Title

Presentation

Halliburton Company reports earnings inline with expectations. Reported EPS is $0.6 EPS, expectations were $0.6.

Operator: Good day ladies and gentlemen and thank you for standing by. Welcome to the First Quarter 2025 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]. At this point I would like to turn the conference over to Mr. David Coleman. Sir, please begin.

David Coleman: Hello, and thank you for joining the Halliburton first quarter 2025 conference call. We will make the recording of today’s webcast available for seven days on Halliburton’s website after this call. Joining me today are Jeff Miller, Chairman, President and CEO; and Eric Carre, Executive Vice President and CFO. Some of today’s comments may include forward-looking statements reflecting Halliburton’s views about future events. These matters involve risks and uncertainties that could cause our actual results to materially differ from our forward-looking statements. These risks are discussed in Halliburton’s Form 10-K for the year ended December 31, 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 first quarter earnings release and in the quarterly results and presentations section of our website. Now, I’ll turn the call over to Jeff.

Jeff Miller: Well thank you David and good morning everyone. I will begin today’s discussion with our highlights from the first quarter. We delivered total company revenue of $5.4 billion and adjusted operating margin of 14.5%. International revenue was $3.2 billion a decrease of 2% year-over-year due to lower activity in Mexico. Excluding Mexico international revenues grew by mid single digits. North America revenue was $2.2 billion, 12% lower than the first quarter of 2024. Finally, during the first quarter we generated $377 million of cash flow from operations, $124 million of free cash flow, and repurchased approximately $250 million of our common stock. Before we take a closer look at our geographic results, I’d like to take a moment and talk about the macro environment for oil and gas.

The last three weeks have been highly dynamic as the trade environment injected uncertainty into markets, raised broad economic concerns and along with faster than expected return of OPEC production weighed on commodity prices. These market forces impact us all, but here’s what I know to be true. First, oil and gas will play a fundamental role in global economic growth and prosperity. Second, the world is consuming more oil and gas than ever before. And finally, decline curves are real and in many basins significant. And adequate supplies today do not guarantee adequate supplies tomorrow with our ongoing investments. Given these realities, I know that our technology will continue to transform the industry and it will unlock new sources of value for us and our customers.

I know our unique collaborative approach improves outcomes and deepens customer relationships. And finally, I know that safety and service quality formed the cultural bedrock of Halliburton and they are key differentiators to our customers. On that note, I would like to take a moment to thank the Halliburton employees for their outstanding safety and service quality performance last quarter. I firmly believe that despite recent pressures on the energy macro, Halliburton’s consistent focus on technology, collaboration, and service quality execution create value for our customers and drive long term success for Halliburton under any market conditions. Turning to our results, I’ll begin with the international markets where Halliburton delivered solid quarterly revenue of $3.2 billion.

As I look at the balance of this year, while our overall international outlook has not materially changed, it is reasonable to assume that there is more risk embedded in our outlook today than three months ago. As a result, I expect our year-over-year international revenue to be flat to slightly down. Our Q1 international tender activity remains strong. Halliburton won meaningful work extending through 2026 and beyond. Customers awarded Halliburton several contracts that demonstrate the strength of our value proposition and the power of our service quality execution. Shell awarded Halliburton significant scopes of work this quarter, including development and intervention work for Gato do Mato in Brazil and exploration work in Suriname and West Africa.

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

It is core to our competitive advantage and I am pleased it is winning in the marketplace. In addition to these offshore examples, our international growth engines also delivered in Q1. Over the next several years, we expect these engines, unconventional, artificial lift, intervention and directional drilling to grow faster than other parts of our business. To give you a few examples of our progress in these areas, in unconventional, we mobilized Zeus equipment to the Middle East and expect trials in the near term. In artificial lift, we were direct awarded new offshore work in Ghana and we expect strong double-digit international growth in this product line in 2025. In intervention, we closed the acquisition of Optime Subsea, a technology we expect will transform deep water interventions.

And finally, in directional drilling, with our partners, we delivered a first closed loop automated drilling system and drilled the well with it in Norway. Then we did it again in the Middle East. To summarize international markets, we had a solid start in 2025. Our first quarter contract awards add visibility and give me confidence for this year and beyond. Our growth engines are strong. In my discussions with customers, tell me we are focused on the right things, collaboration, execution, and technology, and I am confident in the future of our international business. Turning to North America, our first quarter revenue increased 1% sequentially. Seasonal increases in frack activity were offset by seasonal declines in Gulf of America completion tool sales.

Looking forward, many of our customers are in the midst of evaluating their activity scenarios and plans for 2025. Activity reductions could mean higher than normal white space for committed fleets and in some cases the retirement or export of fleets to international markets. Nevertheless, I expect Haliburton to outperform the North America services market and I believe this because our clear strategy to maximize value in North America has demonstrated success under a variety of market conditions. Our Zeus fleets, which represent more than 40% of our overall frack fleet, operate under term contracts. And finally, our technology is highly differentiated and drives value for our customers. Haliburton’s recognized leadership was on display recently when in partnership with our customer range resources and others we were honored to host Secretary of the Interior, Doug Burgum on a field visit in Pennsylvania.

The visit featured our Zeus electric frack equipment, which we proudly build in Duncan, Oklahoma, and demonstrated the industry’s ability to deliver reliable and affordable energy in the United States and around the world. We were pleased to host Secretary Burgum and I was energized by his vision and support for advancing American energy. I am also excited by the adoption of our latest technologies, which are a cornerstone of our strategy to maximize value in North America. In the first quarter, we achieved a significant milestone with the successful completion of the first closed loop autonomous fracturing operation in the world. To put it plainly, closed loop means that the Zeus platform utilizes real-time feedback from the reservoir that directs pump activity to control where water and sand are placed all without human intervention, effectively reading and responding to the reservoir.

I expect that this technology, known as Zeus IQ, will change the game in unconventional. I believe Zeus IQ provides customers both the measurements and controls critical to their journey to improve productivity and production for lateral foot. I am excited about the future of this technology and we have several other deployments now underway. I would like to thank our Zeus IQ customers for sharing our vision and bringing this technology to the forefront. We look forward to our continued collaboration to improve asset performance with this unique technology. To finish my thoughts on North America, our strategy to maximize value is unchanged. This strategy means we focus on returns not shared. Our plan is to retire or reallocate equipment rather than operate it on economic levels.

We focus on safety, service quality, and efficiency. We maintain equipment and invest in training. I am confident that our customers value our execution and it differentiates Haliburton in this market. We lead technology innovation in North America, which means we develop technologies that maximize the value of our customers’ assets and deploy them at scale. Before I turn the call over to Eric, let me close with this. I am confident in our strategy to maximize value in North America, drive our growth engines internationally, and deliver technology that creates value for our customers and Haliburton. I expect Haliburton generates solid free cash flow in 2025 and we are on pace to return at least $1.6 billion of cash to shareholders through buybacks and dividends.

With that, I will 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 Q1 reported net income per diluted share was $0.24. Adjusted net income per diluted share was $0.60. Total company revenue for Q1 2025 was $5.4 billion, a decrease of 7% when compared to Q1 2024. Adjusted operating income was $787 million and adjusted operating margin was 14.5%. During the quarter, we recognized a pre-tax charge of $356 million as a result of severance costs, impairment of assets held for sale, and real estate, and other items primarily related to legacy environmental reserves. We expect our cost rationalization efforts to be supportive of our margins going forward. Now turning to the segment results. Beginning with our completion and production division, revenue in Q1 was $3.1 billion, a decrease of 8% when compared to Q1 2024.

Operating income was $531 million, a decrease of 23% when compared to Q1 2024, and operating income margin was 17%. These results were primarily driven by decreased pressure pumping activity and lower completion tool sales in the western hemisphere. In our drilling and evaluation division, revenue in Q1 was $2.3 billion, a decrease of 6% when compared to Q1 2024. Operating income was $352 million, a decrease of 12% when compared to Q1 2024, and operating income margin was 15%. These results were primarily driven by decreased activity in Mexico and Saudi Arabia. Now let’s move on to geographic results. Our Q1 international revenue decreased 2% year-over-year. Europe Africa revenue in Q1 was $775 million, an increase of 6% year-over-year. This increase was primarily driven by improved activity across multiple product service lines in Norway and higher well construction activity in Namibia.

Middle East Asia revenue in Q1 was $1.5 billion, an increase of 6% year-over-year. This improvement was due to higher activity across multiple product service lines in Kuwait and improved completion and production performance in Saudi Arabia. Latin America revenue for Q1 was $896 million, a 19% decrease year-over-year, primarily due to lower activity across multiple product service lines in Mexico. In North America, Q1 revenue was $2.2 billion, a 12% decrease year-over-year. This decrease was primarily driven by lower stimulation activity in U.S. land and decreased completion tool sales in the Gulf of America. Moving on to other items, in Q1 our corporate and other expense was $66 million. We expect our Q2 corporate expenses to be about flat.

In Q1, we spent $30 million or about $0.03 per diluted share on SAP S4 migration, which is included in our results. For Q2, we expect SAP expense to be about flat. Net interest expense for the quarter was $86 million. For Q2, we expect net interest expense to increase about $5 million. Other net expense for Q1 was $39 million. For Q2, we expect this expense to increase about $5 million. Our normalized effective tax rate for Q1 was 22.1%. Based on our anticipated geographic earnings mix, we expect our Q2 effective tax rate to be approximately 23%. Capital expenditures for Q1 were $302 million. For the full year 2025, we expect capital expenditures to be about 6% of revenue. Our Q1 cash flow from operations was $377 million and free cash flow was $124 million.

Moving on to other items that will impact free cash flow, we’re following the trade situation closely. While the situation is fluid, our initial estimates are for an impact of about $0.02 to $0.03 per share in the second quarter, which is included in our guidance. We will provide an estimate of the full year impact next quarter. Now, let me provide you with comments on our expectations for Q2. In our completion and production division, we anticipate sequential revenue to increase 1% to 3% and margins to remain approximately flat. In our drilling and evaluation division, we expect revenue to be flat to down 2% and margins to decline 125 to 175 basis points, primarily due to the seasonal roll off of software sales and higher mobilization expenses related to contract start-ups.

I would 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. While there is more uncertainty in the market than there was three months ago, Haliburton’s consistent execution of our strategy has driven results that give me confidence that Haliburton will continue to outperform. In international markets, we had a solid start in 2025 with significant contract awards and strong delivery on our growth engines. Our value proposition resonates with customers, and I expect it to deliver further incremental wins throughout the year. In North America, we have expanded our technology leadership with the Zeus IQ closed loop autonomous frack system. I am confident our unique technologies and high percentage of contracted fleets will drive our outperformance in the North America market.

Finally, I firmly believe Haliburton’s consistent focus on technology development, collaboration, and service quality execution will create value for our customers and drive long-term success for Haliburton and our shareholders through any market. And now let’s open it up for questions.

Operator: Thank you. [Operator Instructions]. Our first question or comment comes from the line of Neil Mehta from Goldman Sachs. Your line is open, sir.

Neil Mehta: Yeah, good morning, Jeff and team, and thank you for the time here. A couple of North America questions.

Jeff Miller: Good morning Neil.

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

Jeff Miller: Yeah, thanks, Neil. Look, I think that customers right now are working through that. I mean, a lot’s happened in three weeks. It’s been a busy three weeks from a commodity price standpoint and also tariffs and what that might mean. So yeah, talk to customers all of the time, but what we really see are customers digesting information, I think duration is a part of that thinking as well. And so look, when I think about the market in activity, sort of in the 60s, I think some important things are going on. One, from our perspective, anyway, the market’s not building new equipment. So I think that we’re in a good place there. I think that activity itself, if it slows down, much starts to have a production impact as well.

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

Neil Mehta: Thanks, Jeff. Well C&P’s report in the next couple weeks we’ll definitely be asking the same question. And then, you mentioned Mexico a couple of times in the prepared remarks, and it had impacts on margins, it looks like, in both C&P and D&E. So, just give us a lay of the land there, how do you think about the trajectory over the course of this year into 2026, and do you see a path to resolution?

Jeff Miller: Yes, thanks. And look, and I was just there meeting with Victor Padia, the new CEO and have spent some time with them. Clearly not settled at this point as we look forward. And I think they have a plan, but I also think that it’s going to be tough for a while. And I say tough for a while, I don’t see immediate recovery in Mexico. Just as the new administration and they make themselves work through, what does all of this mean. But I do know this, and what’s very important is oil and gas to the economy of Mexico. And so I do expect they find their footing. At some point, it’s too early to call when that point is. But I do think the decline rates are pretty meaningful in that market. And I think that, that’s going to drive recovery.

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

Neil Mehta: Okay, thanks Jeff, appreciate the color.

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

J. David Anderson: Thank you very much. Jeff, maybe start with a question on Saudi. There’s a little bit of some moving pieces in there. The simulation is about drilling a well construction down. Do you see Saudi growing in the Halliburton portfolio this year, there are a number of tenders for Jafurah to be announced, is that the big swing factor for the year, could you just talk about that within the context of flat international for the year, please? Thank you.

Jeff Miller: Sure. And I think that — I mean, number one, Saudi is a huge market and we expect growth for our portfolio in 2025 in Saudi, just to be clear. I think there’s some exciting opportunities. You mentioned one of them, but there are others. We do a lot in that market, certainly in Jafurah but beyond Jafurah like our performance there, like the opportunity to put technology to work there, both in unconventionals and other parts of the market. And so I think when I think about Saudi, that’s one of those places where we are going to grow in those growth engines and we see a lot of — well we have unique strength in those growth engines, whether it’s unconventionals, intervention, and artificial lifts, see all three of those positively in Saudi as well. So I hope that clarifies that.

J. David Anderson: That’s helpful. So good to see some positive stuff. I know a lot of concerns on the North American side. Eric, I want to ask you a bit more about the margin progression. Margins came down this quarter in both segments below the guidance that we were expecting. You just — you’re looking towards second quarter coming down again, usually, first quarter is the bottom. How are you thinking about kind of margin progression through the rest of the year, I’m particularly thinking about the context of white space in North America, particularly, I think most of your equipment is locked down, but help us understand kind of how margins how you’re thinking about margins and maybe where we could exit the year from here? Thank you.

Eric Carre: Yes. So let me start with giving you a bit of a walk-through from Q1 to Q2, and then I’ll give you a little bit of color on the full year margins by division. So if we look at Q2, as we guided for the — starting with the C&P division, we’re looking at fairly flat revenue in North America, but a pickup in our international business for the C&P division. Margin is flat. Keep in mind as well, that includes the tariff impact. When we look at tariffs, we kind of mentioned on the prepared remark, a $0.02 to $0.03 impact about 60% of that is in the C&P division, 40% of that is in the D&E division. So that’s for C&P. On the D&E side of the business, it is really — I mean, if you look at Q2 over Q1, we’re basically dropping about $40 million in profits.

And that can be explained fairly specifically. We have about $10 million in tariffs, $20 million in mobilization and that is incremental mobilization costs over Q1 as we get geared up for growth in the second half of the year in quite a few of the regions. And then we have $10 million, that’s a mix issue with our software business coming down in Q1, our drilling business coming back up a bit, but the delta of that is about $10 million. So I think what’s important to realize for the Q2 guidance is that the guidance is really not a new run rate is really a couple of specific items. If we think about the second half of the year to kind of give you some color there, we’re at this stage forecasting that our second half 2025 the margin levels in Q3 and Q4 will be in the same ZIP code as they were in 2024.

So that’s kind of D&E. If we look at C&P, what we’re not going to guide the year, the international business for C&P is about 40% of our business, 60% in NAM. As Jeff mentioned in the remarks and in a couple of comments here, we’re expecting our growth engine to perform really well in the international market that’s on the intervention, lift unconventional. A lot of these growth engines sit in the C&P division. For the North America business, it’s a bit less clear as we explained in the prepared remarks.

Jeff Miller: Yes. And maybe I’ll add some color because specifically regarding North America. I think I didn’t mean that the customers are still digesting what precisely that means and at what price range and duration of commodity price. But that being said, I mean, we have a different-looking customer base today than we’ve ever had in the past, particularly given that Zeus, not only the contract terms but the who it works for and what it’s able to do. I also know from a technology perspective that there’s a lot of demand for the technology that we have. And we really have a different operating model than we’ve had going into any other period of time. Given the — just the ability to move up, down to take a clear view on what’s really required to perform the services and the automation continues to take cost out of the process for us.

So again, a lot of digesting of data going on. But I think from our perspective, in a really strong position, certainly relative to the market.

J. David Anderson: Great, thank you Jeff and Eric.

Operator: Thank you. Our next question or comment comes from the line of Arun Jayaram from J.P. Morgan. Your line is open.

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

Jeff Miller: Yes. Look, let me just start with how we see international with a little more specificity. And when I think about our operating plan today, it looks flat, I mean, sans Mexico. And then overall, it — excuse me, overall looks flat with Mexico in there. But the key is we do see a bit more risk creeping into the models in the last three weeks or certainly the last three months. But when I think about non-OPEC parts of the world, Norway, we see a lot of activity. We see solid growth there. We’ve been quite successful in Brazil. This is where some of the mobilization cost is, both for P&A and for integrated drilling and then talked about the Shell integrated projects and other operators in Suriname. So it’s really the deep collaboration model that I’m describing that is gaining work and just winning and developing different types of relationships.

So when I think about how do you — how do we land there. Look, I see the second half of the year, Europe and Africa, making the biggest jump in Q3 and that’s with contract start-ups, and we see the Middle East growth engines, having an impact there, the growth engines in the Middle East. And then in Q4, Latin America has a pretty stout uplift as well just because we’ll see the full quarter of the contract startups that we’re mobilizing for in Q2 and that I’ve described.

Arun Jayaram: Great. That’s helpful. Maybe one for Eric. Eric, I wanted to maybe zero in on the cash flow statement. You announced a $345 million equity investment, looks like a minor acquisition. So I was wondering if you could describe those two, plus you had about a $350 million outflow in other operating items. So maybe you could give us a little bit of color on those items in the cash flow statement?

Eric Carre: Yes. So there was one to start with the investing activities. There was one that was related to the Optime acquisition that we commented on. The second number, the $345 million relates to an increase in ownership in VoltaGrid, and I’ll let Jeff elaborate on this one. Going back to the operating activities, the big item that you see in other operating activities is actually the combination of the typical incentive payout, cash tax payments, etcetera, but also the cash portion of our restructuring charge in Q1.

Arun Jayaram: Got it, got it. That’s helpful. Thanks a lot.

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

Arun Jayaram: Great, thanks a lot Jeff.

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

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

Jeff Miller: Look, thank you. And the key to Zeus IQ is just things we have been working on for some time. So in some ways, it’s a culmination of Octave [ph] auto frac sensory, the ability to read the reservoir, control the equipment and then analyze in real time as they analyze, but solved for that and better than real time at the pace of AI time solve for where does the sand and the water need to go. And look, this precisely addresses what kind of the greatest challenge is in hydraulic fracturing, which is how to improve recovery rates and almost under any conditions, meaning what we know over time gets the grades, okay? The best rock gets fracked first. But how does that get read and manipulated and addressed in a way that creates better outcomes.

And this is really important technology and the types of customers that are taking it up are the kind that have a very long view of North America, clearly appreciate the importance of recovery over a long period of time. And yes, I think it drives growth in even this market. We actually put a new Zeus fleet to work in Q1. And I think that it creates not just stickiness, but clearly, it creates more value, which is value that is close us.

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

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

Roger Read: Appreciate that, thank you.

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

Saurabh Pant: Hi, good morning Jeff and Eric.

Jeff Miller: Good morning Saurabh.

Saurabh Pant: Jeff or Eric, maybe I want to start with the tariff side of things. I know you said $0.02 to $0.03 impact on the second quarter and we’ll get more color on the back half later on as you get more visibility, right, but maybe you can elaborate a little bit on what business is, what exact components or maybe I’m thinking business like chemicals and [indiscernible] specifically, what parts of your businesses are seeing the most impact from tariffs and then how are you looking to mitigate that going forward?

Eric Carre: Yes. So I’ll take that one, Saurabh. So as we said, it’s really early days. So we have reasonable visibility of what is going to happen in Q2, and that is about an impact of $0.02 to $0.03. And as we indicated, we are doing a lot of work on mitigating the impact of tariffs. We have a well-diversified supply chain. We have a lot of levers we can pull. But really to be more clear in terms of the overall impact, we need a bit more clarity and stability in the structure of tariffs so that we can really understand what levers we can pull and then what the overall outcome is going to be. So there’s just a lot of moving parts right now, and I think we’ll be able to give you more color in three months from now. In terms of the impact of product lines, I’m not going to go into a lot of details.

But broadly speaking, we’re looking at about 60% in C&P with some impact on our lift business, some chemicals, etcetera. 40% on our D&E business. You’re looking at parts like colors for drilling and gun bodies [ph] for perforating business, that’s the type of components that are being affected by tariff at this stage.

Saurabh Pant: Okay. Okay. Perfect. Eric, a quick clarification on that. I think in response to a prior question, you said for margins, D&E you think 3Q and 4Q margins can go back to the same ZIP code as last year. Does that include any of the tariff impacts reversing?

Eric Carre: Broadly speaking, yes, with what we know today. Yes.

Saurabh Pant: Okay. Okay. Perfect. I got it. And then, Jeff, quickly one for you on the international side of things. If I’m doing my math right, it sounds like Mexico might have been down 70%, 75%, which is a massive number year-over-year, right. But excluding that, I think you said mid-single digits rest of international, right. It’s a pretty healthy growth considering the environment we are in. Maybe talk to what countries, what regions drove that growth, Jeff and what should we expect from those regions going forward?

Jeff Miller: Yes. Look, I think I mentioned that, but I think we’ll see the solid jump in Europe, Africa in Q3 as we start a number of contracts in the Middle East. I expect our growth engines are kicking in as well, whether that’s intervention, which is an important business for us in the Middle East as well as some activity start-up around lift in new countries. Again, we expect that that’s a meaningful part of our business, and it’s continuing to grow. And I think that we’ll continue to see activity around drilling and I’ve described some of the drilling technology, but that becomes more and more meaningful. And then in Q4, we really see Latin America making a big step up. And again, very focused in Brazil, Argentina, a number of places where we have a very strong business.

So I would say that Mexico certainly is the outlier. But very excited about our business and the type of — it’s really the strategic approach that we have around collaboration and maximizing asset value, which aligns us very well with our customers, creates opportunity for us. I expect we’ll see more growth in the North Sea, maybe even outside of the Norwegian sector. So I think that for us, we see a great opportunity in the second half of the year.

Saurabh Pant: Okay, fantastic. No, it is good to see that momentum continue Jeff. Okay, I will turn it back. Thank you.

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

Scott Gruber: Yes, good morning.

Jeff Miller: Good morning Scott.

Scott Gruber: Good morning. Jeff, you highlighted some emerging risk to second half activity. Eric, you reiterated CAPEX being about 6% of sales. Obviously, there’s a bit of risk to sales. But at 6% of sales, your CAPEX is still trending above DD&A. Can you just speak to the need for spending above DD&A, is that really helping to drive the share gains that you’re targeting, and what factors would cause you to adjust that rate of spend, I realize second half spending more impacts your fleet of tools in 2026 and therefore, reflects the 2026 outlook, but what factor caused you to kind of reconsider the rate of spend in the second half?

Eric Carre: Yes. So a couple of things on CAPEX. So there is a somewhat of a self-regulating element around CAPEX as we look at it as a percentage of revenue. So as revenue fluctuates over time the dollar CAPEX spend adjust to it. And I’m saying over time, intentionally in the sense that there is a time element there like most of the CAPEX that we are going to spend in 2024 is the result of orders that were placed in 2024. So there’s — it takes time to kind of adjust things. And we’re probably not going to be able to adjust very much if the activity ends up changing. And as we said right now, most of the — like international CAPEX, we’re not seeing still the activity fairly flat. So if we adjust, we’ll start adjusting really for 2026. The other thing to keep in mind as well that we have not qualified either is a potential impact on the CAPEX number coming from tariffs as some of the parts get incorporated into the capital build.

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

Scott Gruber: Got it. Appreciate it. And turning back to VoltaGrid, what’s the end game here with VoltaGrid, do you intend to just keep it as an equity investment or are you interested in ultimately becoming the majority owner, do you see benefits to how being the majority owner — could you help accelerate the capture of non-oilfield work, more data center contracts, more industrial contracts, is there an international expansion angle that you could push forward as majority order, just kind of how do you think about that investment longer term?

Jeff Miller: Yes. Look, in my view, that’s optionality. And so not predetermined on any direction, and I want to be clear that I’m not — we’re not. But again, that’s one avenue that we’re looking — that we’re participating in now. Obviously, I think that — that’s an opportunity for growth over time. We’re going to address it prudently. As I said, we look at lots of options, not just that by any means. And we also are clear around what strategically, where does that distributed power go as opposed to is it one area or another. I think there are multiple areas that demonstrate some growth. But just chasing after the thing of the day, we’re really, really careful not to do those things. And so again, prudence and sort of the kinds of things we do at Halliburton are always going to be deeply thought out and have an executable clear strategy around it. And right now, we see a lot of opportunity broadly in that area, and we want to keep those options wide open.

Scott Gruber: Appreciate the color Jeff and Eric. Thank you.

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

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

Jeff Miller: Yes. Look, I’m positive on the gas markets for sure. And I think that the structural change that you described, both power demand and LNG exports will continue to structurally drive more demand, which is going to increase activity in the gas markets. And I’ve had dialogue with gas operators. They certainly like the price where it is better than where it had been. We’ve come a long way. The strip today or at least the current price today is moving around, but I think some of that is as a result of a lot of the digestion of data that’s coming at a high rate is having an impact on that. None of that changes though the structural demand for gas, which clearly is the most reliable, scalable and affordable form of power. And so I think we’ll continue to see improvement there. But like I said for many quarters, I’m not going to pick the date that we see the inflection, but we have had more inbounds from gas operators than we’ve had in some time.

Derek Podhaizer: Got it. That’s helpful. And this might be more of a bigger picture question, but I was thinking about last year when we were talking about the international cycle, you talked about Halliburton being better positioned in last cycle is talking about artificial lift chemicals. I mean now we have Deepwater offshore starting to pick up. So maybe if you could spend some time talking to us about Halliburton’s position attacking this offshore cycle versus prior offshore cycle, just given the commentary you laid out in the release and on the call has been — it’s pretty strong. Your outlook seems pretty constructive. So maybe just some thoughts around your position this time around than prior cycles?

Jeff Miller: Yes. Look, I think it’s technically, we’re in a much better place than any other cycle, and that’s why I described we’re winning offshore exploration — integrated offshore exploration work. Really all the contract wins, all of the contract wins I described are offshore projects, some development, some exploration. And I do that just to demonstrate from an example perspective, there are others, (a) how technical we are and why we are competing so well in the offshore space. That’s one. And then second, the value proposition is really meaningful internationally or in Deepwater because the stakes are much higher, the alignment is much more important, the type of ways we work and plan together with our customers. Though the clarity around asset value, creating asset value for our customer creates amazing alignment.

And culturally, we are aligned around delivering that which gives customers a lot of confidence that we’re going to show up and do the best thing for them. We’re going to be aligned with them. And so those two things put us in a very different position internationally and in Deepwater. And for that reason, I’m very — I am optimistic around where we sit and how we will perform.

Derek Podhaizer: Great, appreciate the color. I will turn it back.

Jeff Miller: Yeah, thank you.

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

Douglas Becker: Thank you. Eric, I wanted to circle back to your comment that second half 2025 D&E margins would be in the same ZIP code as second half 2024. If I’m interpreting that correctly, it might imply about 300 basis points of margin improvement from the second quarter. So I wanted to make sure I got that right and if so, that still seems pretty aggressive even trying to take into account the unique caliber and growth drivers and just some seasonal improvement, so anything you could expand on the drivers there?

Eric Carre: No, you are correct. That is what I said. And again, you’re looking at a significant impact from mobilization in Q2, and we’re mobilizing equipment because we have won additional work. So all of that kind of go together. We’ll have less cost as we get into the second half of the year. We’ll have incremental work that we’re mobilizing for. So that’s what our operational forecast tells us at this point in time.

Douglas Becker: Does that assume any decrease in activity in the second half?

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

Jeff Miller: Nor is that the feedback we’re getting from customers internationally. That feedback is much clearer.

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

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

Douglas Becker: Got it, thank you very much.

Jeff Miller: You are welcome.

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

Stephen Gengaro: Thanks. Good morning everybody. So two things for me. I think the first, when we think about sort of the evolution of the pressure pumping business over the last 5 to 10 years and the increased probably resiliency in margins. Can you talk about what you’re seeing right now kind of on the pricing side and maybe even if there’s any color you could give on how these longer-term contracts that are in place on e-fleets you may or may not kind of reprice on a quarterly or annual basis, are there any color you can give us there as we think about margin progression in C&P?

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

Stephen Gengaro: Okay, great. Thank you and then just a follow-up on the question that came up on VoltaGrid. One of the things that we’re trying to understand better around Power Gen is the differentiation it brings. And given how I think the pressure — market has become, if it’s a word decommoditized over the last 10 years, how do you think about something like VoltaGrid and whether that’s a more commoditized service and kind of something that they — however, and as an entity has kind of been moving away from over time?

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

Stephen Gengaro: Okay, great. Thank you for the color.

Jeff Miller: Thank you.

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

Jeff Miller: Yes. Thank you, Howard. As we close out today’s call, let me close with this. I’m confident in our strategy to maximize value in North America, drive our growth engines internationally, and deliver highly differentiated technology that creates value for our customers and Halliburton. I expect Halliburton generate solid free cash flow in 2025, and we are on a pace to return at least $1.6 billion of cash in 2025. I look forward to speaking with you next quarter.

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