# Halliburton Co: Form 10-Q for the period ended Jun 30, 2023

- Company: [Halliburton Co](/companies/hal.md) (CIK 45012)
- Form: 10-Q
- Filed: 2023-07-26
- Accepted by EDGAR: Jul 26, 2023, 10:28 ET
- Period: 2023-06-30
- Accession: 0000045012-23-000046
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/45012/000004501223000046/hal-20230630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/45012/000004501223000046/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-04-01 to 2023-06-30 | $5.80bn | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Revenue | 6 months, 2023-01-01 to 2023-06-30 | $11.47bn | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Operating income | 3 months, 2023-04-01 to 2023-06-30 | $1.01bn | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2023-01-01 to 2023-06-30 | $1.99bn | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2023-04-01 to 2023-06-30 | $167.0m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2023-01-01 to 2023-06-30 | $341.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-04-01 to 2023-06-30 | $610.0m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2023-01-01 to 2023-06-30 | $1.26bn | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-04-01 to 2023-06-30 | $680000.00 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2023-01-01 to 2023-06-30 | $1390000.00 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-04-01 to 2023-06-30 | $680000.00 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2023-01-01 to 2023-06-30 | $1400000.00 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-04-01 to 2023-06-30 | 903,000,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2023-01-01 to 2023-06-30 | 905,000,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2023-01-01 to 2023-06-30 | $1.17bn | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2023-01-01 to 2023-06-30 | $571.0m | us-gaap:PaymentsToAcquireProductiveAssets |
| Dividends paid | 6 months, 2023-01-01 to 2023-06-30 | $289.0m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 6 months, 2023-01-01 to 2023-06-30 | $348.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Current assets | at 2023-06-30 | $11.44bn | us-gaap:AssetsCurrent |
| Total assets | at 2023-06-30 | $24.07bn | us-gaap:Assets |
| Current liabilities | at 2023-06-30 | $5.35bn | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-06-30 | $15.35bn | us-gaap:Liabilities |
| Shareholders' equity | at 2023-06-30 | $8.69bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 37,190 characters.

Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in conjunction with the condensed consolidated financial statements included in "Item 1. Financial Statements" contained herein.

### EXECUTIVE OVERVIEW

### Organization

We are one of the world's largest providers of products and services to the energy industry. We help our customers maximize value throughout the lifecycle of the reservoir - from locating hydrocarbons and managing geological data, to drilling and formation evaluation, well construction and completion, and optimizing production throughout the life of the asset. Activity levels within our operations are significantly impacted by spending on upstream exploration, development, and production programs by major, national, and independent oil and natural gas companies. We report our results under two segments, the Completion and Production segment and the Drilling and Evaluation segment.

- Completion and Production delivers cementing, stimulation, intervention, pressure control, artificial lift, specialty chemicals, and completion products and services. The segment consists of Production Enhancement, Cementing, Completion Tools, Production Solutions, Artificial Lift, Multi-Chem, and Pipeline and Process Services.
- Drilling and Evaluation provides field and reservoir modeling, drilling, fluids, evaluation, and precise wellbore placement solutions that enable customers to model, measure, drill, and optimize their well construction activities. The segment consists of Baroid, Sperry Drilling, Wireline and Perforating, Drill Bits and Services, Landmark Software and Services, Testing and Subsea, and Project Management.

The business operations of our segments are organized around four primary geographic regions: North America, Latin America, Europe/Africa/CIS, and Middle East/Asia. We have manufacturing operations in various locations, the most significant of which are in the United States, Malaysia, Singapore, and the United Kingdom. With approximately 47,000 employees, we operate in more than 70 countries around the world, and our corporate headquarters is in Houston, Texas.

Our value proposition is to collaborate and engineer solutions to maximize asset value for our customers. We work to achieve strong cash flows and returns for our shareholders by delivering technology and services that improve efficiency, increase recovery, and maximize production for our customers. Our strategic priorities are to:

- *International*: Allocate our capital to the highest return opportunities and increase our international growth in both onshore and offshore markets.
- *North America*: Drive better pricing, increased efficiency, and higher margin through utilization of our automated and intelligent fracturing technologies and increased market penetration of our premium low-emissions electronic fracturing equipment.
- *Digital*: Continue to drive differentiation and efficiencies through the deployment and integration of digital and automation technologies, both internally and for our customers.
- *Capital efficiency*: Maintain our capital expenditures in the range of 5-6% of revenue while focusing on technological advancements and process changes that reduce our manufacturing and maintenance costs and improve how we move equipment and respond to market opportunities.
- *Sustainability and energy mix transition*: Continue to:
- Leverage the increasing number of participants in and scope of Halliburton Labs to gain insight into developing value chains in the energy mix transition;
- Develop and deploy solutions to help oil and gas operators lower their emissions while also using our existing technologies in renewable energy applications;
- Develop technologies and solutions to lower our own emissions; and
- Grow our participation in the entire life cycle of carbon capture and storage, hydrogen, and geothermal projects globally.

The following charts depict the revenue split between our two operating segments and our four primary geographic regions for the quarter ended June 30, 2023.

HAL Q2 2023 FORM 10-Q \| 12

### Market conditions

Commodity price volatility continued during the second quarter of 2023 driven by inflationary pressures, changes to OPEC+ production levels, supply chain shortages, demand uncertainty, recessionary fears, and geopolitical conflicts. On June 4, 2023, Saudi Arabia announced it would reduce July production by 1 million barrels per day. On July 3, 2023, Saudi Arabia announced that reduction would extend through August 2023. During the second quarter of 2023, the West Texas Intermediate (WTI) crude oil price averaged approximately $74 per barrel and the Brent crude oil price averaged approximately $78 per barrel. Both of these prices were well below the average price per barrel for 2022. The average Henry Hub natural gas price during the second quarter was $2.16 per million BTU, which is also well below the average price during 2022. While U.S. land rig counts increased in 2022, there has been a decline in the rig count during the second quarter of 2023. These factors contributed to softness in the market for energy services generally in North America and particularly in gas basins during the second quarter of 2023. The United States Energy Information Administration (EIA)'s July 2023 forecast has Brent crude oil spot price averaging $78 per barrel for the third quarter of 2023 and increasing to approximately $80 per barrel in the fourth quarter of 2023.

Globally, we continue to be impacted by increased supply chain lead times for the supply of select raw materials. We monitor market trends and work to mitigate cost impacts through economies of scale in global procurement, technology modifications, and efficient sourcing practices. Also, while we have been impacted by inflationary cost increases, primarily related to chemicals, cement, and logistics costs, we generally try to pass much of those increases on to our customers and we believe we have effective solutions to minimize the operational impact.

### Financial results

The following graph illustrates our revenue and operating margins for each operating segment for the second quarter of 2022 and 2023.

HAL Q2 2023 FORM 10-Q \| 13

During the second quarter of 2023, we generated total company revenue of $5.8 billion, a 14% increase as compared to the second quarter of 2022. We reported operating income of $1.0 billion during the second quarter of 2023 compared to operating income of $374 million during the second quarter of 2022, which included the effects of $344 million of impairments and other charges related to our decision to market for sale our Russia operations. Our Completion and Production segment revenue increased 19% in the second quarter of 2023 as compared to the second quarter of 2022, primarily due to increased pressure pumping services in North America land as well as higher completion tool sales and artificial lift activity globally. Our Drilling and Evaluation segment revenue increased 7% in the second quarter of 2023 as compared to the second quarter of 2022, driven primarily by improvements in drilling-related services globally and wireline activity in the Middle East/Asia region. Both segment results were negatively impacted in the second quarter of 2023 when compared to the second quarter of 2022, as a result of the sale of our Russian operations during the third quarter of 2022.

In North America, our revenue increased 11% in the second quarter of 2023, as compared to the second quarter of 2022, driven by improved stimulation activity and pricing gains and higher artificial lift activity in North America land, in addition to increased drilling-related services across the region. The North America average rig count increased 1% in the second quarter of 2023 as compared to the second quarter of 2022.

Internationally, revenue increased 17% in the second quarter of 2023, as compared to the second quarter of 2022, primarily driven by improved drilling-related services, higher completion tool sales, and increased pressure pumping services across the regions, partially offset by the sale of our Russian operations during the third quarter of 2022. The international average rig count increased 18% in the second quarter of 2023 as compared to the second quarter of 2022.

### Sustainability and Energy Advancement

We continue to pursue our strategic initiatives around advancing cleaner, affordable energy, and supporting sustainable energy advancements using innovation and technology to decarbonize both our and our customers' operations. This includes the continued development and deployment of solutions designed to help oil and gas operators lower their environmental impact while also using our existing technologies in sustainable energy applications.

Halliburton Labs, our clean energy accelerator, continues to provide us insight into developing value chains in the energy mix transition and opportunities to assist early stage companies to enable them to achieve scaling milestones. Halliburton Labs has 25 participants and alumni as of the end of the second quarter of 2023.

Our operating performance and liquidity are described in more detail in "Liquidity and Capital Resources" and “Business Environment and Results of Operations.”

HAL Q2 2023 FORM 10-Q \| 14

### LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2023, we had $2.1 billion of cash and equivalents, compared to $2.3 billion of cash and equivalents at December 31, 2022.

### Significant sources and uses of cash during the first six months of 2023

#### Sources of cash:

- Cash flows from operating activities were $1.2 billion. This included a negative impact from the primary components of our working capital (receivables, inventories, and accounts payable) of a net $589 million, primarily associated with increased receivables and inventory.

#### Uses of cash:

- Capital expenditures were $571 million.
- We paid $348 million for the repurchase of 11 million shares of our common stock.
- We paid $289 million of dividends to our shareholders.

### Future sources and uses of cash

We manufacture most of our own equipment, which provides us with some flexibility to increase or decrease our capital expenditures based on market conditions. We currently expect capital spending for 2023 to be within our target of approximately 5-6% of revenue. We believe this level of spend will allow us to invest in our key strategic areas. However, we will continue to maintain capital discipline and monitor the rapidly changing market dynamics, and we may adjust our capital spend accordingly.

While we maintain focus on liquidity and debt reduction, we are also focused on providing cash returns to our shareholders. Our quarterly dividend rate is $0.16 per common share, or approximately $144 million. In January of 2023, our Board of Directors approved a capital return framework with a goal of returning at least 50% of our annual free cash flow to shareholders through dividends and share repurchases and we expect our returns to shareholders will be in line with our capital return framework for 2023.

We may utilize share repurchases as part of our capital return framework. Our Board of Directors has authorized a program to repurchase our common stock from time to time. Repurchases of 8.1 million shares of common stock occurred during the second quarter of 2023 under this program. Approximately $4.5 billion remained authorized for repurchases as of June 30, 2023 and may be used for open market and other share purchases.

During the second quarter, Halliburton kicked off its migration to SAP S4. The total project investment is estimated to cost approximately $250 million over the next two and a half years. This new system will provide important efficiency benefits, cost savings, visibility to our operations, and advanced analytics that will benefit Halliburton and its customers.

### Other factors affecting liquidity

*Financial position in current market.* As of June 30, 2023, we had $2.1 billion of cash and equivalents and $3.5 billion of available committed bank credit under a revolving credit facility with an expiration date of April 27, 2027. We believe we have a manageable debt maturity profile, with approximately $500 million coming due beginning in 2025 through 2027. Furthermore, we have no financial covenants or material adverse change provisions in our bank agreements, and our debt maturities extend over a long period of time. We believe our cash on hand, cash flows generated from operations, and our available credit facility will provide sufficient liquidity to address the challenges and opportunities of the current market and our global cash needs, including capital expenditures, working capital investments, shareholder returns, if any, and contingent liabilities.

*Guarantee agreements.* In the normal course of business, we have agreements with financial institutions under which approximately $2.2 billion of letters of credit, bank guarantees, or surety bonds were outstanding as of June 30, 2023. Some of the outstanding letters of credit have triggering events that would entitle a bank to require cash collateralization; however, none of these triggering events have occurred. As of June 30, 2023, we had no material off-balance sheet liabilities and were not required to make any material cash distributions to our unconsolidated subsidiaries.

HAL Q2 2023 FORM 10-Q \| 15

*Credit ratings.* Our credit ratings with Standard & Poor’s (S&P) remain BBB+ for our long-term debt and A-2 for our short-term debt, with a stable outlook. Our credit ratings with Moody’s Investors Service (Moody's) remain Baa1 for our long-term debt and P-2 for our short-term debt, with a stable outlook.

*Customer receivables*. In line with industry practice, we bill our customers for our services in arrears and are, therefore, subject to our customers delaying or failing to pay our invoices. In weak economic environments, we may experience increased delays and failures to pay our invoices due to, among other reasons, a reduction in our customers’ cash flow from operations and their access to the credit markets, as well as unsettled political conditions.

Receivables from our primary customer in Mexico accounted for approximately 9% of our total receivables as of June 30, 2023. While we have experienced payment delays from our primary customer in Mexico, the amounts are not in dispute and we have not historically had, and we do not expect, any material write-offs due to collectability of receivables from this customer.

HAL Q2 2023 FORM 10-Q \| 16

Table of Contents Part I. Item 2 \| Business Environment and Results of Operations

### BUSINESS ENVIRONMENT AND RESULTS OF OPERATIONS

We operate in more than 70 countries throughout the world to provide a comprehensive range of services and products to the energy industry. Our revenue is generated from the sale of services and products to major, national, and independent oil and natural gas companies worldwide. The industry we serve is highly competitive with many substantial competitors in each segment of our business. During the first six months of 2023, based upon the location of the services provided and products sold, 46% of our consolidated revenue was from the United States, compared to 44% of our consolidated revenue from the United States in the first six months of 2022. No other country accounted for more than 10% of our revenue.

Activity within our business segments is significantly impacted by spending on upstream exploration, development, and production programs by our customers. Also impacting our activity is the status of the global economy, which impacts oil and natural gas consumption.

Some of the more significant determinants of current and future spending levels of our customers are oil and natural gas prices and our customers' expectations about future prices, global oil supply and demand, completions intensity, the world economy, the availability of capital, government regulation, and global stability, which together drive worldwide drilling and completions activity. Additionally, during 2023, we generally expect that many of our customers in North America will continue their strategy of operating within their cash flows and generating returns rather than prioritizing production growth. Lower oil and natural gas prices usually translate into lower exploration and production budgets and lower rig count, while the opposite is usually true for higher oil and natural gas prices. Our financial performance is therefore significantly affected by oil and natural gas prices and worldwide rig activity, which are summarized in the tables below.

The table below shows the average prices for WTI crude oil, United Kingdom Brent crude oil, and Henry Hub natural gas.

Three Months Ended June 30 Year Ended December 31

2023 2022 2022

Oil price - WTI (1) $73.76 $108.72 $96.04

Oil price - Brent (1) 78.32 113.54 100.78

Natural gas price - Henry Hub (2) 2.16 7.48 6.45

(1) Oil price measured in dollars per barrel.

(2) Natural gas price measured in dollars per million British thermal units (Btu), or MMBtu.

The historical average rig counts based on the weekly Baker Hughes rig count data were as follows:

|  | Three Months Ended June 30 2023 | 2022 | Six Months Ended June 30 2023 | 2022 | Year Ended December 31 2022 |
| --- | ---: | ---: | ---: | ---: | ---: |
| U.S. Land | 699 | 698 | 722 | 660 | 708 |
| U.S. Offshore | 20 | 15 | 18 | 15 | 15 |
| Canada | 117 | 113 | 169 | 155 | 175 |
| North America | 836 | 826 | 909 | 830 | 898 |
| International | 959 | 816 | 937 | 819 | 851 |
| Worldwide total | 1,795 | 1,642 | 1,846 | 1,649 | 1,749 |

HAL Q2 2023 FORM 10-Q \| 17

Table of Contents Part I. Item 2 \| Business Environment and Results of Operations

### Business outlook

According to the United States Energy Information Administration (EIA) July 2023 "Short Term Energy Outlook", the Brent spot price is expected to average $78 per barrel for the third quarter of 2023, with an expected full year 2023 average of $79 per barrel, a decline of approximately $22 per barrel, or 22%, as compared to the full year 2022 average. According to the EIA, WTI prices are expected to average $73 per barrel in the third quarter of 2023 and to average $74 per barrel for the full year 2023, resulting in a decrease of approximately $21 per barrel, or 22%, compared to the full year 2022.

The EIA July 2023 “Short Term Energy Outlook” projects Henry Hub natural gas prices to average $2.63 per MMBtu during the third quarter of 2023, and to average $2.62 per MMBtu for the full year 2023, resulting in a decrease of $3.83 per MMBtu, or 59%, compared to the full year 2022.

Per the International Energy Agency (IEA) July 2023 "Oil Market Report", the forecasted global oil demand is set to average 102.1 million barrels per day in 2023, an approximate 2 million barrels per day increase from 2022. The EIA projects crude oil production in the United States will average 12.56 million barrels per day in 2023, an approximate 6% increase from the average 11.89 million barrels per day in 2022.

We continue to expect that oil and gas demand will grow over the next several years, despite the actions taken by central banks in an attempt to control inflation by increasing interest rates and the resulting concern about a potential economic slowdown. We believe the demand will be driven by economic expansion, energy security concerns, and population growth. Oil and gas continues to demonstrate its critical role in the global economy and meeting long term demand requires sustained capital investment. We believe many years of increased investment in existing and new sources of production is the only solution to increase supply and that production will be needed from conventional and unconventional, deep-water and shallow-water, and short and long-cycle projects.

Despite the softness in the market for energy services in North America during the first six months of the year as discussed above, we expect upstream spending to grow in 2023, with international and North America upstream spending growth in the high teens and around 10%, respectively, compared to 2022. We anticipate overall upstream market activity in North America in the second half of 2023 to be slightly lower than in the first half. Our international business is growing at a strong pace across all regions, and we expect our differentiated technology offerings, selective contract wins, and our unique collaborative approach to working with our customers, to deliver profitable growth.

HAL Q2 2023 FORM 10-Q \| 18

Table of Contents Part I. Item 2 \| Results of Operations in 2023 Compared to 2022 (QTD)

### RESULTS OF OPERATIONS IN 2023 COMPARED TO 2022

### Three Months Ended June 30, 2023 Compared with Three Months Ended June 30, 2022

| Millions of dollars Revenue: By operating segment: | Three Months Ended June 30 2023 | 2022 | Favorable (Unfavorable) | Percentage Change |
| --- | ---: | ---: | ---: | ---: |
| Completion and Production | $3,476 | $2,911 | $565 | 19% |
| Drilling and Evaluation | 2,322 | 2,163 | 159 | 7 |
| Total revenue | $5,798 | $5,074 | $724 | 14% |
| By geographic region: |  |  |  |  |
| North America | $2,696 | $2,426 | $270 | 11% |
| Latin America | 994 | 758 | 236 | 31 |
| Europe/Africa/CIS | 698 | 718 | (20) | (3) |
| Middle East/Asia | 1,410 | 1,172 | 238 | 20 |
| Total revenue | $5,798 | $5,074 | $724 | 14% |
| **Operating income:** |  |  |  |  |
| By operating segment: |  |  |  |  |
| Completion and Production | $707 | $499 | $208 | 42% |
| Drilling and Evaluation | 376 | 286 | 90 | 31 |
| Total operations | 1,083 | 785 | 298 | 38 |
| Corporate and other | (59) | (67) | 8 | 12% |
| SAP S4 upgrade expense | (13) | — | (13) | n/m |
| Impairments and other charges | — | (344) | 344 | n/m |
| Total operating income | $1,011 | $374 | $637 | 170% |
| n/m = not meaningful |  |  |  |  |

### Operating Segments

#### Completion and Production

Completion and Production revenue in the second quarter of 2023 was $3.5 billion, an increase of $565 million, or 19%, when compared to the second quarter of 2022. Operating income in the second quarter of 2023 was $707 million, an increase of $208 million, or 42%, when compared to the second quarter of 2022. These results were driven by increased pressure pumping services and artificial lift activity in North America land along with higher completion sales globally. These improvements were partially offset by reduced well intervention services in North America land.

#### Drilling and Evaluation

Drilling and Evaluation revenue in the second quarter of 2023 was $2.3 billion, an increase of $159 million, or 7%, when compared to the second quarter of 2022. Operating income in the second quarter of 2023 was $376 million, an increase of $90 million, or 31%, when compared to the second quarter of 2022. These results were due to an increase in drilling-related services globally and higher wireline activity in the Middle East. Partially offsetting these improvements was lower project management activity in Saudi Arabia, Colombia, and Ecuador.

Both segments' results were negatively impacted in the second quarter of 2023 when compared to the second quarter of 2022, as a result of the sale of our Russian operations during the third quarter of 2022.

HAL Q2 2023 FORM 10-Q \| 19

Table of Contents Part I. Item 2 \| Results of Operations in 2023 Compared to 2022 (QTD)

### Geographic Regions

#### North America

North America revenue in the second quarter of 2023 was $2.7 billion, an 11% increase compared to the second quarter of 2022. This increase was primarily driven by improved stimulation activity and pricing gains, mainly in North America land, higher completion tool sales and drilling-related services across the region, improved artificial lift and cementing activity, and increased well intervention services in the U.S. Gulf of Mexico. Partially offsetting these improvements were decreased well intervention services in North America land and decreased pressure pumping services in Canada.

#### Latin America

Latin America revenue in the second quarter of 2023 was $994 million, a 31% increase compared to the second quarter of 2022, due to increased well construction services, project management activity, and software sales in Mexico, along with higher completion tool sales, testing services, and wireline activity across the region, and improved pressure pumping and drilling-related services in Argentina. Partially offsetting these improvements were lower project management activity and drilling-related services in Colombia and Ecuador.

#### Europe/Africa/CIS

Europe/Africa/CIS revenue in the second quarter of 2023 was $698 million, a 3% decrease compared to the second quarter of 2022. This decline was primarily driven by the sale of our Russian operations during the third quarter of 2022, in addition to reduced activity across multiple product service lines in Norway. These decreases were partially offset by improved well construction services in Africa, and higher completion tool sales, pressure pumping services, and fluids services across the region.

#### Middle East/Asia

Middle East/Asia revenue in the second quarter of 2023 was $1.4 billion, a 20% increase compared to the second quarter of 2022, resulting from improved drilling-related services, higher completion tool sales, increased stimulation activity, and increased wireline services across the region, in addition to improved project management activity in Iraq and Kuwait. Partially offsetting these improvements were lower project management activity in Saudi Arabia and reduced well construction services in Australia.

### Other Operating Items

*SAP S4 Upgrade Expense.* During the second quarter of 2023, Halliburton kicked off its migration to SAP S4 which will take place over the next two and a half years. This new system will provide important efficiency benefits, cost savings, enhanced visibility to our operations, and advanced analytics that will benefit Halliburton and its customers. We expect this upgrade to payback in three years after an investment of $250 million. For the second quarter of 2023, we recognized expense of $13 million on the migration.

*Impairments and other charges.* During the three months ended June 30, 2022, we recognized a pre-tax charge of $344 million, related to the write down of all our net assets in Russia as a result of our decision to market our Russia operations for sale due to the additional sanctions enacted against Russia arising from the conflict in Ukraine.

### Nonoperating Items

*Argentina Blue Chip Swap*. The Central Bank of Argentina maintains currency controls that limit our ability to access U.S. dollars in Argentina and remit cash from our Argentine operations. The execution of certain trades known as Blue Chip Swaps, effectively results in a parallel U.S. dollar exchange rate. This parallel rate, which cannot be used as the basis to remeasure our net monetary assets in U.S. dollars under U.S. GAAP, was 101% higher than Argentina's official exchange rate at June 30, 2023. During the three months ended June 30, 2023, we entered into Blue Chip Swap transactions, which resulted in a $104 million pre-tax loss on investment.

*Effective tax rate*. During the three months ended June 30, 2023, we recorded a total income tax provision of $167 million on a pre-tax income of $783 million, resulting in an effective tax rate of 21.3% for the quarter. During the three months ended June 30, 2022, we recorded a total income tax provision of $114 million on a pre-tax income of $231 million, resulting in an effective tax rate of 49.3% for the quarter. The effective tax rate for the three months ended June 30, 2023 was lower than the three months ended June 30, 2022 primarily due to the impact on our effective tax rate for the second quarter of 2022 of our decision to sell our Russian operations and a corresponding increase in the valuation allowance on foreign tax credits.

HAL Q2 2023 FORM 10-Q \| 20

Table of Contents Part I. Item 2 \| Results of Operations in 2023 Compared to 2022 (YTD)

### Six Months Ended June 30, 2023 Compared with Six Months Ended June 30, 2022

| Millions of dollars Revenue: By operating segment: | Six Months Ended June 30 2023 | 2022 | Favorable (Unfavorable) | Percentage Change |
| --- | ---: | ---: | ---: | ---: |
| Completion and Production | $6,885 | $5,264 | $1,621 | 31% |
| Drilling and Evaluation | 4,590 | 4,094 | 496 | 12 |
| Total revenue | $11,475 | $9,358 | $2,117 | 23% |
| By geographic region: |  |  |  |  |
| North America | $5,461 | $4,351 | $1,110 | 26% |
| Latin America | 1,909 | 1,411 | 498 | 35 |
| Europe/Africa/CIS | 1,360 | 1,395 | (35) | (3) |
| Middle East/Asia | 2,745 | 2,201 | 544 | 25 |
| Total revenue | $11,475 | $9,358 | $2,117 | 23% |
| **Operating income:** |  |  |  |  |
| By operating segment: |  |  |  |  |
| Completion and Production | $1,373 | $795 | $578 | 73% |
| Drilling and Evaluation | 745 | 580 | 165 | 28 |
| Total operations | $2,118 | $1,375 | $743 | 54 |
| Corporate and other | (117) | (124) | 7 | 6% |
| SAP S4 upgrade expense | (13) | — | (13) | n/m |
| Impairments and other charges | — | (366) | 366 | n/m |
| Total operating income | $1,988 | $885 | $1,103 | 125% |
| n/m = not meaningful |  |  |  |  |

### Operating Segments

#### Completion and Production

Completion and Production revenue in the first six months of 2023 was $6.9 billion, an increase of $1.6 billion, or 31%, compared to the first six months of 2022. Operating income for the segment in the first six months of 2023 was $1.4 billion, an increase of $578 million, or 73%, compared to the first six months of 2022. These results were primarily driven by higher utilization and pricing for pressure pumping services in North America land and Mexico and higher completion tool sales in Brazil, U.S. Gulf of Mexico, and Saudi Arabia. Also improving were artificial lift activity in North America land and Kuwait and well intervention services in the U.S. Gulf of Mexico and Saudi Arabia. Partially offsetting these improvements were lower completion tool sales in Norway.

#### Drilling and Evaluation

Drilling and Evaluation revenue in the first six months of 2023 was $4.6 billion, an increase of $496 million, or 12%, compared to the first six months of 2022. Operating income for the segment in the first six months of 2023 was $745 million, an increase of $165 million, or 28%, compared to the first six months of 2022. These results were primarily impacted by increased drilling-related services in Middle East/Asia and Mexico, higher wireline activity globally, and increased project management activity in Mexico. Increased fluid services in North America land and the U.S. Gulf of Mexico also contributed to the results. Partially offsetting these improvements was decreased project management activity in Saudi Arabia, Colombia, and Ecuador.

Both segment results were negatively impacted in the first six months of 2023 when compared to the first six months of 2022, as a result of the sale of our Russian operations during the third quarter of 2022.

HAL Q2 2023 FORM 10-Q \| 21

Table of Contents Part I. Item 2 \| Results of Operations in 2023 Compared to 2022 (YTD)

### Geographic Regions

#### North America

North America revenue in the first six months of 2023 was $5.5 billion, a 26% increase compared to the first six months of 2022, largely driven by higher activity and pricing primarily associated with pressure pumping and wireline activity in North America land and the U.S. Gulf of Mexico and fluid services across the region. Improved artificial lift activity in North America land along with higher completion tool sales in the U.S. Gulf of Mexico also contributed to this increase. Partially offsetting these improvements was lower well intervention services in North America land.

#### Latin America

Latin America revenue in the first six months of 2023 was $1.9 billion, a 35% increase compared to the first six months of 2022, resulting primarily from improvements across multiple product service lines in Mexico, Brazil, and Argentina along with higher completion tool sales in the Caribbean. Partially offsetting these improvements was lower project management activity in Colombia and Ecuador.

#### Europe/Africa/CIS

Europe/Africa/CIS revenue in the first six months of 2023 was $1.4 billion, a 3% decrease compared to the first six months of 2022. This decline was primarily driven by the sale of our Russian operations during the third quarter of 2022, in addition to lower activity across multiple product service lines in Norway and reduced drilling-related services in Azerbaijan. These declines were partially offset by increases in multiple product service lines in Angola, West Africa, and the United Kingdom combined with increased pressure pumping in Algeria and Egypt.

#### Middle East/Asia

Middle East/Asia revenue in the first six months of 2023 was $2.7 billion, a 25% increase compared to the first six months of 2022, resulting primarily from increased activity across multiple product service lines in Saudi Arabia, United Arab Emirates, Qatar, Indonesia, and Iraq, higher drilling services in Thailand, and improved project management activity in Kuwait. Partially offsetting these improvements was lower drilling and wireline activity in Australia.

### Other Operating Items

*SAP S4 Upgrade Expense.* As noted above, Halliburton kicked off its migration to SAP S4 which will take place over the next two and a half years. During the six months ended June 30, 2023, we recognized expense of $13 million on the migration.

*Impairments and other charges.* During the six months ended June 30, 2022, we recognized a pre-tax charge of $366 million, primarily related to a $344 million write down of all our net assets in Russia as a result of our decision in the second quarter of 2022 to market our Russia operations for sale due to the additional sanctions enacted against Russia arising from the conflict in Ukraine. In the first quarter of 2022, we recognized a pre-tax charge of $22 million to write down all of our assets in Ukraine, including $16 million in receivables, due to the ongoing conflict between Russia and Ukraine.

### Nonoperating Items

*Argentina Blue Chip Swap*. As noted above, during the six months ended June 30, 2023, we entered into Blue Chip Swap transactions, which resulted in a $104 million pre-tax loss on investment during the six-month period.

*Loss on early extinguishment of debt*. During the six months ended June 30, 2022, we recorded a $42 million loss on the early redemption of $600 million aggregate principal amount of our 3.8% senior notes, which included premiums and unamortized expenses.

*Effective tax rate*. During the six months ended June 30, 2023, we recorded a total income tax provision of $341 million on a pre-tax income of $1.6 billion, resulting in an effective tax rate of 21.1%. During the six months ended June 30, 2022, we recorded a total income tax provision of $182 million on pre-tax income of $563 million, resulting in an effective tax rate of 32.2%. The effective tax rate for the six months ended June 30, 2023 was lower than the six months ended June 30, 2022 primarily due to the impact on our effective tax rate for the first six months of 2022 of our decision to sell our Russian operations and a corresponding increase in the valuation allowance on foreign tax credits.

HAL Q2 2023 FORM 10-Q \| 22

### FORWARD-LOOKING INFORMATION

The Private Securities Litigation Reform Act of 1995 provides safe harbor provisions for forward-looking information. Forward-looking information is based on projections and estimates, not historical information. Some statements in this Form 10-Q are forward-looking and use words like “may,” “may not,” “believe,” “do not believe,” “plan,” “estimate,” “intend,” “expect,” “do not expect,” “anticipate,” “do not anticipate,” “should,” “likely,” and other expressions. We may also provide oral or written forward-looking information in our statements and other materials we release to the public. Forward-looking information involves risk and uncertainties and reflects our best judgment based on current information. Our results of operations can be affected by inaccurate assumptions we make or by known or unknown risks and uncertainties. In addition, other factors may affect the accuracy of our forward-looking information. As a result, no forward-looking information can be guaranteed. Actual events and the results of our operations may vary materially.

We do not assume any responsibility to publicly update any of our forward-looking statements regardless of whether factors change as a result of new information, future events, or for any other reason. You should review any additional disclosures we make in our press releases and Forms 10-K, 10-Q, and 8-K filed with or furnished to the SEC. We also suggest that you listen to our quarterly earnings release conference calls with financial analysts.

## Market risk

As filed, 269 characters.

For quantitative and qualitative disclosures about market risk, see Part II, Item 7(a), “Quantitative and Qualitative Disclosures About Market Risk,” in our 2022 Annual Report on Form 10-K. Our exposure to market risk has not changed materially since December 31, 2022.

## Controls and procedures

As filed, 1,457 characters.

In accordance with the Securities Exchange Act of 1934 Rules 13a-15 and 15d-15, we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2023 to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Our disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There has been no change in our internal control over financial reporting that occurred during the quarter ended June 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

HAL Q2 2023 FORM 10-Q \| 23

Filed Jul 26, 2023.
Source: SEC EDGAR, the filing index for accession 0000045012-23-000046. Last ingested by Listed: Nov 2, 2026, 13:24 ET. No prices; not investment advice.