activity.

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

As we look at the remainder of the year in North America, we expect that revenue in the second half will decline due to lower drilling and completion activity. This comes in the form of more white space in our frac calendars, the full period effects of recent service pricing reductions, and the stacking of frac fleets that do not meet our returns threshold. While increases in gas activity are likely to absorb some service capacity this year, it is unlikely to offset the decreases in oil directed activity. We now forecast full year North America revenue to decline low double digits year over year. In this environment, differentiation has never mattered more.

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

Halliburton's leading technology remains an important differentiator for us. This quarter, we were pleased to see Chevron announce their Zoos IQ closed loop fracturing milestone in The Rockies. Customer enthusiasm is strong and we are actively deploying Zeus IQ across our U. S. Operations.

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

I expect up to one third of our Zeus electric fleets to operate with Zeus IQ by year end, a strong endorsement of a technology that debuted only a quarter ago. In North America drilling, iCruise and Logix automation enable our customers to maximize the value of their assets by consistently delivering curve and lateral sections on today's longer wells. This performance has driven rapid growth in our U. S. Land rotary steerable business and double digit revenue growth in North America drilling services even amid rig count declines.

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

To finish my thoughts on North America, activity reductions will affect the oilfield services market this year. I am confident in our plans to take the necessary actions to address these headwinds. My customer conversations tell me technology and service execution are key to maximizing the value of their assets, and I believe Halliburton has unmatched capability to deliver both of these at scale, which is why I am confident we will deliver returns in North America that outpace our competitors. For both the international and North America markets, here's how I plan to address the near term softness. First, we will not work equipment where it does not earn economic returns, and this includes North America frac fleets.

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

Second, we will reduce our variable and fixed cash costs over the quarters ahead to size our business to the market we see. And finally, we will remain focused on free cash flow and returns and will remain diligent stewards of capital. Before I turn it over to Eric, let me close with this. I am confident in Halliburton's future. Today, we are more differentiated with deeper technology advantages to address our customers' requirements and more collaborative than ever before.

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

I believe our value proposition to collaborate and engineer solutions to maximize asset value for our customers is a powerful driver of both customer and shareholder value. With that, I'll turn the call over to Eric to provide more details on our financial results. Eric?

[Eric Carre, EVP & CFO at Halliburton Company]

Thank you, Jeff, and good morning. Our Q2 reported net income per diluted share was $0.55 Total company revenue for Q2 twenty twenty five was $5,500,000,000 an increase of 2% when compared to Q1 twenty twenty five. Operating income was $727,000,000 and operating margin was 13%. Our Q2 cash flow from operations was $896,000,000 and free cash flow was $582,000,000 During Q2, we repurchased approximately $250,000,000 of our common stock. Now turning to the segment results.

[Eric Carre, EVP & CFO at Halliburton Company]

Beginning with our Completion and Production division, revenue in Q2 was $3,200,000,000 an increase of 2% when compared to Q1 twenty twenty five. Operating income was $513,000,000 a decrease of 3% when compared to Q1 twenty twenty five and operating income margin was 16%. Revenue increased largely due to seasonal improvement in pressure pumping activity in the Western Hemisphere. The decline in operating income was primarily driven by lower pricing for stimulation services in U. S.

[Eric Carre, EVP & CFO at Halliburton Company]

Land. In our Drilling and Evaluation division, revenue in Q2 was $2,300,000,000 an increase of 2% when compared to Q1 twenty twenty five. Operating income was $312,000,000 a decrease of 11% when compared to Q1 twenty twenty five and operating income margin was 13%. Revenue increased due to higher drilling related services globally. Operating income decreased due to seasonal roll off of software sales and increased startup and mobilization costs across multiple product service lines.

[Eric Carre, EVP & CFO at Halliburton Company]

Now let's move on to geographic results. Our Q2 international revenue increased 2% sequentially. Europe Africa revenue in Q2 was $820,000,000 an increase of 6% sequentially. This increase was primarily driven by higher activity across multiple product service lines in Norway. Middle East Asia revenue in Q2 was $1,500,000,000 a decrease of 4% sequentially.

[Eric Carre, EVP & CFO at Halliburton Company]

This decrease was primarily due to lower activity across multiple product service lines in Saudi Arabia and Kuwait. Latin America revenue in Q2 was $977,000,000 a 9% increase sequentially. This increase was primarily due to improved activity across multiple product service lines in Mexico and Brazil and increased well intervention services in Argentina. In North America, Q2 revenue was $2,300,000,000 relatively flat when compared to Q1 twenty twenty five. Slightly higher well construction activity, completion tool sales and stimulation activity in the region were offset by lower artificial lift activity and software sales.

[Eric Carre, EVP & CFO at Halliburton Company]

Moving on to other items, in Q2, our corporate and other expense was $66,000,000 We expect our Q3 corporate expenses to increase by about $5,000,000 In Q2, we spent $32,000,000 on SAP Sfour migration, which is included in our results. For Q3, we expect SAP expenses to be about flat. Net interest expense for the quarter was $92,000,000 For Q3, we expect net interest expense to be approximately flat. Other net expense for Q2 was $24,000,000 for Q3, we expect this expense to be about $45,000,000 Our effective tax rate for Q2 was 21.4%. Based on our anticipated geographic earnings mix, we expect our Q3 effective tax rate to be approximately 23.5%.

[Eric Carre, EVP & CFO at Halliburton Company]

Capital expenditures for Q2 were $354,000,000 For the full year 2025, we expect capital expenditures to be about 6% of revenue. In Q2, tariffs impacted our business by $27,000,000 For Q3, we currently expect a negative impact of about $35,000,000 or about $04 per share, which is included in our guidance. Now let me provide you with comments on our Q3 expectations. In our Completion and Production division, we anticipate sequential revenue to decrease 1% to 3% and margins to decrease 150 to 200 basis points. In our Drilling and Evaluation division, we expect sequential revenue to also decline 1% to 3% and margins to improve 125 to 175 basis points. I will now turn the call back to Jeff.

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

Thanks, Eric. Let me summarize the key takeaways from today's discussion. First, we are aligning our business with the current market conditions. We will reduce costs and retire, stack, or reallocate underperforming assets. Next, internationally, we see strong performance in our growth engines, unconventionals, drilling, production services, and artificial lift.

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

We secured key wins last quarter through our technology, operational excellence and collaborative approach. In North America, the ZEUS platform and iCruise continue Halliburton by delivering unique value to our customers. Combined with our ability to execute at scale, they reinforce our position as the leading services company. And finally, we remain focused on returns, capital discipline, and free cash flow. And now let's open it up for questions.

[Operator]

Ladies and gentlemen, if you have a question or comment at this time, please press star one one on your telephone keypad. Our Our first question or comment comes from the line of Neil Mehta from Goldman Sachs. Your line is open sir.

[Neil Mehta, Head - Equity Research at Goldman Sachs]

Yes, morning Jeff and team. The first question was really just morning, sir, is around C and P margins. They were a little softer in the quarter and we appreciated the Q3 volume Q3 guide. But can you just unpack that a little bit more? What are you seeing that's contributing to that?

[Neil Mehta, Head - Equity Research at Goldman Sachs]

And how do we get that moving back in the right direction?

[Eric Carre, EVP & CFO at Halliburton Company]

Neil, it's Eric. So let me I'll give you a couple of colors on the C and P margins versus what we guided for Q2. And then I'll give a little more color around the Q3 guide for Q3. So starting with Q2, we actually were kind of on guidance in terms of revenue margins was a bit lower than the guidance on flat. We are I think 80 bps below the guide.

[Eric Carre, EVP & CFO at Halliburton Company]

So what really happened in terms of the revenue side, we were up in most region and most product lines across the C and P division with two major exception, one Saudi and also the artificial lift business in North America. The reduction in Saudi is actually a reduction in frac, but also on the related services as a lot of the frac in Jafura was slowed down ahead of the award of the new tender. The other element that contributed to softer margins are obviously the pricing headwinds in U. S. Land and also the reduction in the Saudi activity I talked about.

[Eric Carre, EVP & CFO at Halliburton Company]

Some of that was offset by the performance of our cementing and completion tool product lines, but overall it resulted in a slight miss from a margin perspective. So that's the color on the performance versus the Q2 guide. Now, if we move to Q3, so our guidance is 1% to 3% reduction in revenue and 150 basis to 200 basis basis points reduction in margin. There are really three main elements that contribute to the guidance. The first one is the reduction of activity and reduction or softness in pricing in North America land pressure pumping, which is both frac and also cementing.

[Eric Carre, EVP & CFO at Halliburton Company]

The second element is the reduction of completion tool deliveries in most international market, partially offset by increase in completion deliveries in the Gulf Of America. And these are essentially just operation the cycle of drilling versus completion, etcetera. And the third element, which is the one I mentioned that affected also Q2 is a reduction in activity of frac in Saudi.

[Neil Mehta, Head - Equity Research at Goldman Sachs]

Yes. Thanks, Eric. And so maybe Jeff for you, the question is just can you help us walk through your customer conversations about the white space as you think about the back half of the year in North America for the frac side of the business and any early thoughts in 2026? I know it's a really volatile macro, but you probably have some great perspective as you talk to your most important customers.

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

Yes, certainly. I think that conserving cash, look and we see that there's, as I mentioned in my prepared remarks, quite a bit of reorganization and activity going on around that. And so I would say customers are fairly cautious in conserving budget. They also say though that, you know, the most important thing is technology and service quality performance, which, you know, is certainly good for Halliburton, and, you know, we will probably talk more about it, but sort of the technology steps we've taken have been important. And so, as I look out to '26, it's really early with the volatility that we see and

[Neil Mehta, Head - Equity Research at Goldman Sachs]

just

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

what precisely they're going to do for 2026 is sort of on hold. But what I would expect is that we would see activities earlier in the year pick up above what it is in certainly Q3 and Q4. But as far as sort of doubling down, I think that I don't see that happening soon until we see some catalysts that change trajectory on sort of price outlook.

[Neil Mehta, Head - Equity Research at Goldman Sachs]

Thank you, Jeff.

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

Thank you.

[Operator]

Thank you. Our next question or comment comes from the line of Dave Anderson from Barclays. Mr. Anderson, your line is open.

[J. David Anderson, Managing Director at Barclays]

Hey, good morning. Thank you for the question. I'm just kind of curious, Jeff, where are we right now in terms of these E and Ps resetting their programs? You talked about some meaningful schedule gaps coming up. I'm just kind of curious, we've seen a pretty steady decline in oil recount in last few months.

[J. David Anderson, Managing Director at Barclays]

Do we be thinking about kind of a 4Q bottom? And then related to that, if you could give us maybe a little bit more color on pricing. I know at the end of last year, concessions were made to fleets contracted. The situation today, I'm curious, are they coming back for another bite of the apple? And sounds like you've walked away from some work.

[J. David Anderson, Managing Director at Barclays]

I'm curious, does that mean you're getting rid of the final diesel fleets? Sorry, I threw a lot into that first question. Yeah.

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

Fair enough. Couple questions in there, Dave. All good questions. So let me just start with outlook on where are we in sort of the cycle or where are we relative to a bottom. And I really think we have to look at the supply and demand fundamentals here.

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

And we project and I think broadly as projected, there's solid growth in oil demand, but we also have spare capacity coming into the market and sort of The U. S. Producing at a fairly high level. And so I think as supply consumes, excuse me, as demand starts to consume spare capacity, we also start to see sort of production rollover in some key markets, which it likely will. I mean, decline curve is still working.

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

I think those are the signposts we look for in terms of where do we things come, you know, where do we see sort of a bottom versus a recovery. What I do know though is that, you know, it becomes a question of duration and sort of depth. And so if it comes off hard, it comes back on pretty hard pretty quickly So we need to look for those signposts. But seeing that we're below maintenance level today in North America, certainly below maintenance level in Mexico and a few other key markets around the world.

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

So I think we're from a trajectory standpoint that recovers. From a price standpoint, yes, I mean, at a place where I would describe it as we get to make choice. And so we are making choice around equipment working or not working, and we'll clearly stack some fleets just because, it just we're not going to work at uneconomic levels. And it's a commitment, it's strategic for us and it takes some equipment out of the market as well. But from our perspective, working at you know, uneconomic levels is literally burns up equipment, creates HSE risk and all sorts of things that we just don't wanna do.

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

And so so so that's those are steps we're taking now broadly, you know, from a anyway, I'll stop there. That's that's kinda where we are.

[J. David Anderson, Managing Director at Barclays]

No. That makes sense. That makes sense, Jeff. Maybe if we can shift it to international markets.

[J. David Anderson, Managing Director at Barclays]

You you had mentioned the unconventional the number of times. Argentina, Australia and obviously Saudi, which is the big one we're all kind of watching here. I was wondering if you could give us a sense as to kind of how big this now right now is in your international portfolio and how big it could actually be in a couple of years? Just trying to get a sense. Is it like 10% of international revenue at this point?

[J. David Anderson, Managing Director at Barclays]

Like, kind of where does it go from here? Just a little bit of relative sense here in terms of the opportunity. Thank you.

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

Yeah. Let's look, I think there's opportunity in certainly Argentina as you described, also Saudi Arabia, but it's well beyond that in terms of sort of a trajectory. And like all things, it starts slowly and then gains gains legs, which I would how I would describe probably Argentina more so just because it was sort of a broad group of customers all investing in a market, and it got a lot of legs. And, now today, that is a meaningful market, a very meaningful market, and a technology driven market. You know, I think that, we expect growth beyond just those two countries.

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

And I think that's what's important as we go forward. We've seen pretty solid growth year on year, I would say double digits growth year on year with our international frac business, non U. S. Frac business. That's why I described Australia, I'll describe The UAE where we see quite a bit of opportunity and then also most of North Africa actually presents pretty good opportunities for unconventionals and also having the markets.

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

And yes, and I think and gas demand is going to drive in a number of these markets, you're going to see unconventionals driven more by gas demand than anything else.

[J. David Anderson, Managing Director at Barclays]

That makes sense. Thanks, Jeff.

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

Alright. Thank you.

[Operator]

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

[Arun Jayaram, Research Analyst at JP Morgan Chase & Co]

Good morning, Jeff, Eric. Wanted to maybe Good morning. Wanted to see if you could maybe elaborate on that commentary on unconventionals. And wondering if we could focus on The Middle East. I know I cover EOG and they'll be testing an unconventional play concept in The UAE.

[Arun Jayaram, Research Analyst at JP Morgan Chase & Co]

And perhaps, wanted to see if you could comment on how HAL is positioned in the upcoming Jafurah tender. I know that that tender will include, call it, a tripling of the amount of stages. So it's a large tender. Jeff, how important do you think technology will be within that tender? And when do you expect to see activity kind of rebound in Saudi?

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

Yeah. Look, I'm from an unconventional perspective, we're well positioned in The Middle East for unconventionals, both from an equipment standpoint and technically. And we have work starting q four ish in UAE, and we're happy with that. And that'll be, you know, a technology showcase I expect in terms of what we can do with Zoos IQ and some other things. You know, I I'm not gonna comment on Jafurra other than to say, you know, it's in process now.

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

It's we've got a very disciplined approach to bidding work, and I think that's what needs to be remembered here. And we're centered on that whole process is centered around returns and long term returns, not just volumes. And and I think we know quite a bit about this how to price frac, etcetera. And so from that perspective, look, by the time we're talking about name tenders on calls and things of that nature, you can bet they've gotten pretty competitive. But that said, we do like the frac work we're doing internationally and I really like the interest in the technology beyond interest actually buying the technology in Argentina, for example, that we're able to do with how to place fracs, where the sand is going, how to improve recovery.

[Arun Jayaram, Research Analyst at JP Morgan Chase & Co]

Great. Jeff, my follow-up is just on the portfolio. I know in the last 10 Q, commented on the focus on Halliburton maybe to market a portion of its chemicals business, but just thoughts on pruning of the portfolio.

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

Look, we want to be investing in the thing we are investing in the things that we believe show the best returns for us and the best sort of opportunity for growth and returns. And so we do, we print the portfolio from time to time. We really like what we're doing with Lyft. And we think that ESP lift in particular is the most attractive certainly for us. And as we look at other parts of our portfolio where we don't see necessarily, we don't see opportunity for the kind of accretive returns that we would like, we take a hard look at it.

[Arun Jayaram, Research Analyst at JP Morgan Chase & Co]

Great. Thanks a lot.

[J. David Anderson, Managing Director at Barclays]

Thank you.

[Operator]

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

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

Yeah. Thank you. Good morning.

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

Good morning, Roger.

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

Coming back to the, let's just call it, the North American outlook here that I recognize, a lot of things are kind of going against us here in terms of rig count, frac count, all that. We did get some tax reform with the big, better bill, or big, beautiful bill, whatever the heck, BBB. And we've heard a number of the E and P companies talk about it will be favorable to their free cash flow. So when we think about your outlook as it is today, kind of through year end, and then we think about maybe commodity prices hold flatter and some of these guys have a little more cash, what's sort of in the risk profile of your outlook? In other words, is that something that could help meaningfully?

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

Or do you feel, hey, visibility is actually pretty solid here and we got a good view into year end of significant softness?

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

Look,

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

I don't think the big beautiful bill necessarily factors into the plans in terms of what customers do. I think that's going to be quite a bit more sort of budget and commodity driven and returns driven for them. But when I look at the market, we have a fantastic group of customers and really good customers. And they are serious about this work, got good strategies and if there's white space appearing, it's to manage budget, the plan for 2026 is far from set for them at this point. But they're the kind of customers that we know will be active in this market.

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

And so, when we see white space like this, in some cases, we will stack for a short time and then come back or we will reallocate things in a way that we think is best from a returns perspective or we will in some cases make the determination to stack and keep something stacked. So I think that from an activity set, we really need to watch supply and demand and as I said, those signposts around what does production overall do in North America, I think will be a key driver in terms of what twenty twenty six looks like.

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

Yes, that makes sense. And then in terms of your comments about not wanting to chase uneconomic work, Historically, this has been a sector that sometimes gets more market share rather than, let's call it, returns or margin focused. That we should think it's a little different this time. You are going to be focused on maintaining, call it margins and returns as opposed to a market share fight?

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

Look, we are strategically, we're about maximizing value returns in North America, and that includes not working at uneconomic rates. And so this is exactly what we did a year ago in the gas markets and something we will continue to do. I mean, the fact is we want good equipment when it snaps back. We wanna make money with the equipment, and that's just the the approach we're going to take. We've taken it before, so it should not be, you know, it's not something we're gonna do. It's something we've done, and we'll certainly do again.

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

Appreciate that clarification. Thanks.

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

Yes. No, thank you.

[Operator]

Thank you. Our next question or comment comes from the line of Saurabh Pont from Bank of America. Mr. Pont, your line is open.

[Saurabh Pant, Director & Equity Research Analyst at Bank of America]

Hi. Good morning, Jeff and Eric.

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

Good morning.

[Saurabh Pant, Director & Equity Research Analyst at Bank of America]

Or Eric, maybe maybe I want to spend a little time on the cost side of things. I know you have worked hard to variabilize your cost structure in North America, and Jeff, did speak to reducing your variable and fixed cost, right, but how should we think about what kind of level of activity that you would be using to frame what you think you can take out of your cost structure or put differently, how should we think about protecting margins, maybe overall, maybe D and E and C and P, however you want to talk about that?

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

Yeah, look, we are looking at a market where we want to take action around variable costs clearly. It's not a perfect science, but as activity slows down, we want to take equipment and cost out of the market. Not a perfect science, but we've seen some moves in the market that cause us to do that. So that's one half of the equation. When I get to the other half of the equation around structural costs, we're still relatively busy around the world.

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

That said, contributing to margins or maintaining, taking actions that drive efficiency, no different than what our customers are doing is right in our wheelhouse. And we've done that before also and expect to do that again. To frame that, look, it's probably in the 1% range sort of type thing as early days as we get started, and it may be a couple of quarters as we get right sized around what we see in terms of the market. It's a bit of a dynamic market today. So we're targeting what we see.

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

I think we probably got a pretty good handle on where we need to get from a reduction standpoint, but we'll need to let that play out.

[Saurabh Pant, Director & Equity Research Analyst at Bank of America]

Got it, got it. Okay, Jeff, no, thank you for that answer. And then the other one I have Jeff for you is on the Saudi market, we have all seen the rig count in the country come down, it's too speculative for me at this point to say where it goes, but one thing I've been hearing is that maybe the Saudi market becomes more LSTK over time as activity comes back, or even if it doesn't come back, but look, don't know, but just a philosophical question, if that's what happens, right, the Saudi is more LSTK, Middle East in general is more LSTK, how does Halliburton play in that market? Is it to Halliburton's advantage, or do we have to adapt the way you do things? Maybe just a high level comment on that.

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

Well, look, we've got very strong muscles in that area, and we've been successful doing that. You know, I I would say our project management organization We do a lot of collaborative work, and we do LST work today. You know, in fact, today, that type of work, LSTGA and collaborative type work that we describe represent more than 20% of our international business. So clearly, I think it is it's in our wheelhouse to do, and it's a strength for us.

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

And so I would see that as advantageous. So I will start all of that with what I said earlier around our tendering process, which is highly disciplined and is geared towards returns. And so again, volume and market share at the expense of returns is not it doesn't help the cause at all. And so what you'll see us be is very sharp around how we look at those things and make sure that we can make a return. But the capability to do it, we do a lot of it today and really pleased with actually where that whole business is.

[Saurabh Pant, Director & Equity Research Analyst at Bank of America]

Right. Got it. Okay. No, that's fantastic color. And by the way, good update and good progress on the Summit ESP side of things, Jeff. I'll turn it back. Thank you.

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

Thank you.

[Operator]

Thank you. Our next question or comment comes from the line of Mark Bianchi from TD Cowen. Your line is open.

[Marc Bianchi, Managing Director at TD Cowen]

Hey, thanks. I guess I wanted to ask about sort of doing some math here from the 3Q guide you gave and the outlook you gave for the year for North America and international. It seems to imply a pretty big step down in 4Q to kind of get to the numbers that you talked about. And I guess I'm curious how much visibility you have to that at this point? How are you thinking about, is it more pronounced in international versus North America when we look at fourth quarter?

[Eric Carre, EVP & CFO at Halliburton Company]

Hey, Mark, it's Eric. So we're not going to give you an exact guide on what Q4 looks like. There are a lot of moving parts that we touched on today is what The U. S. Activity is going to look like, the amount of white space, the activity in Saudi, Mexico is kind of being on and off, etcetera.

[Eric Carre, EVP & CFO at Halliburton Company]

So a lot of things can happen between now and Q4 that will shape Q4, how Q4 looks like. But directionally, to give you some color, we're looking at probably kind of flattish revenue at best it would seem, We'll see a reduction in C and P revenue, an increase in B and E revenue. Margin will continue to soften probably in C and P because of the amount of white space in The U. S. Frac market Jeff talked about, we will see a continued strengthening of the NE margin on top of what we did in Q3.

[Eric Carre, EVP & CFO at Halliburton Company]

And we'll see the usual seasonality that we see Q4 over Q3. So, frac in The U. S. Tends to come down, software sales will pick up materially and then typically completion tools in the C and P division go up as well. So, that's kind of how we look at Q4 at this point in time.

[Marc Bianchi, Managing Director at TD Cowen]

Okay, thanks for that, Eric. And I guess, given the cost actions you're taking and the efforts you're making to sort of manage through the market, do you think that CMP margins can hold above double digits as we exit the year?

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

Yes. Yes. No, for sure. Very much. Great.

[Marc Bianchi, Managing Director at TD Cowen]

Thanks so much. I'll turn it back.

[Operator]

Thank you. Our next question or comment comes from the line of Scott Gruber from Citigroup. Mr. Gruber, your line is open.

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

Yes. Good morning. Just wanna follow that last line of questioning. Eric, the margin improvement you mentioned in D and E in 4Q, is that going to be largely just seasonal factors, some more software sales, etcetera? Or is there any of the mobilization expense and contract start up cost that weighed on 2Q, is there an element of those costs still impacting 3Q or are most of those in the rearview mirror now?

[Eric Carre, EVP & CFO at Halliburton Company]

No, I mean, if we look at so I think Q4 will be a continuation of Q3 with a material impact in terms of improvement in margin coming from the software sales part of the business. Now, if we kind of peel the onion a little bit in the Q3 guide for B and E and the improvement there, so we guided an improvement of 125 to 175 So the different factors that are coming into play there is one, the reduction in activity in Saudi, which is kind of a headwind for us in terms of P and E. The second element is on is a bit of a change in the drilling versus completion cycles. We talked about it in completion with the Gulf Of Mexico completions coming up, but the offset of that is that like drilling fluid, which is a really big business for us in the Gulf Of Mexico and in Europe is coming down a bit.

[Eric Carre, EVP & CFO at Halliburton Company]

The two largest drivers or three largest drivers of margins in Q3 though, is the start of the improvement in software, a global improvement in our directional drilling business, and the elimination of mobilization costs that drag margins down in Q2. So that's a little bit of color on Q3 and Q4 from a D and E perspective.

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

I appreciate that. I appreciate the details on how you're responding to the current environment. CapEx should now be sliding with lower sales. But is there a plan to pause the Zeus fleet expansion either in the second half or next year? And if we think about that investment on an annual basis, how much would CapEx come down if that program is paused?

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

Yes. Look, I think that that program has always been demand driven in terms of we've only built equipment for contracts that we had in hand. And so it's been less of a program and more of a demand driven activity. And so the extent to which we don't see demand for new equipment, that obviously will come in. And so and then with respect to anything else, we will expect to bring down CapEx to the lower end of that range as we go into 2025 or 2026, certainly.

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

And, but from a from a Zeus build standpoint, I would expect that slows down just because we've achieved the 50% of our fleet or thereabouts Zeus fleets and like the portfolio that we have.

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

And is it kind of $85,000,000 of fleet in terms of what you'd say is?

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

No. For CapEx? For CapEx or No. For CapEx, firstly. Ballpark. Ballpark. Ballpark, right.

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

Okay. Okay. Thank you. I'll turn it back. Appreciate it. Thank you.

[Operator]

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

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

Hey, good morning. There's a lot of interesting comments on artificial lift on the call. You're seeing some bifurcation, seeing softness in The U. S. Land, but significant growth internationally.

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

Could you maybe walk through the puts and takes in each region there? Are you seeing tariffs maybe bite into The US land artificial lift market? International, is that more of a function of the increasing unconventional activity? Just some maybe some color on artificial lift US versus international.

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

Yeah. Look, the Internet the the demand for artificial lift is around accelerating production. And so it's not as much an unconventional story internationally as it is just great technology in conventional wells to produce more oil. And, you know, we when we acquired Summit, they had no footprint internationally and so we've been quite successful in growing that business in the markets on the back of just the technology and performance and automation that Summit has developed and has taken to new markets. In The U.

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

S. Market, it is going to be somewhat affected by just activity levels that we see. And then secondly, from tariffs, do they have an impact? Yes, they do.

[Eric Carre, EVP & CFO at Halliburton Company]

Yes. On the tariff side of things, as we said, Derek, we expect tariffs go up a bit in Q3. Artificial lift is probably the largest component of the tariffs for us today. So our team in Summit and our supply chain team are working hard, trying to kind of rewire part of the supply chain around what they source from China, but it's going to take a couple of quarters to work through.

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

Got it. Very helpful. Appreciate it. And then just a question on two regions. So, you talked about Mexico being a source of strength here in the quarter with LatAm up 9%.

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

I was surprised with that. So, maybe could you just give us an update on Mexico? We've seen a lot of news flow out of the country and where we are with that. And then separately, Kuwait, you pointed as a sign of a bit of softness, which I was surprised about given it was one of the bright spots that's been talked about over the last quarter. So maybe just your thoughts on what you see for Mexico go forward and Kuwait?

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

Look, Kuwait overall is solid market and it will bounce around from month to month, quarter to quarter. But ultimately, we see growth in Kuwait. No question about growth in Kuwait and we do important work in Kuwait today and expect to do more of that in the future. From a Mexico perspective, we saw a solid improvement in LatAm, but it was not Mexico. And so solid performance in Mexico.

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

I mean, the issues Mexico, in my view, aren't settled. And so I think we see starts and stops in Mexico. And, you know, I've been to Mexico. I've met with the management team there. I think what we're going to see is decline rates at a pace that create sort of pressure to reactivate the business there.

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

Oil and gas is obviously critical to the economy of Mexico and I think that will drive recovery.

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

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

[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 for me and I think the first Eric, I'm not sure your comment on this or not, but the guidance color you gave kind of for the different geographies and segments. It feels like CMP's got a step down like double digits in 4Q to get there. Is that is that accurate?

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

Yes, that's about right.

[Stephen Gengaro, Managing Director at Stifel Financial Corp]

Okay. Okay. Thank you for that. The other question, when we started thinking about kind of the pricing in U. S.

[Stephen Gengaro, Managing Director at Stifel Financial Corp]

Pressure pumping, particularly as we kind of get into the fourth quarter and then thinking about 2026. How do you approach the customers for obviously the service quality and the quality assets you're delivering and what clearly is going to be kind of a soft market. And as you kind of contract these out at '26, what is sort of the pricing strategy to kind of maintain margin in that environment?

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

Well, I'm not going to get into the details around pricing strategy here, but we obviously look at value in terms of value created for customers and we look at the opportunities to provide more technology and how does that create value. And then ultimately, we step back if the pricing is not in a situation where we can make economic returns then we just say no. I mean, that's where I say we get to exercise some choices well in terms of what the market looks like for us.

[Stephen Gengaro, Managing Director at Stifel Financial Corp]

Thanks. And just one quick one, we've heard kind of maybe fleet attrition is accelerating a bit. Are you seeing that in the overall market?

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

I'm sorry, repeat the question.

[Stephen Gengaro, Managing Director at Stifel Financial Corp]

Whether you're seeing fleet attrition across the industry accelerating at all or expect to accelerate in this market?

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

Yeah, I do expect it to accelerate in this market and it is you know, to a certain degree. It's always sizing to the market that's there. I mean, that's what happens. And so it's, you know, equipment will get retired, and then it will be, in many cases, harvested to for spares and other things, and that's how it goes it gets consumed. At the same time, fracking in gas is just harder on equipment than it is in oil.

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

It's just higher pressures, which means it's harder on the equipment. That means the equipment wears out more quickly. And so we're really thoughtful about pricing and where we put equipment to work for those very reasons.

[Stephen Gengaro, Managing Director at Stifel Financial Corp]

Great. Thank you for the details.

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

Yep. 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, Equity Analyst at Capital One Securities, Inc]

Thank you. Jeff, Eric, just given the updated outlook, I wanted to get your thoughts on free cash flow this year. Does the commitment to the cash returns framework explicitly mean the $1,600,000,000 cash return targets still intact?

[Eric Carre, EVP & CFO at Halliburton Company]

Yes, I mean, update as we talked about a bit of a softening in the market. So we've revised our outlook for free cash flow in 2025. And right now, the range that we're looking at is anywhere between 1,800,000,000.0 and $2,000,000,000 That's kind of how we're setting things. That's how we're seeing things evolve on the free cash flow for 2025. Now, we're not seeing anything that really changes our perspective on the cash return to shareholders.

[Eric Carre, EVP & CFO at Halliburton Company]

I mean, when we're through Q2, if you account for the second half of the year, will be over our 50% return already. Now, we'll probably maintain the pace at which we have been going. So, yeah, that's kinda how we look at free cash flow and returns.

[Douglas Becker, Equity Analyst at Capital One Securities, Inc]

I'll leave it at that. Thank you.

[Operator]

Thank you. I'm showing no additional questions in the queue. At this time, I'd like to turn the conference back over to management for any closing remarks.

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

Thank you, Howard. Look, before we wrap up today's call, let me leave you with a few thoughts. Despite industry cycles, I believe the demand fundamentals remain strong for both oil and gas. Today Halliburton is more differentiated with deeper technology advantages to address our customers' requirements and more collaborative than ever before. Those are powerful drivers of both customer and shareholder value.

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

Throughout the cycles, Halliburton will remain focused on free cash flow and returns. I look forward to speaking with you next quarter. Howard, please close out the call.

[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 - IR
• Jeff Miller, Chairman, President and CEO
• Eric Carre, EVP & CFO

Analysts

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