Halliburton (HAL) Q2 2026 Earnings Call Transcript

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DATE

Tuesday, July 21, 2026 at 9:00 a.m. ET

CALL PARTICIPANTS

• Senior Director, Investor Relations - David Coleman
• Chairman, President and CEO - Jeffrey Allen Miller
• executive vice president and COO - Jeffrey Shannon Slocum
• executive vice president and CFO - Eric J. Carre

TAKEAWAYS

• Total Revenue -- $5.7 billion, representing a 6% sequential increase driven by improved performance across both operating divisions. During the second quarter, **Halliburton Company** (NYSE:HAL) reported that international revenue reached its highest second-quarter level in more than a decade.
• Adjusted Net Income -- $0.55 per diluted share, which excludes a $95 million pre-tax credit primarily related to government refund recoveries and gains on equity investments.
• Adjusted Operating Margin -- 12%, reflecting consistent execution across global operations despite geopolitical disruptions.
• International Revenue -- $3.4 billion, an increase of 5% sequentially and 6% year over year, led by a 19% sequential improvement in the Europe/Africa region.
• North America Revenue -- $2.3 billion, a 7% sequential increase driven by higher stimulation and well construction activity in U.S. land and higher fluids activity in the Gulf of Mexico.
• Free Cash Flow -- $668 million, supported by $824 million in cash flow from operations and $79 million in proceeds from asset sales.
• Completion and Production Revenue -- $3.2 billion, a 6% sequential increase primarily due to increased stimulation activity in the Western Hemisphere and improved well intervention in Asia.
• Completion and Production Operating Income -- $474 million, an 8% sequential increase with an operating margin of 15%.
• Drilling and Evaluation Revenue -- $2.5 billion, a 5% sequential increase driven by higher drilling-related services and wireline activity in North America and Europe/Africa.
• Drilling and Evaluation Operating Income -- $338 million, a 4% sequential decrease resulting from the seasonal roll off of software sales.
• Shareholder Returns -- approximately $200 million in common stock repurchases and $143 million in dividends paid during the quarter.
• Europe/Africa/CIS Revenue -- $1 billion, a 19% sequential increase driven by improved activity in the North Sea, Namibia, Egypt, and Angola.
• Latin America Revenue -- $1.1 billion, a 3% sequential increase reflecting higher stimulation activity in Argentina and Mexico.
• Middle East/Asia Revenue -- $1.3 billion, a 2% sequential decrease due to lower activity in Kuwait, Iraq, and Qatar resulting from regional conflict.
• Full-year CapEx Guidance -- approximately $1.1 billion, focused on supporting growth engines in international and offshore markets.
• Q3 C&P Guidance -- revenue expected to be flat to down 2% sequentially, while margins are projected to improve 125 basis points to 175 basis points.
• Q3 D&E Guidance -- revenue expected to be down 3% to 5% sequentially due to rig moves, with margins projected to improve 25 basis points to 75 basis points.
• International Growth Forecast -- low double digits for 2026 for the business outside the Middle East, driven by unconventional and offshore expansion.
• Iraq Field Management Award -- a foundational contract for Integrated Field Management Services and EPCM for the Bin Umar and Sindbad oil and gas fields.
• Saudi Aramco Turnkey Contracts -- lump sum awards for approximately 285 wells involving oil re-entry, drilling, completions, and workovers.
• Suriname Deepwater Contracts -- major integrated well construction award for the GranMorgu development operated by TotalEnergies.
• SAP S4 Migration Expense -- $46 million incurred in the second quarter, with an additional $45 million anticipated for the third quarter.
• North America Rig Activity -- over 30 rigs added to the U.S. land market, which management indicated is supporting a recovery in drilling and evaluation services.
• Corporate and Other Expense -- $83 million in the second quarter, with an expectation of approximately $80 million for the third quarter.
• Unconventional Expansion -- mobilization of the first Zeus fleet to Argentina and a multiyear stimulation contract for unconventional gas in Saudi Arabia.

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RISKS

• Slocum stated, "Activity is recovering from the conflict flows, but the pace of recovery is still dependent on the day-to-day events in the region," noting that current conditions in the Middle East remain fluid and subject to security escalations.
• Carre noted that regarding the Middle East, "it is just very difficult to forecast," leading the company to assume steady activity rather than a full recovery to pre-war levels in its guidance.

SUMMARY

Management reported a shift in operational focus toward international growth engines, including unconventionals, offshore development, and artificial lift. The company stated that demand remains high in every region served, with significant contract awards announced in Iraq, Suriname, and Saudi Arabia. In North America, the company indicated it is prioritizing margin expansion and price increases over market share, including the redeployment of equipment to international markets where returns are higher. Management expressed confidence in a multiyear growth cycle driven by global energy security requirements and the increasing service intensity required to sustain oil and gas production.

• CEO Miller described energy security as a central issue that will take "years not quarters" to address, supporting a healthy long-term outlook for the oilfield services industry.
• The company announced the acquisition of InformatiQ AS, a Norway-based software company, to convert a long-standing collaboration into full ownership and strengthen its agile asset management offerings.
• Miller stated that Halliburton has "zero hesitation" in moving equipment from North America to international markets to achieve better margins and returns.
• CFO Carre noted that third-quarter margins in Drilling and Evaluation are expected to improve despite lower revenue, reflecting a shift toward higher-margin software sales and a different product mix.
• Slocum attributed recent international wins to Halliburton's "differentiated technology" and its ability to collaborate with customers on complex projects like the Jafurah unconventional gas development.
• Management highlighted that its international growth engines are currently ahead of schedule to add $2.5 billion to $3 billion in annual revenue by 2028, with potential upside to those targets.
• The company successfully deployed the VersaFlex expandable liner hanger system in the Caspian Sea and launched the Xaminer Deep Testing logging service to support integrated well construction decisions.

INDUSTRY GLOSSARY

• Completion and Production (C&P): A business segment focused on enhancing well output and managing well integrity through stimulation, cementing, and completion tools.
• Drilling and Evaluation (D&E): A business segment providing drilling fluids, wireline services, and subsurface insights to optimize well construction.
• EPCM (Engineering, Procurement, and Construction Management): A professional services contract where a company manages the technical and management aspects of a project.
• Artificial Lift: Techniques used to increase the flow of liquids, typically crude oil or water, from a production well to the surface.
• Unconventionals: Hydrocarbon resources, such as shale oil or gas, that require specialized extraction techniques like hydraulic fracturing.
• IFMS (Integrated Field Management Services): A comprehensive service model covering field development planning, production optimization, and digital solutions.
• Liner Hanger: A device used to attach or hang a liner from the internal wall of a previous casing string.
• Zeus Fleet: Halliburton's advanced, fully electric hydraulic fracturing technology designed for high-intensity unconventional completions.
• SAP S4: An enterprise resource planning software suite that the company is currently migrating toward to modernize its digital infrastructure.
• STEM Vessel: A specialized offshore vessel used for well stimulation, intervention, and pumping services.

Full Conference Call Transcript

Operator: Good day, ladies and gentlemen. And thank you for standing by. Welcome to the second quarter 2020 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. To ask a question at this time, you would need to press *11 on your telephone keypad. As a reminder, this conference call is being recorded. At this time, I would like to turn the conference over to Mr. David Coleman, Senior Director, Investor Relations. Sir, please begin.

David Coleman: Hello, and thank you for joining the Halliburton Second Quarter 2026 Conference Call. We will make the recording of today's webcast available for 7 days on Halliburton's website after this call. Joining me today are Jeffrey Allen Miller, Chairman, President and CEO, Shannon Slocum, executive vice president and COO, and Eric J. Carre, executive vice president and CFO. Today's comments may include forward looking statements that reflect Halliburton's views about future events. These matters involve risks and uncertainties that could cause our actual results to differ materially from our forward looking statements.

These risks are discussed in Halliburton's Form 10-Ks for the year ended 12/31/2025, Form 10-Q for the quarter ended 03/31/2026, and 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, except as required by law. Our comments today also include non GAAP financial measures. Additional details and reconciliation to the most directly comparable GAAP financial measures are included in our second quarter earnings release and in the Quarterly Results and Presentation of our website. Now I will turn the call over to Jeffrey.

Jeffrey Allen Miller: Thank you, David, and good morning, everyone. I am pleased with Halliburton's second quarter performance. Our international business delivered its highest second quarter revenue in more than a decade, despite the disruption in The Middle East. Our North America business delivered sequential improvement and my outlook for our business is positive. Here are a few highlights from the second quarter. We delivered total company revenue of $5.7 billion and adjusted operating margin of 12%. International revenue was $3.4 billion an increase of 6% year over year. North America revenue was $2.3 billion flat year over year.

During the second quarter, we generated $824 million of cash flow from operations, $668 million of free cash flow, and repurchased approximately $200 million of our common stock. Now let's turn to our macro outlook. On our last call, I shared my belief that the situation in The Middle East would have and long lasting implications for the global energy sector. What is ever more clear to me is how important energy is to a functioning global economy. The events we have seen since then only reinforce that view. 2 points frame my view of the road ahead. First, energy security remains a central issue for both producing and consuming nations.

To achieve it, countries must rebuild inventories, refill and expand strategic reserves, and diversify supply. I expect this work will take years not quarters. Second, reliable and affordable energy are prerequisites for prosperity and quality of life. As the global economy expands, demand for that energy grows with it. I believe the path forward runs squarely through a healthy oilfield services industry. Here is what I see today. In international markets, customer engagement is high. I see growing demand for our services and technology in every region we serve. Durable, long cycle investment is increasing in unconventional, offshore, and intervention markets, and Halliburton wins in all 3. In North America, activity responded positively as we expected.

Over the long term, North America remains critical to global energy security. I expect the market will require more advanced technology and greater service intensity to simply sustain much less grow production. I believe the global outlook I just described and our differentiated technology and value proposition set the stage for Halliburton's future revenue growth and margin expansion. With that, I will turn the call over to Shannon.

Jeffrey Shannon Slocum: Thanks, Jeffrey. Before I get into our operational results, I want to thank each of our employees who work in more than 70 countries around the world. For their focus on our customers, safety performance, and execution. Let me start with international. Where opportunities for Halliburton around the world are the strongest I have seen in many years. In the second quarter, Halliburton recorded international revenue of $3.4 billion and secured a number of significant awards. I will start with The Middle East. Recently returned from the region where I met with our customers and our operations teams.

Activity is recovering from the conflict flows, but the pace of recovery is still dependent on the day to day events in the region. Let me share a few observations from my visit. Land well construction activity was largely steady across the region in the second quarter. With the exception of pockets of disruption in Iraq and Bahrain. When production comes back online, I expect a tailwind for artificial lift and intervention businesses. Offshore activity increased to the quarter. Though it is not yet back to pre conflict levels. The offshore situation remains particularly fluid, with operators assessing reactivations, alongside recent security conditions. Iraq deserves a specific mention. Yesterday, we announced a significant integrated field management service award.

This is a foundational project that I expect will transform our business and country. It redefines our opportunity set and puts our latest digital technology offerings to work at scale. While the conflict dominates the discussion today, I see a bright future for Halliburton in The Middle East. Our recent wins in onshore well construction, integrated projects offshore, and the resumptions of our unconventional frac operation to further all strengthen my view. Next, let's turn to our business outside The Middle East. Where we expect year over year growth in the low double digits. Our growth engines production services, drilling, unconventionals, and lift are key to delivering on the outlook. Here are a few recent developments.

First, in production services, the commissioning phase began for our newest North Sea stem vessel, The first operations of its multiyear contract expected at year end. This deployment strengthens our leading global STEM business and importantly represents the first offshore implementation of Octave. Our automated pumping control system. Second, in directional drilling, Sikal, our recent acquisition, is fully integrated with our Logix automation platform. And together, they deliver Halliburton's closed loop drilling solution. This integrated solution gives us a significant runway to scale on offshore rigs worldwide. Our system delivers more precise well placement, better reservoir contact, and faster drilling times. We saw this firsthand in Norway with back to back record wells for Aker BP this quarter.

I am confident this technology and the opportunity to further deploy will deliver meaningful, profitable growth for Halliburton. Finally, in international unconventionals, we saw further progress in multiple regions. In Algeria, we secured Sonatrac's first unconventional award, a multi well integrated drilling and completions program. We are off to a strong start and have already delivered the longest lateral drilled in country to date. This project highlights the breadth and depth of our entire unconventional portfolio. Both drilling and completions, and puts Halliburton in front of the next wave of development. In Argentina, our first Zeus fleet has been mobilized and is planned to start up in the fourth quarter.

This deployment exemplifies Halliburton's unique capability to bring leading unconventional technology to international customers. I see a clear runway for Halliburton to build on this position in this growing market. Our international strategy is advancing, We differentiate on technology. We deliver on execution. And we collaborate closely with our customers. When I look at our growth engines and the pipeline of opportunities ahead, I believe that our international business delivers meaningful, profitable growth for Halliburton. Now to more North America, where Halliburton delivers second quarter revenue of $2.3 billion. Second quarter activity built on the momentum we saw in the first quarter. With stronger activity, modest pricing gains and further technology adoption. Drilling activity was strong.

Our D and E division grew 9% year over year, In completions, our focus remains on returns, not share. And our option to redeploy equipment to international markets set a high bar for any North America fleet reactivation. Halliburton's maximized value strategy in North America leads with technology. Automation electrification, and real time subsurface data gives our customers the tools to maximize recovery in their assets. Let me give you a proof point. This quarter, we deployed the latest version of Zeus IQ. This release has near well and cross well subsurface measurements. Spans data inputs, and gives customers well by well treatment control and simul-frac operations. In plain terms, better fracture placement, means more value for our customers.

Let me close on North America with this. The market is in a recovery, and I am encouraged by the shift in trajectory. Activity is up. Pricing is improving and our playbook works. I expect continued progress throughout the year. Our priorities are clear. We focus on returns for Halliburton, and we deploy technology that improves performance, and recovery for our customers. Big picture. I like Halliburton's strength globally. With a balanced portfolio that spans international and North America. Onshore and offshore, mature and new plays, I am excited about our contract awards and our opportunity pipeline. I am confident will translate into revenue growth, and margin expansion.

With that, I will turn the call over to Eric to provide more details on our financial results. Eric?

Eric J. Carre: Thank you, Shannon, and good morning. Our Q2 reported net income per diluted share was $0.64. Adjusted net income per diluted share was $0.55. Total company revenue for Q2 2026 was $5.7 billion an increase of 6% when compared to Q1 2026. Adjusted operating income was $683 million and adjusted operating margin was 12%. Our Q2 cash flow from operation was $824 million and free cash flow was $668 million During Q2, we repurchased approximately $200 million of our common stock. Now turning to the segment's results. Beginning with our completion and production division, revenue in Q2 was $3.2 billion an increase of 6% compared to Q1. Operating income was $474 million an increase of 8%. When compared to Q1.

Operating income margin was 15%. These results were primarily driven by increased stimulation activity in the Western Hemisphere and improved well intervention services in Asia. Partially offsetting these increases were lower specialty chemical activity in North America, resulting from the sale of our chemical business, and decreased cementing activity in Latin America, and lower activity across multiple product service lines in The Middle East. In our Drilling and Evaluation division, revenue in Q2 was $2.5 billion an increase of 5% when compared to Q1. Operating income was $338 million a decrease of 4% when compared to Q1. Operating income margin was 13%.

Revenue improvements were primarily driven by increased drilling related services and higher wireline activity in North America and Europe Africa. Partially offsetting these increases were lower software sales globally decreased project management activity in Latin America, and lower wireline activity in The Middle East. Operating income decreased due to the seasonal roll off of software sales. Now let's move on to geographic result. Our Q2 international revenue increased 5% sequentially. Europe Africa revenue in Q2 was $1 billion an increase of 19% sequentially.

These results were primarily driven by improved activity across multiple product service lines in the North Sea, increased well construction activity in Namibia and Egypt, higher completion tool sales in the East Med, and increased project management activity in Angola. Middle East Asia revenue in Q2 was $1.3 billion a decrease of 2% sequentially. These results were primarily driven by lower activity across multiple product service lines in Kuwait, Iraq, and Qatar due to the conflict in the Middle East. Latin America revenue in Q2 was $1.1 billion. a 3% increase sequentially. These results were primarily driven by increased stimulation activity in Argentina and Mexico, and improved completion tool sales in Mexico.

In North America, Q2 revenue was $2.3 billion, a 7% increase sequentially. This increase was primarily driven by higher stimulation and well construction activity in US land, and higher fluids activity in the Gulf of Mexico. Moving on to other items. In Q2, our corporate and other expense was $83 million. We expect our Q3 corporate expenses to be about $80 million. In Q2, we spent $46 million on SAP S4 migration, which is included in our results. For Q3, we expect SAP expenses to be about $45 million Net interest expense for the quarter was $83 million. For Q3, we expect net interest expense to increase about $5 million Other, net expense in Q2 was $31 million.

We expect Q3 expense to be about $35 million. Our normalized effective tax rate for Q2 was 18.3%. Based on our anticipated geographic earnings mix, we expect our Q3 effective tax rate to be approximately 19%. Capital expenditure for Q2 was $235 million for the full year 2026, we expect capital expenditures to be about $1.1 billion Now let me provide you with comments on our Q3 expectations. Our completion and production division, we anticipate sequential revenue to be flat to down 2%, and margins to improve 125 to 175 basis points. In our Drilling and Evaluation division, we expect sequential revenue to be down 3% to 5%, and margins to improve 25 to 75 basis points.

I will now turn the call back to Jeffrey.

Jeffrey Allen Miller: Thanks, Eric. Here are the important takeaways from today's call. I believe the global outlook for Halliburton is strong and will lead to revenue growth and margin expansion. In the international markets, I am excited about Halliburton's contract awards and pipeline of future opportunities. Outside The Middle East, we expect our international business to grow low double digits this year. In North America, I am encouraged by the recovery we saw this quarter, and we will execute on our strategy to maximize value. Finally, I expect that our consistent focus on returns and capital discipline will drive long term success for Halliburton and its shareholders. Let's open it up for questions.

Operator: Yes, sir. Ladies and gentlemen, if you have a question or comment at time, please press *11 on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, simply press *11 again. Again, if you have a question or comment at this time, please press *11 on your telephone keypad. Our first question or comment comes from the line of Arun Jayaram from Evercore. Your line is now open.

Analyst: Hi. Good morning. Jeffrey, last quarter, I think you showed quite a bit of foresight by talking about kind of the end of white space and the pickup of inbounds in North American completions specifically. I was wondering if you could talk about how that evolved during the quarter. Eric costs and how much of that is kind of feeding into the margin outlook you have in the second half of the year, particularly in C and P?

Jeffrey Allen Miller: Thank you, Steve. Look. As I described, we see positive margin trajectory in white space is filled. We have seen rig adds. We are seeing white space filled, and it is a very constructive environment. We are seeing price increases. And it is a steady march. it is, it does not all happen at once. We anecdotally, we can describe price increases, but our primary focus is across the entire fleet. And I am very confident that we are seeing that trajectory continue actually into Q3. So white space built up. Looking forward Q3, Q4. Pleased with that.

And so, we are again, focused on margin expansion, but all around the fleet, the entire fleet, not just 1 at a time and in some cases, you know, when we work on price, that includes moving some equipment overseas and to get better margins. And so, when we think about maximizing value in North America, that includes moving on price, and also maximizing the value of the entire fleet. Which will include putting equipment to work where it has the highest margins.

Analyst: that is great. Appreciate that. And then I was also wondering if you could just follow-up on last quarter, you all were talking about sort of itemized the impact of what we are seeing in The Middle East and talked about a $0.07 to $0.09 kind of headwind. You maybe just maybe mark us to market on what you saw in the business and how you have kind of thought about the dislocations as it pertains to the second half?

Jeffrey Shannon Slocum: Yeah. Shannon here. And, Steve, I will have Eric, provide a little color on the guide. I guess, let me just talk about activity in general. In The Middle East. it is been really hard, highly fluid. Customers are thinking about their long term view. They are looking at capacity, they are looking at risk, and really understanding how quickly they can bring that back. In Q2, we saw a positive progression in Middle East of what was going on. And then when we got here over the last week or so, obviously, we have seen a little bit of step back of escalations.

So we have kind of had a little bit of starting up and then a bit of pulling back. But I think it is important, to maybe emphasize the bigger picture here as far as we think about what is going on in Middle East. Regardless of the pace of when it comes back, Halliburton will be ready. We have the operational footprint intact. And also important to note is the business that we are winning in The Middle East, is work that is absolutely gonna get done. We talked about going back to work in Jafurah and unconventional. The integrated work, what work we won in reentry.

The integrated work we have won offshore and also a really exciting project in Iraq with IFMS. So the pace is highly dependent and fluid, but we are winning work that will mean something to Halliburton in the future.

Eric J. Carre: Yes, Steve. it is Eric. Regarding what is built in the guide, so our assumptions are for a steady activity compared to where we are today. So we have not put in our guidance any recovery to pre war level, neither have we built in any major disruption So it is basically steady from where we are, but it is just very difficult to forecast as you understand. Thank you.

Analyst: Thank you.

Operator: Our next question or comment comes from the line of David Anderson from Barclays. Mister Anderson, your line is now open.

David Anderson: Thank you, and good morning. So you had a number of really nice wins and this quarter. Europe Africa outperformed as well. I was wondering if you could talk about your offshore business and kind of how you see that performing over the next 12 to 18 months. Should we start to see an inflection here by the fourth quarter? And kind of what are some of the key drivers? You are talking about technology a lot as an enabler here. So maybe if you could expand a little bit more on how that is driving growth going forward.

Jeffrey Shannon Slocum: Yes. Thanks, David. I guess first, really love our position. Maybe just a industry comment And then maybe a bit more about Halliburton on the inflection point. Yeah. Hey. Big markets around the world deepwater markets like in The Caribbean. The revitalization of tieback work deepwater Gulf of Mexico. Brazil, West Africa, as you mentioned, Norway and EastMed, are all really busy markets for us. And while we are seeing a tightening of we are seeing rigs being tendered for those spaces, we are seeing a tightening of FPS in that market. Do not see that as a probably Q4 event, what I see that as more of a 2027 event. Probably later half of 27.

But I think really important here is to emphasize the bigger picture here is we were winning in all those markets. Just announced a really sizable win with Total Energies in Suriname. We still have a great footprint with Guyana there. West Africa, Namibia, Nigeria, and even Ivory Coast adding have a good footprint there and winning there. And obviously, Norway, North Sea has been a big market for us moving forward. So really like the direction we are going offshore, and I think again, more importantly is that we are winning in that space.

Jeffrey Allen Miller: And maybe a comment technically David, just to follow that up. And I think a lot of those wins, most of that winning that you are seeing us do is on the back of 2 things, really, our value proposition, the collaborate and engineer solutions to maximize asset value for our customers and technology advances that we have made over just really the last few years with closed loop geosteering, for example. You saw us acquire Sikal. that is an important step towards better uptake of that technology broadens our ability to implement that technology on more rigs than before. And so very positive technically around what we are doing.

And again, how we are working with our customers to deliver real results.

David Anderson: Appreciate those comments, Jeffrey. Maybe if we could shift over to the international side. International unconventionals are becoming a bigger part of your portfolio. Vaca Muerta is clearly in growth mode. You talked about Algeria. I think you are also in UAE and I was wondering if you could kind of put all this together and sort of kind of walk us through those various opportunities and your strategy. I am also sort of wondering about the impact on the C and P margins.

Is sort of the ramp up, is that kind of hold it weighing down margins to a certain extent as you are sort building up in these different countries and you are not quite at the scale you want to be? Thank you.

Jeffrey Shannon Slocum: Yes. Let me I will comment on some of the activities and ask Eric to give more on the guidance here. But hey, as you said, we are really excited about, David, the scale converting at scale. Argentina with YPF, a big win, multiyear multibillion with Zeus. Going back to Aramco and Jafurah, and if you kind of look at the big markets out there, Argentina starting there, it is growing market. Really Argentina, Algeria, Kuwait, Saudi, UAE, we have frac spreads in all of those locations today doing unconventional work. What I think is important across what we are doing in unconventional, this has been a deliberate focus of ours is continue to use our scale.

With a real emphasis on as Jeffrey said, returns, but also putting technology at play globally and competing on technology, not on horse horsepower. So I think that has been the recipe for us in scaling this globally.

Eric J. Carre: Let me take the last bit of that as well in terms of margin when you think about those businesses around the world. Yes, there is some mobilization that goes on around that. But it is part of our growth engines, and we know that you know that with that scale comes margin expansion. Thank you.

Analyst: Thank you.

Operator: Our next question or comment comes from the line of Arun Jayaram from JPMorgan. Mister Arun, your line is now open.

Arun Jayaram: Good morning, team. Jeffrey, I was wondering if you could comment on and Shannon on clearly, it appears that Hal is taking market share in international markets as just highlighted by a number of awards in The Middle East LATAM, etcetera. I wondered if you could maybe break down what you think is driving some of those, share gains Shannon did mention that you would expect these new opportunities to be margin accretive, and maybe you could just touch upon that. As we think about framing second half of the year and into 2027.

Jeffrey Shannon Slocum: Yes. I guess the short answer is yes. We these, wins that we are talking about, we do see them as future work that will be accretive to our business I think a couple of things have been driving it. 1, the market is tight Nobody's really built overbuilt in that market, in the market. And that is a good thing. Opportunity for, expansion of margins for us And we think that macro outlook from what we are seeing will continue. But I think going back to how we engage with our customers on some of these projects, we knew they were coming down the pipe.

I think our value proposition how we collaborate with our customers, really, if you look at Halliburton's portfolio globally, technically, there is no real holes in it. But we compete all over the world in 70 countries. And I think of combination of you know, value prop and technology has been the difference maker for us over the last 12 months.

Arun Jayaram: Got it. Got it. And then maybe just to follow-up on North America. 1 of the things that caught our attention is your you know, intention to continue to perhaps mobilize equipment out of North America to meet some of these, international opportunities, Is that just a reflection as you see better margin opportunities for unconventional now outside of NAM?

Jeffrey Shannon Slocum: Hey. it is it really comes down to this. it is price first. We are actively working our entire fleet and getting price on that in North America. But we have zero hesitation of moving equipment around the world whether it be in C&P or D and E, to a place that generates returns for Halliburton. And when there is opportunities, we will do that. And that is what you have been seeing on the C and P side frac with Argentina. You have seen that in Middle East. Algeria, UAE. All of these places have been going to a home that it makes better margins returns for health Great. Thanks a lot.

Analyst: Thank you.

Operator: Our next question or comment comes from the line of Saurabh Pant from Bank of America. Your line is now where?

Saurabh Pant: Hi. Good morning, Jeffrey, and Eric. Hey. Sorry. Eric, maybe I will start with a quick clarification, quick for you. I wanna make sure I heard it right. I think the revenue guided Eric, for the third quarter, calls for both segments. I think C&P flat to down 2%, D&E down 3 to 5%. And I think within that, in response to 1 of the initial questions you were thinking Middle East is steady. Right? So flat, let's call it, on a run rate basis. Can you maybe talk to how should we think about the 2Q to 3Q revenue decline? Where is that coming from? Is it timing?

Is it I know the chemical business sale happened in May of this year. Is it past that? Maybe just talk to that a little bit, Eric, just to give us some color.

Eric J. Carre: Yeah. So I will give you some color on the guide. So starting with the D and E division, revenue are primarily affected by drop in revenue in our Drilling Fluids and Testing business. The Drilling Fluids in the Gulf of Mexico and in Europe, across most international region. there is really nothing structural. it is simply, rig moves and end of programs, et cetera. Part of that is offset by the seasonal pickup of our software business in Q3. So that is kind of on the revenue side. On the margin side, the improvement is due to mix. We had a I mean, drilling fluid was a very large contributor to Q2.

In Q3, we are going to see less drilling fluids, more software sales, which are running at a structurally high margins, which explain the guidance. On the C and P side, top line revenue, you mentioned it. We have sold our chemical business, so we are not going to have any revenue Coming from that in Q3. We are gonna be slightly down in Latin America and Europe Africa, which had a fantastic Q2 of 19%. And some of that is going to be offset by the recovery of our Middle East business. On the margin side, the main drivers of the improvement in our margins is the North America land frac business, which is going to see improved margins.

The lift business as well. A recovery of completion tool deliver in the Gulf of Mexico and also the Middle East recovery, as in D&E. So these are the main elements of our Q3 guidance.

Saurabh Pant: I got it, Eric. that is very helpful. And then, Jeffrey, Shannon, maybe this 1 is for you. I wanna touch on your landmark business a little bit. I know digital and software does not come up too much here in the Q&A for you guys, but you have had a strong business. Landmark has been a strong business for you, in drilling, logics, decision space. I think you have had a lot of success in that. Then, you had in your prepared remarks, you acquired Sikal last quarter. Today in your press release, you had the, acquisition of Informatic. Maybe just talk to the landmark business a little bit.

It seems like you are making a lot of positive progress. But maybe just talk to what you are doing there and maybe the opportunities over the next few years.

Jeffrey Allen Miller: Yeah. Thank you. Look. We really like our approach to digital broadly. Both the software business and the automation business. And from a software perspective, you know, our absolute focus on open architecture is very attractive to customers. And so strategically, AI open architecture and then deep science, deep data management. Those are the 4 areas that I feel the most confident about where we are. And look forward to watching that continue to get legs Had several strategic wins over the last year, and I expect not only did those grow, but we just start to see a strengthening of that over time. From an automation perspective, you are correct.

Zeus IQ, Logix, Sikal, acquisitions that we make that we know help our customers drill better precise more precise wells or improve recovery or hydraulic fracturing for unconventional completions. And so that automation and answer products in terms of IQ, Zeus IQ, and Logix, what it does, have been a big part of recent awards. And so we are seeing that manifest in actually the contracts that we are winning, is a differentiator and gives me a lot of confidence around why I believe or why the contracts that we are winning are accretive over time. Fantastic. Yes, that is very helpful. Thank you. I will turn it back.

Analyst: Thank you. Thank you.

Operator: Our next question or comment comes from the line of James West from Melius Research. Your line is now open.

James West: Thanks. Good morning, guys. Morning. Jeffrey, you have guys have stuck to your knitting in North America as the only integrated service provider a fully integrated service provider that is really left in the market, but you have also used it as a cash flow harvesting machine. And that is led to, I think, some of the significant growth that you are now seeing in the international markets as you deploy capital to those markets, you deploy capital into technologies? And are increasingly taking share or at least minimum holding your own as others have failed there.

Could you talk about that strategy how you see the evolution of that strategy in those international regions, which are now-- I mean, they are now coming to you. The just the amount of awards you have announced in the last 2 weeks has been highly impressive. And to just wanted to just touch on kind of where are we in that, in that kind of, I do not know if I want to call it a pivot, but just the deliberate strategy.

Jeffrey Allen Miller: Look. It is a deliberate strategy. It is where we have market leading both capability and technology. that is sought after internationally and as that market grows, we are leading that market. And plan to continue to lead in that market And unconventionals have been proven to be a successful way to deliver oil and gas and now the rest of the world is doing more of it. We plan to lead there. Still focused on North America. And so, you know, we see solid trajectory in North America as well However, we have leading margins in North America today. And plan to continue to keep those.

And so as we push price up, there is always going to be some bumping around in the market. And that bumping around in the market, which is already the market leader, in terms of performance and margins, comes with bringing up some equipment as we push. And the point is we have got opportunities around the world as well to put equipment to work. So this is I would not describe it as a pivot, James. I describe it as a conscious, deliberate strategy to take advantage of our competitive advantage around the world while continuing to drive better performance in North America.

I do not think the 2 are mutually exclusive, but some of the bumping around you are gonna see in North America is us putting real pressure on pricing and margins in North America.

James West: Okay. Got it. That makes, that makes perfect sense. And then as we think about, moving of equipment, abroad, how should we think about, I guess, the kind of margin opportunity set? I mean, I know Eric already gave us some guidance for just next quarter, which is margin significant margin improvement sequentially. But how should we think about the competitive landscape internationally when you do move equipment? You have 2 things. You have 1 it is gonna be better pricing, but also 2, you are not gonna need to put as much capital into the market because you have already got have the steel already ready to go.

Eric J. Carre: Yeah. I will talk a bit about margins, James, and then I will let Shannon talk about the competitive environment. So I think that directionally, I mean, we you heard the Q3 guide, so margins are going to be up in both completion production, drilling and evaluation. I think the trend will continue. We are with margin up in D and E in Q4. We think it continues in 2027. We think the same trend is going to be there for C and P. Although you got to take into account the typical seasonality in Q4.

So we will have to see how that 1 plays out as we get closer to Q4, and then you get some Middle East unknown. Around all of that.

Jeffrey Shannon Slocum: Yeah. James, I guess, kind of the short answer on how we think about when we move things around. You know, the country is moving to, what are the efficiencies and logistics challenges around that? what is the scope of work? How long does it last? Everything from volumes being pumped to, stages and act access to sand and water. But really, it is it is a pretty straightforward answer after you get through all that. Is do we have term and do we make better margins if we put it in x y z country? And we make those decisions every quarter when we are looking at that.

As of if we have an opportunity to move it or somewhere in the world. And it is really it starts at there is different levels of maturity. Around unconventionals around the world. Those are mature, obviously, ones we probably wanna move as quickly as we can to. Others, we look and say, okay, is it a well, or is it a long term program? And we base our decisions around that. Got it. Great. Thanks, guys. Thank you. Thanks.

Analyst: Thank you very much.

Operator: Our next question or comment comes from the line of Derek Podhaser from Piper Sandler. Mister Podhaser, your line is now open.

Derek Podhaizer: Hey. Good morning, everyone. So you mentioned North America land, that is helping improve the C and P margins. I think the guide at the midpoint was 150 basis point. Top line seems to be impacted by the Chemical business sale. Talked about Latin America, Europe, Africa, which had a stellar quarter. But maybe some more color on what you are seeing activity wise impacting your U. S. Land frac revenue 2Q, the theme was absorbing the white space. Are you still seeing that full calendar in 3Q as well? Any indication on pricing will be there to help you even reactivate some sideline equipment. Or you mentioned maybe that international unconventional market is more attractive to deploy that.

That idled equipment. Just some more color on U. S. Land frac specifically impacting C&P.

Jeffrey Shannon Slocum: Yes. Sure. This is Shannon here, Derek. Yeah. Hey. We are seeing a positive margin trajectory C&P and certainly Dean as well, white space in Q2 was taken up. Q3, we are seeing the same thing in Q3. And I think an important point is we are also seeing pretty significant rig adds. Derek, over 30 plus rigs being added to North America. Not only is that a real positive for our D and E business, but it kind of raises the bar if you will, of activity sets moving in the future.

So it makes us feel really good and you know, there is not very little capacity at all in the market on gas substitution, zero at all on electric. And so as we start seeing some of these smaller and medium sized players moving a little quicker, you know, nobody's doing less out here. So I think that is a an environment, it does not happen overnight. it is a steady march and something as Jeffrey mentioned, we look across our entire fleet, not just 1 fleet of raising that will affect that tied up on each and every entire scope of work we do. Got it. Okay. that is helpful.

Derek Podhaizer: And then maybe moving over to Jafurah, you won an award there deploying a frac fleet for the basin. Obviously, there is a player over there that won majority of the committed work. Is this is this the uncommitted work? You know, is there upside to the fleet that you are deploying over there? Maybe talk about some of the technology you could add into the Jafurah Basin as it continues to scale over time just an exciting award, so maybe a little more color there.

Jeffrey Shannon Slocum: Yeah. that is my exact words. Excite I am really excited about it. It is committed scope. You know, we got terms that we are satisfied with. Volumes and wells per pad. And I think a big driver is, of course, we moved it because of long term work there in the gas and we can continue to see that market, in particular gas growing, not just in conventionals, but unconventionals. But a big driver that was bringing our automation, subsurface, and surface moving that to kingdom. And, yeah, I think we are excited to be back and that would be a long term program for us moving forward. Great. Appreciate all the color, Shannon. I will turn it back.

Operator: Thank you. Our next question or comment comes from the line of Neil Mehta from Goldman Sachs. Mister Mehta, your line is now open.

Neil Mehta: Yeah. Thank you so much, team. Jeffrey, Shannon. Maybe you can unpack a little bit about the opportunity set in Iraq. We have seen some of your large customers really lean into it and some big announcements last week. So we think about the margin, the profitability associated with the opportunity set, but also your thinking about the some of the moving pieces around the geopolitics and the aboveground concerns that the market historically has had. In that region.

Jeffrey Shannon Slocum: Yes. I would say today, things obviously are very fluid in Iraq. We are just there a couple weeks ago and just spent some time with prime minister actually here over the last week. You know, I am encouraged by the direction of policy that is being made within the country. Wanting companies like Halliburton to come to work within country.

As far as the war right now, it is still impacted, as far as it is not close to prewar levels, but what I am really excited about is this integrated field management Award that we got. it is really encompasses, if you think about, everything that Halliburton does, from field development planning production optimization, responsible for well construction, digital, a bit of the EPC work there. there. But I think what is important is the big picture here is that is a contract for Halliburton that yes. it is good for Iraq. Yes. it is good for Halliburton, but it is foundational building for us within Iraq. Something we think we can scale and build on.

So broadly, great for Iraq, but also really good for us in our Middle East business. Okay. Thanks.

Neil Mehta: And then the follow-up is here for Eric is just around share repurchase and buybacks. And 1 thing that has been a constant of 2026 has been volatility, including your share price, which is done well but consolidated from peaks. And so how do you think about the buyback? Do we keep the $200 million run rate? Or is there an opportunity to be opportunistic with shares trading at a discount potentially at least relative to where we were a couple months ago.

Eric J. Carre: Yeah. Look, we have not really changed our philosophy around buyback, Neil. We were a bit more conservative at the beginning of the year as we indicated on the Q4 call because the situation was very different at that time. Now our thinking is to reestablish pretty much the run rate that we have been on for the last couple of years. You can expect buybacks to pick up. But we are going to continue to do this on a continuous basis rather than jump in the market. Thanks, guys.

Operator: Our next question or comment comes from the line of Doug Becker from Capital 1. Mister Becker, your line is now open.

Doug Becker: Thank you. It really seems like we are seeing the evidence of the international growth engines revving up Back in January of last year, you mentioned that the international growth engines could add $2.5 billion to $3 billion annual revenue in 3 to 5 years Is that still a reasonable target, or is there some upside there? And could we get a sense how each of the 4 engines is progressing relative to your expectations?

Jeffrey Shannon Slocum: Yes. Doug, hey, I think not only we are ahead of schedule. As far as that, $2.5 billion to $3 billion by 2028 We think there is upside on that number. We really love our position offshore and land on the drilling side of things. Think the acquisition of Sikal in particular on the offshore has really strengthened our offshore positioning or technology advantage there. Unconventionals, we talked about a lot already, whether it is the YPF or the Aramco work, all good business for us. And I think that whole technology that we are deploying internationally, will give us more legs in the future.

And then as far as, you know, intervention and lift, you know, we have a really we have a significant footprint on the intervention space in particular, HD AWO and coiled tubing. But we are really excited also about the trajectory we are seeing on our artificial lift business. Globally. So, yeah, I think there is there is upside on that number.

Doug Becker: It certainly sounds encouraging. Eric, I did wanna just first, the second quarter C and P margin a little bit more. The guidance was for 50 to 100 basis points of sequential margin improvement. A little bit less than that. And just trying to get a sense how much of that was related to the Chemical business, versus, say, lower Middle East activity. Just wanna understand that a little bit better.

Eric J. Carre: Yes. I think in both divisions, we were a little higher than guidance on revenue. We were on the lower end of margin overall for both divisions as well. there is not a lot to read into it if you take the C and P margins, for example, we had higher maintenance cost and mobilization of equipment that hit the numbers. We had delays in the Gulf Of Mexico, which is structurally a high margin business, and it was essentially a product line mix as well that drove the same, you know, results in the D&E guidance. Thank you very much.

Analyst: Thank you.

Operator: Our next question or comment comes from the line of Scott Gruber from Citigroup. Mister Gruber, your line is now open.

Scott Gruber: Thanks. Good morning, everybody. Actually, I wanted to stay on the near term margin guide. Eric, you mentioned mobilization. Impact. I think it was C and P. Just broadly, given the pace of growth for you guys, which is pretty impressive and the new contract wins. Are mobilization and start-up costs, you know, a significant weight on margins, today? And are those completely, you know, fading in Mark? Are they still impacting? Just some more color on the mobilization and start-up costs and took the trend towards normalizing.

Eric J. Carre: Yeah. I mean, I cannot give you an exact number in terms of the impact of mobilization because you have mobilization happening Mobilization or movement of equipment happening at all times in our business as we try to optimize where we put asset to work. The contract wins that we have had have elevated that number a little bit. So we have some headwinds related to that. I just cannot quantify it exactly.

Jeffrey Allen Miller: Okay. No worries. 1 of the things just point out under the hood in North America, we are seeing pricing, and we are seeing improvement in that business. So as Eric described, Gulf Of Mexico moves and mobilizations, etcetera, Underneath the hood, we are pleased that we are getting the traction in pricing and improvement in performance in our North America land business.

Scott Gruber: Mhmm. Yeah. that is where I wanted to go to next is on the medium to longer term outlook for improvement. And I heard you guys mentioned, you know, the new work is coming in. And that is gonna be margin accretive. I am just curious on how to dimension that as we think about the go-forward, you know, we normally think about incrementals for Halliburton in that 30% to 35% range. But you know, a lot of the new contract wins, you know, seem to be propelled by new technologies.

And those mobilization and start-up costs should settle down in the years ahead, and then, hopefully, we have normalization of activity in The Middle East As you kind of think through the potential path for margins, given those factors, you know, should we be thinking about a couple years of above normal incrementals? For Halliburton in 2027 and 2028? Is that possible?

Jeffrey Allen Miller: Yeah. Yeah, your incremental expectations are not wrong. Those are my expectations as well. And so yeah, we are getting underway. I like the trajectory that we are seeing on the ground in North America. We are winning big contracts. All around the world. Yeah. there is always gonna be mobilization associated with those, but that does not diminish my when I say revenue growth and margin expansion, I expect margin expansion. And you know, those types of incrementals are not inconsistent at all with my expectations.

Scott Gruber: Can we do better than normal on incrementals I guess, is the is the question kinda given all those factors around technology and The Middle East coming back.

Jeffrey Allen Miller: Yes. I mean, I think so. Always possible. it is always possible. And then and you know, The Middle East is an odd mix with The Middle East where it is. We have got this pipeline of work that we know will be done. And it will be done, and it will start late this year into next year. In different parts of the world. And so, you know, it is an odd it is a bit of an odd mix right now in the Middle East, slower North America improving. And, yes, some mobilization going on. Okay. Appreciate the color, Jeffrey. Thank you.

Analyst: Thank you. Thank you.

Operator: Our next question or comment comes from the line of Marc Bianchi from TD Cowen. Mister Bianchi, your line is now open.

Marc Bianchi: Hey. Thank you. I was curious if you could share the impact of the Middle East on the business in the second quarter.

Eric J. Carre: It pretty much landed where we saw it would land. Now it is difficult because it is difficult to say you know, if there had been no conflict, the activity would have been that much and then compare it to the actual result of something you just cannot do. But in terms of how we were thinking the quarter would evolve, and the results that the Middle East delivered is pretty much where we thought it would be. Broadly speaking. Okay. Okay. Thank you, Eric.

Marc Bianchi: And then on the comment that the international business ex Middle East will grow low double digits, I am curious what do you think the broader market is doing? And where I am going with this is can we maybe infer some sort of you know, growth above whatever the broader market is doing because of all these you know, contracts that you have announced here in the last few quarters. Thank you.

Jeffrey Allen Miller: Yes, I do believe we are going to see outsized growth. I mean, the growth engines we described are driving this. These are places where we have clear competitive advantage. And they are outgrowing the broader market. And I believe that we are outgrowing the broader. So I look forward to you know, as these things feather in over the next little bit, you know, the growth in our position in deepwater continues to strengthen. And a lot of that is outside The US. And then also our strength in, The Middle East as we just described. Those are meaningful step forwards. And most are on the back of our technology and value proposition. I got comfortable those are differentiated.

Would you say, Jeffrey, that the broader market without this benefit would be up something like mid single digits? Could be. You know, tough to call the entire broader market, but I do believe we are going to be at the very high end of that. Yep. Thanks very much. I will turn it back.

Analyst: Thank you.

Operator: Thank you. Ladies and gentlemen, that concludes our Q&A session at this time. I would like to turn the conference back over to management for any closing remarks. Thank you, Howard.

Jeffrey Allen Miller: Before we wrap up today's call, let me close with this. I believe the global outlook for Halliburton is strong and our differentiated technology and value proposition set the stage for Halliburton's future revenue growth and margin expansion. I look forward to speaking with you next quarter. Let's close out the call.

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

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