HAL - Earnings call transcript Q3 2018

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Operator

Good day ladies and gentlemen and welcome to the Halliburton Third Quarter 2018 Earnings Call. At this time all participants are in a listen-only-mode. Later we will conduct a question and answer session and instructions will be given at that time. [Operator instructions] As a reminder this conference call may be recorded. I’d now like to turn the conference now over to Lance Loeffler.

begin. may You

Lance Loeffler

welcome Call. and Halliburton Quarter Third Good to Conference XXXX morning, the

As webcast days. is will call a today’s reminder, being on website be Halliburton’s and for seven available replay a

President Joining morning CFO. me and are Miller, this Chris and Jeff Weber, CEO

on today remarks, our to one our undertake forward-looking include Form for more you forward-looking materially forward-looking XX, reports from queue. during actual future Form results comments time for views and Commission uncertainties statements. yourself statements Exchange statements involve in our are Halliburton’s to we These please to June XX-K who matters period, other reason. limit for be one Some and year allow publicly risks Halliburton’s filings. the and discussed order XX, After These that the our any Q&A about ask no ended in any may may current Form of X-K, XXXX, recent reflecting that events. prepared the the We revise could in follow-up risks related ended and cause Securities quarter for question XXXX, differ obligation or December others update XX-Q to

over call I’ll turn Jeff. Now, the to

Jeff Miller

Thank you, morning, Lance, and good everyone.

pricing pumping bottlenecks. it pressure out, and off-take the activity We industry efficient in in budget didn’t customers limitations quarter third was North and played responded it in equipment for as the As This America. we use growth see challenging a the capacity impacted negatively expect to services of the our quarter. typical

for results overall am quarter. As pleased said, I our third financial with the

of operations challenges the in continue. performance recovery optimized of face team our America market international North and in our term Our short the

$XXX approximately $X.X largely flow, basis. into the headlines. quarter $XXX a some $X.X operating Total XXXX, generated million to of year-to-date second North nearly a operating of billion X% due was of with XXX% income over cash the converted softening operating was Let me flat third compared decrease the the quarter-over-quarter, cover to quarter We generating while essentially income revenue company billion million a American market. on during key

the returns quarter. this to in highest the continue We deliver industry

pleased I’m steady of business, a with which Now our is signs recovery. showing international

increased X% every Our in international international region. with quarter-over-quarter growth revenue

a North the America we softness, margins. our and of revenue market the on market sequentially; well us we relatively as long expected, This market, improve. As flat to declined returns. I still while as shareholder believe And term finally, am continue data. our we we positions outperformed with market the we result the believe market available to pleased flight based on the but completions dynamics overall Relative highest quality demonstrates performance, activity related remained customer’s have delivering focus our

The repurchases shareholders for share and The investment increased and the outlook see the rig the economic focal by been million of chemicals growth. During Despite has continued projected returned it which current base in is number recovery temporary our East unlocking $XXX under incentivize Simply address and significant it the strong side spare point prices sets Temporary The for Halliburton. final commodity combination decisions the near sources put, for affecting over Middle issues and quarter, have limitation. and Russia to and via investment capacity more in non-U.S. term oil non-OPEC, we dividends. been prices. assets, in are their of strongest industry reflected a has is challenges, supply their minute macro gas the the will the I growth, third global to fact trends. good affordable we years. the more in equation. of thing for current the this stage start demand positive supply and our a count prices four the America commodity clarity today during limitations regarding and of in of the discussion the North fuel announced the customer petro mostly supply that’s customers of today’s We production, in

operations, third to customers for North services active to to more retain to to to exhausting turning demonstrate Halliburton and investing Halliburton’s services in exception. to budgets people, our less technology. completion was manage term market to America expected. maintenance customers capacity completion service best perform to off-take the and near impacting activity during softened who quarter, our response operators, continue not was retain cost, pricing combination demand for move The efficiency in the Now additional our and and than equipment their an company the led constraints

Looking feedback exhaustion and our from impact seasonal take We that customers extended ahead budget the think predictably to will operators indicates fourth breaks. issues will quarter, activity. current

thanksgiving. expect even Some we of weeks year. starting the decrease before activity six levels to last in Therefore customer the

We will in do what situation. a would rational business this do

so, short do when term take we XXXX. We sense to better makes will ourselves keep a the our to in steps business it equipment work for and position will to utilized

measures America the second North to manage through You understand challenges than management in out team. I dislocation America call market. know the arsenal you brief that our temporary, anyone. these North believe available better the as came we We me of know are were market I’ll We out and to the first and me draw headwinds on this quarter. these of the to

Moving free provide XXXX. in completions activity positions operator’s to down XXXX. will stronger decks power. ready creating hedge should and improving higher-priced on fourth worked be are, from quarter, capacity expand. count will substantial budget Off-take additional spending with DUC there backlog flow catalysts cash The The a I’m customer catalysts rebound. for These and reload strong the a about are excited rising

the manifests momentum believe pipelines will capacity Our of be year. get throughout industry Permian Marcellus. in of eager to itself back continued for bottom seeing from creative. this, better organization and inbound come North for quarter We in the work. land. yet conversion processing believe and it. customer feeling business fourth This will I America and responding basin I from the the are believe adaptive urgency hear see get the this demand XXXX. I’m customers is of the sets it. the it. quarter to back the demand. to XXXX XXXX up our because our I’m I’m who market I We again as that want XXXX and development hearing I first in feel new announced in already busy that They’re operators reassurance.

will improve our of first ramp recovery. slope back be price catalysts for activity Once the up the benefit I shifted Increased years. I of out in full every us the and when allows of budgets obviously resource, different world to the basin. are customer continue they a reset resource There to higher restart Our number materialize, from and America that meaning all technology urgency demand the the supply North to in in the that quality we’re are will described programs. them moving at pricing. increase the play of crews and that pricing. in be parts will dynamics services the and leads believe a temporary great face five just we to end a signs challenges last completions help their of higher and The working range, will price activity

addressing come America to resilient operators. and with expect Our we’ve head-on are challenges determination creative. customers from the They and North are these grit

the our DJ for throughout stay next Similarly per have Northeast with the around winter. recently in lower that Permian been DCP out to do completions customers In there walk effort of prices pipeline Northeast, will are XXXX we additional allowing the our and into differentials, the customers targets. has primarily the their MCF that waiting you off-take more they’re me down premium So already pipeline while to met arriving basin, covered. customers XXXX at our again. in now to of to economics, capacity, the will with They new coming increase down various The are the have operators the in help production the year. pipelines basins to more them surpassed DJ story improve budgets facilities. activity U.S. expanding well forecasted $X priced and their have gas in slowed differentials believe starting ongoing Northeast processing their capacity and into spur action online significantly and the and slowed moment activity are move gas markets let Natural Pipelines

the in every dynamics external The early on great responded activity In completing in have it grow are that elsewhere, don’t there continue and around have take remain with have in positioned take to in factor; firm constraints, market of there Our to to appetite as down wells for an and you obligations year, away be take are wherever same as much we the highly preparing watching come cutting start works focus important staying our the differently best the beneficiary. America Eagle basins will Ford, we’re and XXXX some as other meantime, a have improvement in year, may the note. within be the to Halliburton then for customers unconventional is Others other been, DUC expected Commodity we DUC WTI deferring of operators basins and deflated don’t basin customer highest and however, our higher options mid-January, result still cash all capacity it’s in if have budgets. In are basins shifted XXXX, Halliburton throughout capacity, U.S. afresh flow points have ever start In operators they data a who higher. those will advantage efficient the Rockies, who and the were activity North away and pricing count the these their options them. do. away back understand the are $XX and will first. completions. the Midcon take been customers in production are the working a seeing

budgets. in manage reduce increases for our year, to where and Their entering but the for know plans substantial conditions, roll-off, combination to not will are commodity how make at for what sense depend levels. customers a adjusting us or purchase, in what above infrastructure business and see market current dramatically XXXX prices Our their bode structure end greatly slowdown costs well your positive for it is to outcomes we will budgeting the temporary keep cost are the are on of all would hedges when XXXX for of available the activity season. We does hedges of spending

for improvement to our broadly has Halliburton this fields. first, a two and active that pleased but increased and strong our business offshore. international recovery We of remain. starts our think improve for onshore collaborate with Modest profitability cycle. favor activity their production North manifests pressures it and growth today and recovery. where competitive health That North itself project of customers technology foundation fleet, our Nevertheless, distinct in through believe We to business as the that. it In This with in shorter returns with I of I’m continues, in risk lower are projects. the in improves. Middle oriented outperformance development East attributes; America in international mature focused, the the advanced land our I is international markets to both as form economics efficiency. in are has using strategies, and position Sea time environment, today’s this customers cycle Internationally, the The future market success operating markets see and the improve early stages the attested

and government these recovery for exploration. believe companies and partners to mandates see national mature have internal hard them attributes for will to Halliburton’s develop consumption in favor. work lead; take of revitalize unconventional I both base, many production resources oil this Second, to your search play offshore grow the asset fund of

technologies We work approach to collaboration our value in companies and are mature production our traditionally every to completion for DNA. a in that to key fields tackling various National for is challenges, collaborate to day strong We’re collaborative customers. engineer development. solutions their and asset oil to look maximize and go

over XX international is had XXXX was presence currently a an Our we We’ve shareholders three since more business even countries. it international operate years Halliburton ago. today and than valuable to in asset

last made our investments international Arabia, product various in line service significant Singapore During to is technology The we’ve six footprint in our Brazil. have markets this the opening expanding demonstrated and portfolio it. Saudi cycle, international the competitor the believe, eight of in and footprint and and our largest capacity internationally advantage India outgrowing last recovery increasing technology in right geographies, manufacturing footprint, by underway the right We quarters. in including for of we take centers our we

the both, to to business. supply market. right that remain and Importantly, for is poised international leading the market. better in ever positioned America, Halliburton for the returns than global we market commodity the returns and business, has plan international I’m better and North the leader deliver strategy, confident Halliburton outgrow balance make this constructed. are share demand a services in in returns and is also for The not in of the We is recovery. I it’s compete technology believe to which We XXXX. been outlook

call provide shareholders. few Then our to Chris? we now let returns a the deliver results. more to market So how in financial me Chris turn I’ll differentiate ourselves to the our for details positioned on discuss strategically are to over return and

Chris Weber

for a quarter Thanks representing sequential quarter $X.X a the of revenue quarter the which Total third relatively XXXX. quarter X% with $XXX income summary results was billion going start to Total second Jeff. decline. to million, the our was I’m was of operating Company flat. for compared

by results. completion well intervention lower division, pumping X%. flat, primarily due Operating In and sales offset income U.S. in production business, tool pressure was while to primarily our Hemisphere. incompletion was services operating expense pressure our Moving the in business. our decreased revenue higher due to to our increased income lower the flat, and Revenue division maintenance down pumping U.S. pricing relatively pricing and in was Eastern

and drilling North activity As our expense decreased by reduced the revenue America, incremental we drilling previously was discussed, Latin maintenance by America, United In United America chemicals activity lift to X%, services service increased product decreased sector. land in artificial expected the services declines America flat partially our income the in and activity. lower North offset States due pricing in Latin revenue States sector Mexico division, lines in was revenue fluids These driven while of and in increased land In primarily production were drilling increased partially from activity by for by in increases Argentina anticipation evaluation stimulation relatively decrease primarily particularly operating by higher offset in partially primarily resulting demand services Ecuador. X% also region, drilling X%. America. XXXX and in as Mexico. in were and stimulation results maintenance related by drilling services Brazil grew the related in fluids offset performed and throughout sales software These North

expense In sales and resulting Middle services to in revenue Africa, up the partially well to stimulation the CIS the the X% coupled North cost in due quarter, throughout completion to lower the higher pipeline implementation region, offset by second our Asia primarily revenue region, compared and Turning quarter, $X increased services and completion East Europe, by pricing driven increased intervention third across services In million primarily $XX savings other the of increased increased Sea. projects. tool Middle million with sales largely from the corporate region, totaled the tool East. X%

the same was primarily quarter. million. fourth the expect certain million approximately we driven from expense strong to $XXX quarter other second expense other by quarter, to increase quarter. corporate in have approximately the limited Net be fourth million the to $XX emerging million in quarter, some the remain of expense we for we the that of is of losses The the foreign devaluation it reported exchange expect For our ability which and were $XX to due the hedge. up and market interest We dollar U.S. for and currencies $XX

is million we a quarter, other good fourth expense. think $XX the for For estimate

came was Our lower anticipated effective in tax to third discrete tax which at for due than the quarter rate approximately benefits. XX%,

and we between fourth tax XX% quarter to ahead, Looking effective XX%. rate our expect range

during of approximately guidance the billion. we flow, $X.X full-year were our billion. Capital ended quarter generated cash and balance quarter cash this total at $XXX operations quarter. $XXX Turning from unchanged a with to expenditures during XXXX million, remains approximately million CapEx the We cash approximately of $X

excess discuss Before I retirement cash for guidance, focused capital view of cash. and fourth debt our Halliburton uses our we to to like turn which quarter take else growth. three want everything to We Return I wind. the at had allocation, to a minute shareholders, through returns

shares. $XXX we in of buying we million dividend cash shareholders, pay quarter return a during repurchases Regarding and back the to share solid initiated

consider Going continue share have cash. when we will forward, we repurchases excess to

$XXX Regarding August. in repaid that over two quarter, the have our debt now in we is a paid that payment debt $X this note complete, million years, great which retirement, we accomplishment. last this matured billion With

discussed million repaying decided We $XXX our this have previously we maturity; XXXX that have however, to do year. not

opportunities As cash. we evaluate including for current we opportunities, using potential are more that attractive there repurchases, this share believe

accretive great Halliburton and making the increases our investment pursue growth organic it so. continue in a will both returns, has to industry we business we of the do on that decisions to generate of be growth, and track growth. company value value M&A to opportunities, stepped smart or plan continue Investing leading Regarding record out

Now, turning fourth for the the to quarter. guidance

weather, year-end less continue utilization In mentioned fourth will we As of quarter earlier, as currently holidays, America in combination low to division, our double-digit we the primarily out. typical activity for North our quarter, see operations sales make pressure. be efficient where percentage budget we the to a our down equipment, prepare year-end we the primarily to this slightly fourth the is our a This forecasting a is results division, performing in busy level fourth sales. due of continued decrease constraints by typical, and In market, will and we but our to maintenance D&E mean pumping challenge, expect expect incremental to expect C&P due Jeff the lower results a pricing the Also, it customers land pressure playing improve quarter. to how for XXXX. in

the in to I be will the to share per of the result, turn $X.XX in $X.XX. back quarter now And a that, Jeff. expect call over fourth earnings As range with we to

Jeff Miller

Chris. Thanks

be it, shaping the to being The as for tell not this cycle can marathon, is mentally a see you run. key up running is prepared I a marathon long personal to physically and successfully from a experience sprint. I As

Now doing cycle. Halliburton today I’d talked a be like to is technology. lot to you this ready sustained I what highlight to for about

why We North me expand win gain portfolio and share, remind it’s important. you competitive both Let and create our technology America. market internationally in advantage to grow scale,

It the Steerable sophisticated algorithms, technologies In in internationally. with create drive returns. with tool deliver drilling in basins new multiple investing technology high-speed we believe most and that the been deliberately intelligent advanced iCruise the and launched three we will Rotary are specifications division, as as growth, We customers highest well things; capabilities mechanical meaningful the sensors of and recently Tools smart for the differentiation electronics, combines evaluation drilling do our System. It’s U.S. already deployed processors unconventional and three some market. market. on and

simple, excited accurate modular fast Halliburton. and a design well about velocity, mean capabilities maintenance that costs increases for returns repair diagnostics because System, reduces not lot which it’s performance delivers reliable only time, placement self this its and the less are tool and asset but customers, and iCruise maintenance of our it drilling, improves because repeatable the also for takes We

their from much service, well new clearer and operators a more innovation board, ability contracts win from unique haul to and Halliburton. on over the boundaries to precisely occurring EarthStar, current delivers but map markets, depth in momentum in view only and new to of our Sperry ultra-deep industry fluid another of drive per drilling part the offshore We deliver the returns and even for geosteer BOE. logging is Our North these the in to It not This higher of resistivity lowering Sea business North gives production, a XXX to important offerings. several line Sea. twice the markets helping wells unconventional. American plan in than placement reservoir achieve feet grow this other us technology [ph] Drilling North large to helping reservoir center the differentiation well the Adoption cost in product build played this

growth, and investments makes Halliburton returns. differentiation deliver said, I’ve As technology to

our hydraulic and in look in this continue innovate. completions business? market and what the to completions So we Halliburton like does fracturing is leader

for advancement, and creating our Our on working from saving new are for technology us for meaningful and differentiation cost our for customers. operations opportunities competitors teams and constantly

For equipment in reduced surface introduced software. and and our returns Halliburton. drive in they a the allow cost investments last unit, horsepower They IntelliScan strategy. us the between reduced achieve equipment. They They down site. reduction These technologies, investments significant made time several Wellhead We’ve time and per Connection up, rig ExpressSand premium monitoring charge our stages years, a for XX% improve system in us the cut we’ve maintenance capital like half rig our for well have helped efficiency cycle to our ExpressKinect, required velocity have on hour. asset

To and well in more willingness to help efficiency, subsurface customer wealth and intelligent of quest I’m barrels to the the understanding. achieved focused will insight. improve leads see efficiencies next cost the equivalent, pleased growing been which productivity While In industry premium to cost. frac has squeeze technology well refocusing addition increasing barrels of better lowest come this costs forward I lower on end, in for through that placement interest the customers strategy. is our believe better in a fracturing our per system, our and the the service provide implementing from surface we’re out This of to through to our efficiency, on to productivity. customers barrel step pay for better efficiency subsurface number higher oil to the investing

productivity utilizes algorithms unconventional solution During force service, strategy surface. will When fracture on in improves human It leads adjustments inaugural proppant below initial reservoir based and every which AB treating and trial, Prodigi fluid the real-time into commercial the we to on has placement. AB sand frac entire Prodigi to ability Service a customers fracturing AB the the which we well, of multiple thousands Intelligent Prodigi pumping third rock allows consistent Prodigi pressure the across rate deployed stages fine-tune by conditions the without platform. the XXX pump to for our the breakdown of intervention. AB over we to the better launched the a efficiency consistently breakdown feet hydraulically achieve demonstrated and U.S. and Prodigi been recent leads basin basins. and be response to during well our on first it higher stage in across XXXX intelligent If quarter, our customers. for of our element In deployed end

pressure by pumping and Additionally, XX nearly XX is minutes wear XX% maintenance on times by but reduced cuts it's only to our and per This costs. greatly Prodigi dependent not treating design. job productivity lower on also lowers stage. tear means execution, AB equipment Well and affected by job

execution, Our ensures frac the Prodigi globally we Intelligent consistent optimization. for analysis with Halliburton fracture industry-leading AB unconventional designs, well Software the completion portfolio, and assist job addition Fracture acquired conventional We’ve to GOHFER, right execute. which the simulator I'm have us returns to is business Modeling used capabilities and will that to recently of newest this And our Halliburton this family. will production into Halliburton portfolio market. as grow in enhances be investing our acquisition frac said and GOHFER is excited that recovery. I and differentiation in allow mature welcome to earlier, fields This this the a designs share, led

growth the ahead. opportunities this started offering can we’ve I product expanded made in our Our over fields grew We've a the year-over-yea It's into Summit. production capabilities time, that production significant since domain. And we in In and position strides artificial in we’ve markets. delivering still our growth. all revenues experienced chemicals, significant exceptional share the tell lift year mature U.S. group and you expanding key there international been as bought are XX% market

feedback Halliburton a ESP of power to full business this the footprint bear into the market we offering positive bringing intend customer leader. and our global the and grow East is to The Middle to global America. Latin We’re taking and

the the acquisition of in space through second Solutions. remember, into quarter entered As you may chemistry we Athlon the reactive

their and these We in product our expect look and complements our being contribution. chemicals team Halliburton we ongoing aimed to to portfolio first and pressures two significant are this clear why North forward America we and are returns. Multi-Chem challenges. delivering returns-focused are the company. returns. that Everything for expect North growth to markets. across about This profitability American know We in competitive portfolio. industry-leading and and of and the chemistry is The of is we Halliburton capability returns best the in in the international our market investment effective is deliver stages use our manage In our capabilities at most returns I believe the well-positioned rebound drive to This in industry-leading customers in be catalysts is Halliburton excited how what Despite sustained reactive and in the of growth developing up-cycle what acquisition Athlon win us America and early XXXX in future my gives at well-positioned of do Summit compete to North will both internationally Halliburton by cost is great and per a step and I'm market international Athlon manufacture finally, share chemistry and the M&A is markets. recovery. are maximizes enhance additional efforts temporary positioned technology And markets take examples targeted we enhance will through service BOE. to continuously our and is internationally, lowering our summary, line the win make these market and a to advantage returns.

it questions. for open let’s Now, up

Operator

ISI. question Instructions] James [Operator comes Our Evercore West line of from of first

open. now is line Your

James West

Hey, good guys. morning

Jeff Miller

Good morning, James.

James West

with see you obviously, and the growth through agree your driving I expand was Jeff, talk mean, America of for Could since that you year that, but much – as North are. significant we wondering both some I those being curious International. on – XXXX, maybe we to for major if closer, you a you’re bit key catalysts I’m better the you your perhaps customers than see a next catalysts industry on year? could

Jeff Miller

a as ever know Yes. we which they’ve their outlook get of if to look that the Yes. a price look rarity at catalysts off. up budgets to we job same but of as been really the oil are year. get good has is to working done James. higher Those the we customers kind of in The higher adding back the sets we on. in probably and that global a at has clearer commodity time will But our happen, high. as know business, get hedges our hedging we within than budget a worked bit at next budget of Thanks, price, things off, that that year. roll are well historical an or DUCs hedges at put impact resets We XXXX sort look happen, are now the And at for on have that this DUCs, new the

all can are these than and leaves we that on the see again, would and of So certainly view things QX of to better those a back that then is all that momentum catalysts. me build of QX,

driving that’s years see as of similarly in I’m as the I call pretty year. is these they to it far of confidence like it going timing for the happened I lot reinvest underspend the places that last the what requirement three extraordinary, catalysts, happen look the recovery. just think a and they not those happen. to internationally, timing, to The but As next -- try

James West

side, get year, mostly you’re strategy time international a make put be to place starting the for and And it on sure that ago the in to this right portfolio up at going it fair seems contracts. a It like right competitor, the Jeff, me over you your maybe market to statement? pricing. should setup point on perhaps and Is should be that largest and in you. to Got by just was half year follow

Chris Weber

it Well, competitive fairly internationally. stays

that work certainly of in get projects to pricing, we market, I same market, And will But not at those get for little will take at the can think growing than anecdotes bias a think. Those pressure bigger can optimized, are – we time. but contracts competitive. projects very think I of I able kind that a look more the we’ve I have we that probably we through so time I remain off, but demonstrated, worked where When and to the think the will do is bit point returns. but competitive get grow

James West

Jeff. Okay. Got it. Thanks

Operator

line the of from of Scott our Citigroup. Gruber And Thank comes you. next question

now is line open. Your

Scott Gruber

Yes. Good morning.

the XQ? a I just se American Jeff, America Basically, offset if recovery comment, think that that can I’m So, or in the is seasonal want more North just curious is in weakness a abroad on comment we XQ comment? earnings North to global bottom than we’ll that clarify

Chris Weber

around Well, pretty Yes. at next that’s a America; we what think -- we’ve talked timing like a bottom. in maybe than happened look about see importantly efficiency, QX investing rather I’m about and those up there’ll we’re The that The efficiency frame international, always be I XXXX. global recovery of catalysts QX – more it, think we not all I'm North sort still has of looks We the which comment. that it’s subsurface that where it and QX a surface technology excited some of predictable pace fairly in to seasonality to the When I call a things about Internationally, the about year. QX pretty excited see. cycle.

different we bit little But think it continues. recovery, internationally about. a about excited it's North that So America the than the

Scott Gruber

just that gap with the Schlumberger unrelated And closes system, think system the -- new iCruise follow-up the it. on technology and Baker? Rotary Got do then system, you an

Jeff Miller

terrific Yes. this of mean Look, its I about a thought do. in lower both super is terrific Its performance important cost those equally makes it’s view, for us I'm that performance I do. returns doing my technology. and is it would what at excited and it's

was doing. as really it there’ll think to capable got and international a of I like It’s be doing in my I so, America, it And come. North so three more comments everything its in journey we’re what thought we’ve it’s And -- said today. markets; I

Scott Gruber

you. Thank it. Got

Operator

Thank you.

comes line the Meakim JPMorgan. next Sean Our of from of question

Your is open. line now

Sean Meakim

good Hey, morning. Thanks.

Jeff Miller

Sean. morning, Good

Sean Meakim

going to getting to be is and for bottom is XQ start me recent key year. the the industry that most in fact I investors here remember to seems folks the this confidence the it �� challenges had many last So think will

read-through we the So to between how interplay confidence what’s frac the give to and gets in And pricing do topline C&P bps. you volumes XXX margin you that off XXXX pricing on track? And characterize back had XQ? just flat

Chris Weber

third in down in mean flat our is pricing know when C&P America the on see a flat, roughly in but is activity really quarter story what we the that sort the you really, biggest third at quarter-on-quarter. about think you typically driver we would when so take to walk, piece. the the relation There’s really land, third activity roughly to sequential quarter, really I’ll look division of I pricing North within specific coming quarter. expectation a

into Moving pullback your going it’s budget be fourth to from our effect. the quarter, more and as exhaustion activity, seasonality see we taking customers,

Jeff Miller

Yes.

the to look XXXX. that less happens happen. been that the but as and things I get happen to the described those timing but in those there’s road – prescriptive the get to ahead work. Obviously on they eager fourth in quarter talked I’ve into better I’ve happen, And we to do QX, customers. market catalyst. to seasonality a of They’re catalysts think I’ve start when that So, on we

example, particularly by get there's next they I companies So that the work. do think with price not where generally to to reset, for more I do mean budgets less And bias back is. year

XXXX. as to in things So those without start being prescriptive happen

Sean Meakim

get Okay. Chris, Fair debt that XXXX. opposed could we to decision-making as from maybe other more into maybe on of the repayment, we kind cash back allocating for around little enough. bit choices stepping granularity as go some the

towards the on? Just curious obviously versus set how the dept-to-cap long-term goals also are you you investor should focused priorities of kind expectation that other on

Chris Weber

strong which being And half will today. sheet XXs. our on We’ve focused times I Maybe we have being balance strong mean on that and that, line underneath sight of doesn’t metrics. this debt-to-cap We’re debt-to-EBITDA balance a our the in towards. two time a debt target perspective sheet. to change talked work take on mid definitely,

continues over two last now there's now just share But cash for now. And we over relation the that the feel that billion years, we including uses it again right we've cash quarter. to opportunities made like XXX million that right just to $X we debt opportunities that take get and time. stronger we when look progress repaying think using into account I that at the of third repurchases for see better in in

Sean Meakim

lot. Okay. Fair enough. Thanks a

Operator

you. Thank

comes of Our of question next Bill the Simmons. line from Herbert

now is line open. Your

Bill Herbert

can Jeff, to which in earliest which you strongest relative be QX, morning. lag will will ones to QX, regard do activity? you terms of basins Good with discuss and think

Jeff Miller

I Eagle budget Ford probably response Yes. suppose. resets. more quickly say, I Bill, all probably would with behave differently

happen Region we’d DJ, as we probably Eagle the -- -- Bakken DJ expect there. think certainly I but that to Northern sort the broadly response weather the or Ford, to. say want piece of most I -- in as will think really of Region, Certainly some as can customers and back and the it -- But Northern be it in in getting actually I is impactful work things up reset that happens. mix,

I the budget that I to this a like a think carry lot be things is reaction had more. on so of and sort do discipline, that year degree, in Bill. feel saw discipline more as reset there’ll effect our QX capital appetite we to

Bill Herbert

Okay.

unfolds want just races who at, that regard having hedging them be QX incremental -- to I’m going of better to are to even you commodity also I the trying with course off waiting to customers trying given over they So, the are they’re get too? bit for reload, a with as do you budget you're XXXX? focused, capacity that telling expect prices, pipeline -- your discussions to to the opportunities, little that Permian to strong I’m lag Or understand,

Jeff Miller

Bill, customer strategy Yes. response every each what different out and their is has own trouble, and to The there.

when I So I’m statements. blanket make careful

consolidation look activity that market, just the kind certainly the out we there. happen of doesn't at back happen you step that’s in do that see of if that to and So, less, kind

pace, and think but I goes they’ll next timing individual the be be decision that customers, into year. will an a reloading clearly So by so different

Bill Herbert

expressed. And digits understood regard double for Chris think, guidance, then your Okay. C&P That's I’m down with I fair. sorry, I reasons you

heard for or up how that the to unfold? D&E flat be in would expect D&E quarter. up in I Would think QX you fourth say you I would margins to

Chris Weber

see be I think sales slight largely year-end Like which from say revenue in software and improvement in by margins both product said, I Landmark we’ll D&E. should should sales or driven I difficult.

Bill Herbert

one that is last which the Which one leads last Okay. from -- me. into

implies XX.X%. of kind that that margin, to the you C&P trough Would the I low-end C&P? about of margin for at the So think be expect

Chris Weber

the land reaching else about North an America from a the talked at want Jeff, but in Don't the quarter do bottom activity fourth in bottom. fourth this a like land on perspective North quarter. think anything we feels America bottom now, Right call point,

Bill Herbert

Okay.

Jeff Miller

bit – a We will work there’s C&P in internationally, mean that there there there Bill, of of occur I North cyclicality Latin different markets. are America, the in other a is quite lot things Sea. do

to now. want right call don't that just So,

Bill Herbert

Thank much. Okay. you very

Operator

you. Thank

Fargo. next Jud Our Wells from comes the line Bailey question of of

line Your open. is now

Jud Bailey

back for people go think of and kind morning. on is, across capacity gained sit Jeff, Good very question there’s industry, we at to question I look as the sitting excess the asking the Thanks. we end been industry as frac have lot of a lot you year one fence, of are efficiency solid.

how in and on back swinging industry will in increase you if -- any kind leverage As XXXX? do comments to Do of improve any regaining get pricing leverage the in about of believe appreciate frac? things on XXXX kind start think activity you I’d we we how think any about pricing

Jeff Miller

more what opposite customer that creep It with see mean is budgets I now Thanks. activity I urgency. providers. expect bit see expect we a sort be right of customer service year opportunities commodity of we'll to early higher prices there's do, to couple saw a things. we're around this for We the We swing starts quite before. Yes. urgency. saw in that pricing I at And leverage When year. the it back to of back don’t with different. seeing a

that I’ve abundant out a working think. it’s and not it's worked the wearing as said many might I is harder than times, at today, as equipment ever one it equipment pace that means it think is

how the about very that time talking the other more but modeling which is going how we’re over around make do that's this being barrels make subsurface, well many time. though – important we time around is quarter, for doing go and really do customers think things I per or more think barrels to ask be second Prodigi of technology to time piece over also and beginning and about I that piece spent I over talk I that want which of don’t

Jud Bailey

like the the the an kind a putting is that expectation referenced is today, is in All the for how Do with not you that the my kind right to I XX% you. goal margins. is the Halliburton initiatives pricing initiatives, mind still timeframe efficiency your you over achievable of on given And thank and industry Okay. you’ve it, past of or follow-up intermediate out? get and in to a feel and playing technology ability term? way but guess, situated see

Jeff Miller

best and of we right the But doesn't we're we're get believe terms the it, big addressing When the Thanks. in back that today. I there? and best long-term. can Yes. investing under this at what on conditions market, service right returns doing And truly market the today I in making we change and the for the in look think now, market Yes. in business step can. the market I

Jud Bailey

Thanks. turn it I’ll back. Okay.

Jeff Miller

Thanks.

Operator

Thank you.

comes question next Our Jim of Credit the Suisse. from line of Wicklund

now is open. line Your

Jim Wicklund

rigs it, sure when are bottom more activity utilization, day that pressure will recover? that be critical peers as we pumping or least spreads starts at the couple already inflection did through noted drilling One margins guys? out of to hearing efficiency. guys. the thing start as where frac of now and or hours morning, your Jud really you guys were to next went we or starts years questions And thing fracking better? this bit happen over And is it think we're happen with about is the Is that and you efficient weekend? of pricing little would I things need pricing can impactful in aren’t going because significant when provide recover a like is the than you talked whether to are maybe most right investors being exact as Good to if the weekday What be and period don't the of And so going seen you we many there a to getting before. a efficiency. we’ve they getting same terms

Jeff Miller

from -- gets demand technology don't of I those an it and of there's and will so. think mean and pumps think of time do, efficiency I I the for we over kind think will equipment I lot of more mean, standpoint, worked what the efficiency productivity things was a what I doing. that earlier is for Well, – harder prevail I and think the around demand think a the will investment that is about lot the is we’re finite a core I the and but piece drive resource. only of core I talking bigger better

be I better lack intelligent we have out So word. to doing as we’re what I look guess, not what do consume think successful, of around will and customers to a our in order more, for continue strategy frac will to less,

Jim Wicklund

where impressive, much more however and go How XXXX, that you’re that you taken does exceptionally point we that’s all you How so wells hydraulically all and state fracturing and from wells. much are and in? how much where Permian IPs Where it, developing, for more can we’re much wring can anyway. efficiency some steady we old talk more engineer about to efficiency, this how at an your out efficient to to we XXX get the we -- we've Where simulation unconventional technologies point? do want manage describe if

Jeff Miller

debate of limits does pull sand, much minutia And harder faster progressively stages, mean, versus Well, of of more I literally mean, amount realistically, there's you pump. I around a to but is to more generally, think to in reach, overall, around B lot lever what like. A the time. level terms efficiency I how the more I long-term. how bigger just longer typically, faster, will start takes looks which of think I about gets longer period equipment complexity When even the working harder, because very of us involves busy And, all the time, think wells be and time, a if it done this making keeps significant, more that increase. over will I much better over move? not necessarily that think over at

more to will see that do progressively important. for so what mean, continue and think component technology that, demand And I the certainly just become I we for I

Jim Wicklund

listened the to my the sand. if in could. talk vertically being one integrated day And We benefits I company of about follow-up, other

You’re integrated being vertically is? of noticeably not. Can you tell us sand not in what the benefit

Jeff Miller

returns we And do with do what it about first lens. and we that’s yes, allocate What I differentiation? to everything at through and think I we what unique respect really pumping is we uniqueness. it do do, When around Well, drive that’s up. And capital sand, can more that unique? we we and and moving look a at look back our do

sand. grain and our best got So work equipment there's much on I see with do sand around of you And partners returns. we best to the for And or plenty that found the we’ve add marketplace great see I is make and technically in don't with that don’t that equipment think sand. us spend capital that that thing either technology us to of we the have always a

Jim Wicklund

the Reset job. Okay. you. good bar. and Thank Good down Thanks guys for guide QX.

Jeff Miller

Thanks.

Operator

Thank you.

from Our comes Barclays. next of David the Anderson of question line

Your line is open. now

David Anderson

Hey, good little to international talk here morning, Jeff. I for want a a pace. of just change

really could some think nice growth you the of think a for for parts And do sequentially. I which potential international growth double-digit business had here the You about showed you is you achievable? have if XXXX. was wondering year revenue just full your you international talk most

Jeff Miller

impact activity. about has all on talked I Yes. what our I an drilling technology that real doing Look, and but we’re think with business, about how our excited that's Sperry of I’m important.

demand to of either more in Europe, Asia lot a I a book there bag are and or that downturn. We’ve But parts excited Pacific go markets view, also the East, and so, percentage other production. been to that pretty the got it’s there’s effort that think, a I there the mixed recover sense they Middle markets where pretty basis, throughout have at strongly, in that, like my a be fairly on given of started. out going more in Eurasia market, of I an just bit about look out XXXX, But also are Africa, resilient of internationally. think we C&P tight in a unconventional to if formations, address, to make I��m big do think

looking and And now. digits? seen, look But That double we like high feels are year, at Are absolute next digits? while business about of growth. a we single so fantastic we're the on plan mute range. be that, I may to the amount that But if market, to degree

David Anderson

you issues Then mentioned had spare capacity internationally.

You of just touch see tightness? there? Can little just to you referred Are where an pricing there’s for kind your your that a few out C&P Is you outlook side. you the a drilling suggesting that side, on bit that improving minutes?

Jeff Miller

Yes.

I the at better drive, the Again, in it continue drilling suspect, be think -- is will marketplace And projects as XXXX; time, competitive. that day tightest we work same probably I as today. thing equipment big customers. gets better discussions a have pricing, on But the we with view the every to into anecdotally, of pricing.

that’s a mixed bit why a that’s of bag. So

I work think to and things year, year suspect those it's recovers.. XXXX optimize as last got we than it certainly, we've as the through I ability better a

David Anderson

And then last just thing.

think contributes that to customers? you do of next or side, offshore on conversations offshore your based IOC more the your with XXXX number On much is year's a event,

Jeff Miller

be shelf, as It water deep versus talked far offshore year. Sea, it'll speaking, Sea sort Yes. of water, think deep North as we've does. -- But I then next mature as let's it's mean, IOC -- up. into that momentum well, it going Take plays be certainly North role. gains generally I fields. a about back and

up of around offshore case it completions So wireline And, perfectly we or better that’s fields in if of well kind I the again, of terms from I slice it by doing lines it those and do, with mature we’re fill and and talked part feels, Halliburton’s wireline what versus about standpoint, what like a onshore, business. of some certainly, things.

well for up So shapes I think really us. it

David Anderson

Thanks, Jeff.

Jeff Miller

Thanks.

Operator

you. Thank

comes the Kurt next from Hallead RBC. question Our of line of

line open. is Your now

Kurt Hallead

morning. good and for here. Hey fitting me Thanks in

follow you really questioning recent in a digit, budgets international? year-on-year international growing of of to single of holding North your you basis, context kind America, want the without digit, high just on Do outpace I low you double So, until will done. to line the on here think get

Jeff Miller

that’s that where Well, North for they think we mandates international stronger of up get would produce it governments America price really And ability sort that faster in I we are pace, NOC-led, different dynamic to -- that shape partly around so growth North to to try growth think to catalyst but allow describe grow I from sort has capital that such than planning hard think it’s America that different a if see out to reasons, the I seen size such be let’s through mean, move the the is are we’ve happen, America North feels I see past. in and that by and driven being more. say. more to the will a seen. the oil there of market but I standpoint,

Kurt Hallead

Thanks, be greater and you over is what’s from maintenance to And intensity, do of the this is during industry a going think this it’s maintenance attrition? that could ultimately standpoint Jeff. pause the wide think greater, it been additional the been you years last do than of do couple fleet kind

Jeff Miller

think I do QX the I Halliburton for XXXX. Well we to as described as and would ready more go for just maintenance through we’ll think I be

equipment stages, worked. all conspire the size than harder work broadly, of think it’s to the ever I and rate pressure

maintenance all lot at know that got and our so effort America technology are And of around maintenance, maintenance. I QX. so we put I those to manage to do and it’s more of a it get we through think important into North important we things maintenance tech as specifically of doing performance plan in we a looks We maintenance, the think group managing how

Kurt Hallead

What’s adoption Right. market up. And your on the electric place? then Jeff frac the if potential by take, finish maybe in fleets

Jeff Miller

of to to technology all sustainability. what all early it’s and that going returns looking at of time, I’m too but the all – call is underpins types uptake Look, only say of and we’re

it’s think again among out certainly we that’s to it And looking but are so things. call I earlier at one, other

Kurt Hallead

Always right. color. appreciate the Thank you. All

Jeff Miller

You Thank bet. you.

Operator

for questions. would I Jeff time remarks. is for Thank have closing that hand the to over you. any the like And to all call Miller we

Jeff Miller

couple before we close make call, just Nicole. to of thanks final points. the out Yes, a like Look

the manifest. as can North temporary benefit see expect catalyst We recovery First, QX to the represents I Halliburton America and believe they dislocation. of NAM the bottom

Second, early capital Halliburton than to I’m focus the believe Halliburton allocation and better finally, And industry returns. on about is then continue excited delivering leading for stage positions positioned recovery ever and our international strategy success.

forward close So out to and I with please talking next you look call. Nicole, the quarter

Operator

for you does participating in thank That today’s and conclude Ladies today’s conference. program. gentlemen,

have You all great disconnect. Everyone, a day.

Halliburton (HAL) 22 Oct 182018 Q3 Earnings call transcript