Title

Presentation

Halliburton Company misses on earnings expectations. Reported EPS is $0.648 EPS, expectations were $0.75.

Operator: Good day, and welcome to the Third Quarter 2024 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. [Operator Instructions] Please be advised that today’s conference is being recorded. I will pass the call over to the Senior Director of Investor Relations, David Coleman. Please go ahead.

David Coleman: Hello, and thank you for joining the Halliburton third quarter 2024 conference call. We will make a 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. These risks are discussed in Halliburton’s Form 10-K for the year ended December 31, 2023, Form 10-Q for the quarter ended June 30, 2024, recent current reports on Form 8-K 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 third quarter earnings release and in the quarterly results and presentation section of our website. Now, I’ll turn the call over to Jeff.

Jeff Miller: Thank you, David, and good morning, everyone. I’ll begin today’s discussion with our highlights from the third quarter. We delivered total company revenue of $5.7 billion and adjusted operating margin of 17%. International revenue was $3.3 billion and grew by 4% year-over-year, led by Middle East Asia, which delivered an increase of 9%. North America revenue was $2.4 billion, a decrease of 9% year-over-year. Finally, during the third quarter, we generated $841 million of cash flow from operations, $543 million of free cash flow and repurchased approximately $200 million of our common stock. The August cybersecurity event has not had a material effect on our financial condition or operating results. However, that event, together with the effect of storms in the Gulf of Mexico, did reduce our adjusted earnings for the quarter by roughly $0.02 per share due to lost or delayed revenue.

The cybersecurity event also had an impact on our free cash flow during the quarter due to delayed billing and collections and caused us to pause our share repurchase program while we assess the impact of the event. Importantly, our full year expectations for free cash flow and cash returned to shareholders remain unchanged, and we expect both to accelerate in the fourth quarter. Before we move on, I would like to take a moment and thank our employees for their extraordinary work while we navigated the cybersecurity event this quarter. Our employees maintained operational continuity under challenging conditions, and I celebrate their effort and grit as they work through the event. I would also like to extend my thanks and appreciation to our customers for their support and close collaboration through this time.

Turning to our geographic results. I’ll begin with the international markets where Halliburton’s revenue grew 4% year-over-year, led by the Middle East Asia region. For the full year, I expect international revenue growth to be in line with the overall market and below our prior guidance. I am pleased with our performance and the continued growth of our business. Next year, directionally, we see international growth in the low- to mid-single digits. I’m encouraged by projects I see in the pipeline, and I am confident that Halliburton will deliver on these opportunities and create value for both us and our customers. My confidence comes from the strength of our largest international business lines, the depth of our technology portfolio, the breadth of our global reach and the power of our value proposition.

Halliburton’s largest international business lines, cementing, completion tools and drilling fluids form the backbone of oil and gas development spending globally and each is a leader in their market. We’ve earned these leadership positions through our legacy of execution, consistent service quality and our digital and technology developments. The transformation of our Sperry Drilling business clearly demonstrates the impact technology developments have on our business. The success of our organically developed iCruise and iStar directional drilling and logging tools, LOGIX automation and remote operation platform and ultra-deep resistivity and look ahead tools create a step change in Halliburton’s international competitiveness and return profile.

Year-to-date, Sperry has delivered the highest international revenue growth of any major product line. Further, Halliburton today is present in all major international basins as well as select frontier areas with promising future development potential. Our international business operates both on and offshore with roughly 50% of our revenue outside of North America land earned from offshore operations. Finally, our value proposition to collaborate and engineer solutions to maximize asset value for our customers drives our unique approach to creating value for our customers and Halliburton. Our collaborative approach wins with our customers and is exemplified by our alliances in the North Sea and elsewhere. These alliances have pioneered new ways of working to consistently deliver industry-leading performance on integrated projects.

I am confident in our international business. I am confident because of the strength of our technology portfolio, our unique value proposition, our clear strategy, our experienced workforce and deep customer relationships. I expect that Halliburton’s international franchise will continue to deliver growth and returns. Today, I would like to spend some time describing a few areas where I expect outsized international growth for Halliburton in 2025 and beyond. These are unconventionals, artificial lift and intervention. Two things are clear to me. One, unconventional developments are becoming more important, and I expect they will grow faster than other market segments over the next few years. Two, Halliburton is the clear leader in unconventionals, both in technology and execution, and I expect Halliburton to play the same leadership role internationally as we have in the U.S. We see evidence of this in the Middle East, where Halliburton was awarded a multiyear unconventional drilling services contract and started up an unconventional hydraulic fracturing fleet, both of which grow Halliburton’s market share in a strategically important customer asset.

Elsewhere in the region, we see several other growth opportunities for Halliburton in emerging unconventional plays. Turning to Halliburton’s international artificial lift business, we saw over 30% year-on-year revenue growth this quarter, and we expect to continue to outgrow the market on the strength of our leading technology portfolio. One such technology is our TrueSync hybrid motor, which combines the reliability of an induction motor with the efficiency of a permanent magnet motor. Initially deployed in North America, we anticipate strong international demand, especially in Latin America and the Middle East, where its economic benefits can be realized at scale. Another key technology is our Intelevate service, which uses AI to process real-time data and remotely manage pumps for optimal performance.

We saw a 50% increase in international wells monitored since the start of the year. In North America, Halliburton performed over 160,000 remote interventions this year, and we expect Intelevate to deliver similar value internationally as we expand our installed ESP base. Well intervention is another segment, I believe, will outgrow the overall market. We have seen this already with our Production Solutions product line, which this year alone has grown at twice the rate of our overall international business. Well intervention has long been an area of focus for Halliburton’s organic investment and technology development. For example, Halliburton and alliance with TechnipFMC achieved the world’s first riserless coiled tubing intervention service.

This technology means Halliburton’s full suite of subsea well intervention services can be deployed without the requirement for a riser equipped deepwater rig. Customers can now intervene in thousands of marginal or end-of-life offshore wells that otherwise could not be economically serviced. These are a few examples that describe the unique above-market growth opportunities we see for Halliburton. To summarize international markets, I am confident in the strength of our international business. I believe our technology portfolio, value proposition, and strategy will drive profitable growth in 2025. Turning to North America. Our third quarter revenue declined 4% compared to the second quarter, primarily due to lower hydraulic fracturing activity in U.S. land.

I expect the combination of seasonality and budget exhaustion will result in a full year revenue decline at the low end of our prior guidance. Our strategy to maximize value in North America remains unchanged, and I expect we will continue to outperform our competitors. Here’s how I expect to maximize value in North America as I look to 2025. In our Completion business, maximizing value means unique technology leading service quality and efficiencies and disciplined capital deployment. The success of this strategy is clear. And today, I am pleased that 90% of our fracturing fleets are committed for work in 2025, with multiple opportunities for the remaining 10%. Further, the unique completion technologies we deploy in this market are key differentiators for Halliburton and our customers.

Together, they comprise the Zeus platform, electric pumping units, Octiv Auto Frac and Sensori subsurface measurement. Each of these technologies is commercial, and we are seeing accelerated adoption into customer workflows. This quarter, we signed contracts for two new e-fleets and also secured extensions on several existing fleets at prices commensurate with the leading performance of our platform. We believe the performance of our e-fleets and their integration with other unique components of the Zeus platform will continue to drive demand for this equipment, which we expect exceeds 50% of our active fleet next year. Turning to Octiv Auto Frac. Customers have contracted this automation technology at a remarkable pace. Since launch in Q3, we’ve deployed Auto Frac on 20% of our e-fleets and expect to expand to 50% in the next two months.

In 2025, we expect the vast majority of our e-fleets to operate with Auto Frac contracts. I am also pleased with the deployment progress of Sensori fracture diagnostics, which provide the building blocks for improved per foot recovery for our customers. During the third quarter, we embedded Halliburton’s Sensori fracture monitoring technology into a number of our customers’ well completion workflows and expect to further expand our customer base for this unique technology in the fourth quarter. Looking ahead, I expect the Zeus’ platform and its constituent technologies to see continued adoption. I believe these technologies, working together seamlessly in an automated real-time environment will create a path to greater fracture consistency, ever higher levels of efficiency and ultimately improved recovery.

The potential value creation related to these technologies is significant. We are working today with several market-leading operators to advance this integrated application of the Zeus platform. I believe we are just at the beginning of what this technology will accomplish. Shifting to Drilling and Evaluation. Our North America drilling services business demonstrated nearly 20% year-on-year growth this quarter despite a rig count decline of 5% over the same period. I expect this unique growth to continue in 2025. In unconventional basins, our iCruise rotary steerable tool and LOGIX drilling automation platform, reliably deliver curve and lateral sections in a single run. We delivered revenue growth this year in each of our commercial models.

Rental, sales and full service, and I expect further expansion next year. In Canada, Halliburton’s leading portfolio of well ranging technologies, such as our Aurora magnetic ranging service, is the preferred solution for steam-assisted gravity drainage wells. Expanded midstream infrastructure has improved market access for oil producers in Canada, which creates a strong future runway for these technologies. In Alaska, our EarthStar ultra-deep resistivity tool and reservoir mapping service deliver unmatched performance and unique insights for customers drilling extended reach wells on the North Slope. We see significant growth opportunities for our logging while drilling and directional drilling services as activity increases in multiple projects in the area over the next few years.

Across a broad spectrum of North America drilling applications, Halliburton’s technology delivers performance, precision and unique insights for our customers that have driven meaningful share growth and strong returns, and I expect further revenue growth in 2025. To finish my thoughts on North America. Our strategy to maximize value is unchanged. The strategy means we focus on returns, not share. We deliver leading service quality and efficiency, and we develop differentiated technologies that create value for our customers and Halliburton. I believe Halliburton’s execution of this strategy has transformed the resilience and profitability of our North America business. Let me close with this. I see solid opportunities across business lines and geographies for Halliburton.

As we execute on our strategies, profitable international growth and maximize value in North America, we will target opportunities to deliver unique value, allocate capital to the highest return opportunities, and prioritize free cash flow generation and shareholder returns. With that, I’ll now turn the call over to Eric to provide more details on our financial results. Eric?

Eric Carre: Thank you, Jeff, and good morning. Our Q3 reported net income per diluted share was $0.65. Adjusted net income per diluted share was $0.73. Before we turn to our detailed results, I want to take a moment to discuss the impacts of the cybersecurity event this quarter on our earnings, free cash flow, stock buybacks and SAP deployment. Starting with earnings, the lost revenue resulting from the cybersecurity event and the storms in the Gulf of Mexico impacted our adjusted results by approximately $0.02 per diluted share. In addition, we incurred $35 million of cybersecurity event related expenses, which is excluded from our adjusted results. In Q4, we do not expect to incur significant further expenses related to the event.

Our free cash flow was impacted by system outages, which affected our ability to invoice and collect receivables during the quarter. We work closely with our customers and expect to collect those amounts in Q4. We maintain our expectation of greater than 10% growth in full year free cash flow compared to last year. We paused our stock repurchase program as we assess the impact of the event and repurchased fewer shares this quarter than targeted. Our plan is to catch up on buybacks in Q4. Finally, this quarter, we successfully completed the implementation of SAP S4 in our first country. Based on lessons learned there, and the cybersecurity event, I now expect the project to be delayed three to six months and cost approximately $20 million to $30 million more than our initial estimate.

Turning now to our company results. Total company revenue for Q3 ’24 was $5.7 billion, a decrease of 2% sequentially. Adjusted operating income was $987 million, and adjusted operating margin was 17%. Now turning to the segment results. Beginning with our Completion and Production division, revenue in Q3 was $3.3 billion, a decrease of 3% sequentially. Operating income was $669 million, a decrease of 7% sequentially and operating income margin was 20%. These results were driven by lower hydraulic fracturing services in U.S. land and Latin America. In our Drilling and Evaluation division, revenue in Q3 was $2.4 billion, while operating income was $406 million, both sequentially flat. Operating margin was 17%, a sequential increase of 36 basis points.

These results were driven by improvement in fluid activity in Latin America and higher software sales globally, offset by greater-than-anticipated rig count reductions in the Middle East and project delays in the North Sea, two of our largest well construction markets. Now let’s move on to geographic results. Our Q3 international revenue was flat sequentially. Europe Africa revenue in Q3 was $722 million, a decrease of 5% sequentially. This decline was primarily due to decreased drilling-related services in the North Sea, and lower completion tool sales in West Africa. Partially offsetting these decreases were higher cementing activity in the North Sea. Middle East Asia revenue in Q3 was $1.5 billion, an increase of 3% sequentially. This increase was primarily due to increased pressure pumping services in Saudi Arabia, higher completion tool sales and fluid services in the Middle East, and higher wireline activity in Asia.

Partially offsetting these improvements were lower drilling services and project management activity in the Middle East. Latin America revenue in Q3 was $1.1 billion, a 4% decrease sequentially. This decrease was primarily due to lower hydraulic fracturing activity in Argentina, partially offset by increased drilling-related services and improved project management activity in the region. In North America, Q3 revenue was $2.4 billion, a 4% decrease sequentially. This decline was primarily driven by decreased pressure pumping services in U.S. land in addition to lower activity across multiple product service lines in the Gulf of Mexico, partly due to the impact of storms. Moving on to other items. In Q3, our corporate and other expense was $60 million, which was below our prior guidance.

As a result, we expect our Q4 corporate expenses to increase about $10 million. In Q3, we spent $28 million or about $0.03 per diluted share on SAPS for migration, which is included in our results. For Q4, we expect SAP expenses to increase about $5 million. Net interest expense for the quarter was $85 million. For Q4, we expect net interest expense to increase about $5 million. Other net expense for Q3 was $52 million, which was higher than anticipated, driven by unfavorable foreign exchange movements in multiple currencies. For Q4, we expect this expense to be approximately $35 million. Our effective tax rate for Q3 was 21%, and our normalized effective tax rate was 23.5%. Based on our anticipated geographic earnings mix, we expect our Q4 effective tax rate to be approximately 23.5%.

Capital expenditures for Q3 were $339 million. For the full year of 2024, we expect capital expenditures to be approximately 6.4% of revenue. Our Q3 cash flow from operations was $841 million, and free cash flow was $543 million. For the full year 2024, we expect free cash flow to be at least 10% higher than 2023. Now let me provide you with comments on our expectations for Q4. In our Completion and Production division, we anticipate sequential revenue to decline 1% to 3% and margins to decline 75 to 125 basis points. In our Drilling and Evaluation division, we expect sequential revenue to be flat to up 2% and margins to be flat to up 50 basis points. I will now turn the call back to Jeff.

Jeff Miller: Thanks, Eric. Here are the key points I would like you to take away from our discussion today. I am confident in our international business. I believe the strength of our technology portfolio, unique value proposition, and clear strategy will continue to deliver growth and returns. I’m excited about the emerging trends in the international market, where I believe Halliburton will demonstrate unique growth. And in North America, we are widening the moat around our Zeus platform and expect to keep growing our drilling business. And now, let’s open it up for questions.

Operator: [Operator Instructions] First question is from the line of Dave Anderson with Barclays. Please proceed.

Dave Anderson: So maybe let’s just start with the obvious, and how you think the election might impact your business? Is the thesis out there, obviously, the market sort of buying first asking questions later? But that reduced regulation, faster permitting is going to result in higher onshore activity kind of going forward. Is that a valid assumption? I mean, is that the way you’re thinking about the market for the next couple of years? I could certainly see how complete the Gulf of Mexico, which seems to be mired in red tape. But how do you think this impacts your North America onshore business?

Jeff Miller: Look, Dave, it’s only positive. It could only be positive. In fact, I’m quite optimistic about that outlook. And here’s why. I mean, I think what you saw was a reflection of a commonsense view of economics and resource development, which are incredibly important in this country. And then more importantly, it’s the way it was rolled out. I mean it reflects the majority of people that have a rational view about how important energy is to our country. And so, when I think about that, I think every dollar that is not spent defending and debating the industry, but rather being invested in this industry, are absolutely good for Halliburton’s business.

Dave Anderson: What about the Gulf of Mexico? Do you think this could — you could start to see a pickup in activity out there? I mean I know there’s been some issues kind of getting permits and things like that. Do you think that could potentially free that up?

Jeff Miller: Yes. I think — look, Dave, yes. I mean I think that there’s a lot of risk that’s been painted over this industry, particularly regulatory risk, and it’s probably even more acute in the Gulf of Mexico, given the significance of the investments and the types of decisions that get made that are long term in nature by operators. And I think the more that those are derisked either through regulation or legislation creates an even better runway. I mean operators don’t operate in a vacuum. I mean they are digesting risk every day. And I think what we saw was directionally, hey, energy is extremely important. There’s absolutely no reason we should be — anyway, I think that we’re in a good place with energy development in this country.

Dave Anderson: Understood. And if I could maybe shift to just more specifically kind of the here and now and U.S. onshore. It’s clearly slowing as we approach year-end, we’ve all sort of seen this. It does look like you faced a ton of pricing pressure so far, but you’re kind of guiding down to margins kind of moving down a little bit in the fourth quarter. I was wondering if you could talk about sort of potential widening spread of pricing amongst say conventional diesel, Tier 4 and e-frac. Are you seeing that kind of spread happening here? And if so, does this kind of — are you thinking about accelerating your Zeus? You talked about this towards Zeus platform, which really does sound very differentiated. I just wanted to accelerate that program because that should, therefore, kind of drive into higher pricing going forward?

Jeff Miller: Well, Dave, we still see demand for our Zeus platform and growing demand for that Zeus platform. So, we’ll be consistent with in terms of acceleration is more a matter of customers that see the value and contract them. And we’ve seen that actually this quarter, and we’ve seen renewals. So, I feel really confident in that. And I think it will accelerate almost just by virtue of making that available in the market and having more opportunities to put it to work, as opposed to when you think acceleration, that means we push the pedal and spend and do. I really think we’re going to stick with our maximize value approach and let the diesel, retire or move outside the country, that will be replaced with electric and also — as important as the electric is, quite frankly, the entire platform that is creating outsized value for customers.

Operator: Our next question comes from the line of Arun Jayaram with JPMorgan Securities. Please proceed.

Arun Jayaram: Jeff and Eric, I really want to get your thoughts on how you see North America and Completion and Production kind of trending next year? You mentioned that 90% of your frac fleets is committed for ’25 and perhaps 50% of that capacity up to that could be Zeus fleets. So, it sounds like you’ve kind of navigated through the RFP season, and you got a lot of equipment kind of committed. You also mentioned that you’ve announced some extensions on some Zeus fleet that’s maybe a little bit earlier than we’re thinking. So, I was just wondering, given that amount of capacity that’s been committed, what’s your just outlook for non-frac next year? And I’m trying to think about how margins could play out over the next 12 months.

Jeff Miller: Well, look, look, I feel good about 2025, and we talk to customers — I talk to customers every day, and they are clearly planning to work. But they’re also planning to be more efficient and improve recovery at the same time. Now that’s plays directly into our strengths, whether it’s more silo frac, longer laterals, faster wells and obviously the Zeus platform. So, when I think about 2025, I think about maximizing value, and that means solving the hardest problems are unconventionals with better recovery, widening the moat around our Zeus platform, the drilling performance that I described in the outsized adoption that we’re seeing for our drilling solution. And yes, having 90 fleets committed — 90% of our fleets committed today, does form a view about 2025, and I’ve described those things that we’re going to be doing in the market that are consistent with the performance as you’ve seen till now.

So, I think about the market today. I mean we’ve arguably been arguably have been in a downturn for 18 months. And the tools and the approach that we’ve taken are the tools and approach that we will take.

Arun Jayaram: Okay. Fair enough, Jeff. Maybe — it does help us think about ’25. This is kind of a consistent buy side question that we’ve gotten, Jeff. Is the dynamic in North American frac is the fact that companies like Halliburton are pumping more hours per day doing more completion footage completed per day? And so, a lot of my E&P coverage now is highlighting the ability, for example, one operator mentioned that they could do — in ’25, they could use four frac fleets to do what five frac fleets did in ’24. Does that make sense? So, you’re using less equipment. And the question we’re asking ourselves is how does this impact your profitability if these four frac fleets are doing a similar amount of footage? How does that impact Halliburton, were thinking maybe you lose some margins or some revenues through pass-through, but how does that impact your base frac business using that example?

Jeff Miller: Well, look, number one, we’re at the leading edge of that efficiency, which means that we’re getting more reps, and in most cases, based on sort of our equipment, we get more reps on less capital. So, from a maximized value standpoint, it doesn’t take 2x the equipment to do a simul-frac. In fact, it takes less than half more. And so, generating the same or more revenue with less equipment is positive and strategically why we build the equipment the way that we do. At the same time, creating more value by pumping, which just takes me to the Zeus solution and the platform. That’s also part of how the operators get better. And I’ll tell you, I would much rather be on the front end of this than somewhere else. So, leading this charge is where we want to be.

It keeps us busy and creating opportunities to create more value. So, you’re thinking about it the right way. Yes, this industry gets more efficient. I think it gets harder to get more efficient from here. But I expect Halliburton plays at the front end of that and as a leader. So, in some ways, the capital efficiency. I mean, we’re driving capital efficiency, which ultimately does support margins. And look, there’s a — we are where we are today. If I look forward into the future, we know how to operate in that environment, and we’re doing it, and we’re successful at it. But I also think it’s unreasonable to ignore future catalysts, whether Tier 1 rock becomes Tier 2, becomes Tier 3. There are other things that happened that I think would be positive.

Operator: Our next question comes from the line of James West with Evercore ISI. Please proceed.

James West: You highlighted a lot on intervention this quarter. I think maybe investors that aren’t following you as closely as myself or Dave or Arun would know about the tremendous amount of, not capital, but just R&D and work you guys have done in building that business out as a big strength of yours. Could you maybe talk through kind of — I guess, why highlight now? I guess first and then kind of where you were, where you’ve been, where you are today, and how you view that as one of the kind of huge strength of the Company?

Jeff Miller: Yes. Thanks, James. Look, this has always been an important business for Halliburton intervention, whether it’s stimulation, it’s entering wellbores, and those are the markets that maintain the baseload of oil and gas production around the world. And so, we’ve been in that business, but I’m highlighting it partly because I don’t anyone to forget how important predicting that base load is, and how much work that generates. But I also would like to characterize that in terms of the R&D effort that we’re putting in around that. And so, if I go sort of contextually over look over some history. In Halliburton when we invest in a direction, it’s important for us. So, I think unconventionals, if you go back a number of years, then we’ve talked about what we’ve done around Sperry drilling from an R&D and creating critical mass and a bigger business doing the same thing with intervention.

And we’ve done it for a number of years. However, you’re going to see us developing things like we described on the call today, riserless intervention is an incredible step forward in terms of making wells economic. We’ve talked about it for a decade probably worked hard on it with a technique FMC for five years, and now we’re here. But those are the kind of things I expect to see us do more of and create a bigger growing market for us. And so, from our perspective, this is where we will see outsized growth internationally.

James West: Okay. Very good to hear. And then, Jeff, the growth in the interventions part of the business make earnings a little bit less cyclical than perhaps they’ve been previously and therefore, a higher multiple.

Jeff Miller: I think so. I mean these are completely agree with you, and it’s part of the reason we want to continue to invest and generate that outsized growth. But it’s the kind of growth that decline curves never go away. And so, everything is obviously declining. Therefore, there is always demand for intervention as we described.

Operator: Our next question comes from the line of Roger Read with Wells Fargo Securities. Please proceed.

Roger Read: Jeff, can I get your take, you talk a lot here about the opportunities international. And obviously, everybody talks about the productivity and efficiency that’s going on in North America. Could you give us a little bit of a contrast of what you see happening globally? I mean, not just your products and services that improve it. But if you were to just say, what you think your customers are getting right now in terms of productivity and efficiency, how that’s affecting your business question asked earlier, I think, by Arun, right, five frac crews goes to four, what the impacts are. So, as you think about the opportunity internationally, how does that compare? What kind of headwinds are you facing on the productivity front there?

Jeff Miller: Well, look, North America fantastic resource, fantastic market and a place where operators can implement technology in a fairly straightforward way. I would say that internationally, we’re much further behind in terms of technology application. In fact, I would argue some are just moving into maturity in Argentina where we will start to see more and more. But the Middle East, for example, has worked to a point, but I think that the opportunity — we’ll actually see growth in terms of consumption of equipment well before we see efficiency cresting just because there’s so much work to do. And I think what those markets get the benefit of, particularly with Halliburton is a lot of the technology that creates better wells.

I mean, if you go back in time in the U.S., they’re well designed, there are a lot of wells that we would like to go back and refrac. But today, armed with the technology that we have, I believe we’ll make better wells. But to say that — but to get specifically to your question, we’re not even close to that point of efficiency, reducing demand internationally. In fact, we’re at the opposite end of that. We’re back like it looked in the U.S., early days, where add-add, let’s do more. Hope that helps, Roger?

Roger Read: Yes, it does. I’d say kind of what we look at, the evidence seems similar that way, but I just wanted to talk to the experts about it. The other question I had, one of the things we hear about is a way to potentially accelerate drilling speeds going forward in the U.S. might be greater expansion of rotary steerable type and other types of advanced drilling devices. You mentioned that in your introductory part of the call as something to roll out to Latin America. But I was just curious how that’s — how do you see that in North America in terms of additional penetration over the coming years?

Jeff Miller: Yes. Thanks. Look, I’m crystal clear that this is a market that continues to grow in rotary steerables, just the efficiency, precision, the types of wells that are being drilled in terms of length, tortuosity, everything I see in North America says, over time, the trend is that rotary steerables are a bigger and bigger part of this market, both from the ability to execute the drilling in terms of the complexity and length, but also the speed in terms of curve lateral. And that’s really where we’re getting so much traction with our iCruise tools in North America has been the reliability around drilling that curve lateral. And I see the exact same thing internationally. In fact, we’re already — we’ve described the contract that we’ve won in the Middle East for Sperry, same type of thing.

I would expect to see growth in really any unconventional market around the world that — iCruise CX is a terrific tool. I mean it’s the performance is what’s causing the growth in and share. And so very pleased with where we are, but I also think we’re in the right spot from a secular growth standpoint, in the sense that, that is directionally where the market has to go in order to continue to get better both in time, but also in terms of the types of wells and the lengths that are being drilled.

Operator: Our next question comes from the line of Neil Mehta with Goldman Sachs. Please go ahead.

Neil Mehta: I had a couple of company-specific items here, which is around the cybersecurity incident what are, Jeff, lessons learned around that certainly something that all Fortune-500 companies are having to contend with. But how do you ensure protection of this going forward? And help us understand it sounds like, it could create some delays to the ERP system rollout. Can you talk a little bit about what those impacts were?

Jeff Miller: Yes. Thanks. Look, I think from lessons learned standpoint, I cannot overemphasize the importance of preparedness in terms of desktop drills, contracting with the absolute best professionals in the industry. And I’m so appreciative of the companies have supported us, Mandiant and others. But I would say that is probably one of the most important things any company can do is be absolutely prepared in advance for that.

Eric Carre: So, in terms of the SAP ERP rollout, Neil, there’s really a couple of things. So, the first one is what relates directly to the cyber incidents. And there, obviously, once the incident started most of our IT folks went on to helping fix the problem, restore the systems and everything. They were unavailable, obviously, to continue to participate in the rollout. And when that was done and the systems were restored, what you had is the finance and procurement organization when you do a catch-up mode basically restoring in the system or of the transaction that were made when we were operating in a manual mode. The second impact from the incident was the fact that as we roll out a big system like this, we do what’s called localization events, which when we go and roll out the system in a new country, we sent a team ahead of time to really understand the details of statutories differences, tax differences and everything so that we get ready for any particular specifics of a given country.

And then in parallel to that, we had the rollout in our — first country we rolled out the system in Canada that was successful. We closed the quarter on S4. We closed October on S4, but as we did all of that, we learned a few things around the structure of our training around what it means to manage processes in two different systems and everything. So, all of that resulted in a replanning of the rollout, which we think now is going to be about three to six months over the initial plan. So, we’ll get into H1 2026.

Neil Mehta: Okay. Great. I’m glad you guys navigated. The follow-up is just around the stock buybacks. Again, you did $250 million in March and then $250 million in June in this quarter, it was closer to $200 million, and you explained why. But is 250 the right run rate, all else equal, as we think about 2025 and given the pullback in the share price given the macro environment, is there an argument to really lean into the share repurchase and take it to another level and really drive that free cash flow per share? So, I’ll turn it over to you guys on that.

Eric Carre: Yes. So, to address first part of your question, that’s what we plan ahead, guided to an average $250 million per quarter that would lead to something around $1 billion for the year, significantly up from 2023. So, what happened in Q3 is, I mean, the mechanism that we use to go and buy back share, we do it in two parallel ways. So, one, we filed a 10b5-1 plan; and two, we do open purchase in the market. So, when the cyber incident started, we basically were cautious and we stopped all the open purchases because we didn’t want to end up in a situation where the investigation would lead to the discovery of MDI. So, we paused that continued with the 10b5 plan. So, all of that landed in a number that was below what we were targeted initially and as we said in the remarks, the intent is to catch up a bit on that in Q4.

Directionally, on the second part of your question, we really view buybacks as a systematic mechanism to return cash to shareholders. We look at it through cycles. So, while there might be some short-term opportunities, to your point, around the current share prices, we tried not to be opportunistic per se, but view — again, stock buyback more as a through cycle mechanism to return cash. So, we might weigh in a bit more, but directionally, we want to be fairly steady. And as we look into next year, while we haven’t worked our plan through, the general view would be to up what we’ve done so far in 2024.

Operator: [Operator Instructions] Our next question is from Saurabh Pant with Bank of America. Please go ahead.

Saurabh Pant: Jeff, maybe I have a couple of questions, one on offshore, one on North America. Let me just start on the offshore side of things because that’s one place where there is a lot of optimism and structural optimism, not just short-term optimism. I want to just come back to that I know in the past, you have talked about upside in ’25, particularly in West Africa and Norway and obviously offshore in general. But amongst the conversation from the offshore drillers and delay in contracting, maybe some projects being delayed due to the macro supply chain delays, given all of those headlines on the offshore driller side of things, is there anything we should be mindful of for the offshore side of your business as we think about 2025?

Jeff Miller: No. Look, we see stability in our biggest markets, whether the Gulf of Mexico, Brazil, Guyana, Norway, Black Sea, as we described this morning, positive elements of those. From our perspective, we move equipment between rigs. And so, the actual — we’re not in the rig business. So, the rig contracted status of rigs is not really impactful to us. The key is operators focus on continuing to drill and develop offshore resources, which we see a lot of strength around that, whether it’s 20,000 in the Gulf of Mexico, I mean, there’s just a lot of foot, and so there’s a lot of probably back and forth in the rig business in terms of contracting and gaps and managing timing, but that doesn’t impact us. We’re working with clients. They have rigs available and they are either executing work or planning work and really bought a bit of exciting work around the world and in the Gulf of Mexico.

Saurabh Pant: Okay. Fantastic. No, that’s good color, Jeff. And then just one quick clarification on, Jeff, I think you made the comment in your prepared remarks about 90% of your fleet committed for [indiscernible]. That’s really impressive like I think [indiscernible] Q&A ask. But my follow-up is, do we know at least roughly what the pricing on those fleets are going to look like, right? So basically, do we have line of sight on the profitability as well versus just activity on those fleets?

Jeff Miller: Look, yes, we do have some of that, but we obviously work through that as well. What I would say about without getting into details because I won’t. We’re sticking with our strategy, which is to stay out of the spot market size the fleet to the market that we see as we’ve described, and we’ve been successful in getting things to work. We obviously don’t exist in a vacuum. But at the same time, I believe Halliburton, and I know Halliburton reflects the performance and the technology that we bring to the market, which puts us at the high end of the range, and I get told that every single day. So, I’m well aware of where we are from that perspective. But confident that our strategies in place, and we’re executing on the strategy that’s gotten us to hear.

Saurabh Pant: Okay. No, fantastic. As a market leader, what do you do in that industry, obviously decides where the market goes? So, it’s good to hear that. And if I may, Eric, very quick one. I know you’re not guiding to ’25 CapEx yet. But broad strokes, can we still think about 6% of revenue for next year?

Eric Carre: Yes.

Operator: Our next question comes from the line of Kurt Hallead with Benchmark. Please go ahead.

Kurt Hallead: Jeff, as you — as we all know, right, you’re in constant communication with your cohorts at the oil and gas companies, and there’s been a lot of noise, right, concerns about oil demand growth, concerns about excess OPEC capacity. And obviously, in the broader markets, that’s weighed on the price of crude, right? So, in the conversations that you’ve had of late, right, it sounds like there’s a bit more optimism or a constructive outlook that your customer base has maybe relative to the commodity market or the equity market. So just hoping you can give us some insights on how you’re assessing those conversations, what you’ve seen risk things to give that sense of optimism, and what you could potentially help translate to the people on this call?

Jeff Miller: Certainly. Look, I think that some of this is around the types of players in the market today. And I mean, these are very serious, large, well-capitalized operators. And so, as part of the E&P consolidation, it’s gone sort of as expected in the sense that customers clearly want technology and efficiency. These large players have a larger baseload of work, they’re stable. They plan to work through the cycle. It does create more contractable opportunities for us in terms of Zeus fleet and Zeus platform. But I think some of the optimism that you hear is; a, these aren’t customers that ever react to short swings in commodity pricing. These are operators that build a plan, execute a plan, and I’m so pleased to work with these customers because that kind of clarity helps us run our business.

I think probably some of that optimism you hear is we are getting better at what we do. They see paths to be more productive and they’ve got capital to go do it. And the commodity price today is clearly well within a range that drives consistent activity. And so — and I think that there’ll be a lot of interest in keeping oil and gas in a range that creates profitability for our clients and profitability for us. And that this industry continues to grow and just get — becoming more and more effective, productive, profitable industry.

Kurt Hallead: Great. I always appreciate the color, Jeff. Now maybe a follow-up for Eric, just on that CapEx question, right? So, in the fourth quarter, if the math maps out correctly, it looks like you’re going to be about $450 million in CapEx, which is about $100 million higher than what you had been for quarterly run rate. You mentioned a couple of new e-fleets. So can we connect the dots and suggests that the incremental CapEx is — the bulk of that is going to go toward the e-fleet rollout. And then just as an extension to that, you referenced 6% of CapEx for next year. In that 6% of CapEx of revenue for next year, how many e-fleets or are you assuming any additional et additions?

Jeff Miller: Yes, I’ll take that. Let me take that in terms of e-fleets going forward. E-fleets, again, we look at that from a pull standpoint, not a push the endpoint. So, we do expect deliveries in 2025. We’ve got some of those already planned and expect to do that, and we’ve also — anyway. So that’s where we are. I think the CapEx, I’m going to hand the forecasting to Eric.

Eric Carre: As I mentioned earlier, the CapEx still intended to be 6%. Look, it’s going to be a little higher than 6% this year as we revised revenue compared to the projection we had at the beginning of the year, and we had a lot of equipment and flat. I mean, we’re still dealing with lead time on big pieces of capital equipment between six months and over a year. But as we look into next year, it’s 6%. It’s a balance between CD&E balance between the projection that we have for revenue in North America and international and the overall ratios continue to evolve as our business evolves and becomes more and more internationally weighted.

Operator: Thank you. And that is all the time we have for Q&A today. I will turn the call back to Jeff Miller for his final comments.

Jeff Miller: Yes, Carmen, thank you. As we close out today’s call, I just want to leave you with this. I see solid growth opportunities for Halliburton across our business lines and geographies. I’m confident in our international business and its strong technology portfolio, unique value proposition and clear strategy. In North America, we are widening the moat around our Zeus platform, and we expect to keep growing our drilling business services in North America. So, I look forward to speaking with you next quarter. Thank you.

Operator: Thank you. And with that, we close today’s conference. Thank you all for participating. You may now disconnect.