HAL - Earnings call transcript Q1 2019

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Operator

Good day, ladies and gentlemen, and welcome to the Halliburton First Quarter 2019 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] And as a reminder, today’s conference call is being recorded. I would now like to turn the conference over to Abu Zeya. ahead. go Please

Abu Zeya

welcome call. and Halliburton quarter first 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 are CFO. me and Jeff Chairman, today Lance and Miller, Loeffler, CEO;

the today our our for reports forward-looking and Securities include materially forward-looking We XX-K from actual future Halliburton's results comments forward-looking December views and uncertainties current statements. any and statements involve our revise ended are These filings. to matters Some risks Halliburton's discussed These statements Form that XXXX, about recent to reason. any year on XX, Commission may of update obligation Form reflecting other events. publicly undertake for or could in X-K, no risks cause differ Exchange

include also charges. financial non-GAAP and exclude measures impairments of the today comments Our impact other that

the most reconciliation section and included quarter our and first ask follow-up that related to to details question who in Additional Investor yourself one you for order comparable be found the are measures limit allow please After one others GAAP may in we our in period time the our website. be the release financial and to Q&A press during directly remarks, can in queue. of prepared Downloads

call Now, Jeff. the to I'll turn over

Jeff Miller

market. work. prices rebounded, to customer have and Thank refreshed days make we're you, morning, good back everyone. Commodity Abu, in budgets What XX a this difference and are

in with America quarter first our and the for as both expected I'm results out North how Our we and organization executed played pleased internationally.

international and a step the XX% for International was all XXXX. quarter first company year-over-year, was $XXX increased single-digit essentially to million. growth of compared of towards $X.X adjusted which first of income Total billion the are was high expectation first highlights. operating Here quarter our great of XXXX revenue flat revenue

strong Our geographic all X% growth regions. activity Drilling had Evaluation of revenue division improvements and year-over-year a with across

refreshed customer our stable and favorable year their and demand. XXXX of hemispheres to as production trend backdrop have oil budgets. plus disruptions in have has China beginning up resulted since December fracturing a better and demand and in the perspective, cuts headwinds, From both supplies particularly tightening as picked due a our execution division. market Venezuela, have continues in for behind OPEC rebalancing. delivering Against And from activity in industry. start. to Completion the supported hydraulic U.S pricing also Iran Production in ramped the rising supply off our and strong higher. and been this margins expected, Overall, us, environment prices Commodity with despite activity been trends, remains customers is up India, off macro and land constructive. Libya to Oil winter lows macro Finally, expected than

North it's Although XX we lines often of North business fracturing discuss in operating to important the service product remember has America, America. that Halliburton hydraulic portfolio in a

in For margin example, revenue lift both excellent businesses quarter, growing showed cementing our the results and year-over-year. and first artificial

continue teams number Demand cementing our U.S. performance. for demand cementing the in provider life line Halliburton our in for grew artificial quarter. now for strong one to well Our first wells the production. artificial sooner revenues on lift and after driven in an Congratulations services in right cementing that lift strong by outstanding are XX% the ESPs put is line land. quarter year-over-year the be first top to sometimes much and installed the product the of

quarter Overall, modestly of an business. fracturing level finishing North We Now the let's on activity pumped month turn hydraulic America the compared note. the XXXX. quarter a first land experienced every in stages to March was our this quarter increase higher to first with high

we the quarter. throughout headwinds expected, had pricing As

we’ve as pricing the in us. pricing hydraulic And past, the in fracturing discussed business However, we worst on not of the alone. is believe is dependent the deterioration our success behind now

groups, operational ability for all business. in a and to exposure to have we better cost basins the and efficiency savings our to our all drive such pull Given outcome presence customer as other utilization, levers

and will Let believe me happen describe with I hydraulic what XXXX. fracturing throughout demand supply

On the demand had evolving side, it's we anticipated. as

that Our customers budgets in and we XXXX America. their have announced down spend XX% North X% expect will be overall to

budgets impact how Here stimulation expect is business. XXXX the drilling operate I services reducing North within budgets achieving on customers customers' through and America by savings sand I activity. cost see their of land will largely our by that deflation the

customer quarter remain our On is In the view end at into achieve our their momentum North second shaped heading year-on-year we customer other the essentially publicized hand, I as net production American the completions building will by saw the on to flat that activity targets. near-term, March. of seek believe that activity the

year, the spent for for land of else different see companies that but this range dollar the cadence customer has The modestly. North year. basins of every spend various and of As services progressing next than America quarters, the will look I couple of Halliburton in demand relationships capture services anyone more our scale, out for throughout across

Now let's talk about the supply side.

time, costs. of landscape, equipment Given lives working harder which spend. lot quickly service today, attrition. equipment industry cut existing is service accordingly adjusted Currently, and into new this leading added equipment not the horse intensity, maintenance driver is At key the is is capital market. to the the to the and higher translates being a The same power demand shorter

we've we forthcoming that and fracking X.X rebuilt day. give be wear. utilization, more this per estimate data Industry in per wear will and XX% This points is companies shift achieving perspective. equipment to more improved Let stages horsepower service capital to to have supply. need than leads XXXX. well. equates do laterals that And year in through million pushing horsepower increased put sources also $X.X sand flat as pumping Customers billion not fracked the volume horsepower spend are is abrasive that a more per with cut did to we equipment efficiency, Again, maintain Halliburton spending more in finer Last stages to tear. XX% hours XXXX more in local The in more drilling about some longer currently XXXX. see than me you to equipment more sand plans. hydraulic and I

believe will As available factors, market the there a today. the throughout year I will occur naturally in horsepower capacity America fracturing Halliburton result hydraulic the and year. of of attrition CapEx end is reduce the will less the these North year this than that there be significantly at

when better the [technical until spend market are scale and directed flow will market ongoing We again? will towards of don't just returns. I spending frequently cash you, improving market And strong In the right conducive the when capital I me we of asked mostly the on see we and importantly, at market comes size market in business. not conditions that despite capital most maintaining equipment. our are to demand and deliver have to capacity Let rebalancing described, to on reducing that has substantially continuing pricing. balance be sufficient this focused and and efficiency, level do refurbishing returns. better supply the expense add see difficulty] hydraulic no But fracturing capacity. and adding support invest to today growth tell happening it the emissions in we reason I'm The

market few we different We're control. As expect. what if the control quarters, will first we positioning CapEx reduction. step. continue the can to to was North mentioned demand what That I we America the over outperform is land ourselves currently already from next even market rebalances the substantially our

market. more to our and we're in be any North nimble in structure us land efficiently. more reorganizing America Second, make This will more effective operate

talk a this I Halliburton. company. Third, I we at is a about want to often as it It's clear make temporary continuous improvement. are who of not initiative part that

we to cost to all looking will our efficiency capital parts constantly ways improve our eliminate are supply of and from operations. in from technology continue for to drive field throughout chain to waste and company. We organization, training, productivity And

run. and programs, importantly, well time. on good Emerging and supply where It around and cash stack returns, technologies below infrastructure, would've will production. pricing Therefore, a increase our acceptable leverage Halliburton. returns we implement are maintenance with threshold, our in fleets. driven we more navigate reduce and we've will be positioned including of This allow see sustained longer and capture drive and Finally, the efficiencies and pushed repair the a stable velocity, frac elected be and growth Halliburton can period logistics for asset from chain is efficient us most long at concessions investments. the growth instead flow costs equipment, near-term an to over thrive to scale to industry's our focus we returns to organization

and market here company evolving XXX old we our is Our got by years our customers. and with

to continue the will in do so future. We

key and capitalize to gained on this international on us expect and several what revenue I growth fields. by by single-digit base momentum. excited international the international oil markets focused recovery year. international to last over to a mature the led was recovery has The strong national initially markets, The recovery in the high build gives Halliburton This continues Turning companies we I'm see. international share years.

long-term spending world. by started are critical offshore Campos to These complex, Brazil. and XX% also market. quarter. project first Arabia. green in International collaborate XX% international offshore most quarter three-year additions activity first our increased the of In work is example Shell's to Saudi rebound the in Iraq in is recent shoots A Middle East Now of in the economics integrated excited activity Santos the win of Shell in Halliburton the prolific driven and this increasing, the offshore offshore recovery first up markets construction are is be projected Brazil. rig count XXXX but basins emerging Shell entering on is average recovery with on also year-on-year in mode great some the we rig well deepwater campaign most an in basins more and attractive. with become offshore the as

in the expect the activity Middle capacity in pricing steady continue drive to and East competitiveness. of region we pressures to continue excess equipment near-term. in However, A the volume

and spare North Sea drilling to with is movements. Going improvement available on showing call a production pricing forward, capacity should lead tightening essentially equipment capacity The pricing absorbed. positive

the However, margin contracts rig first the since Africa Asia both first continue now remain optimize to the with of mobilization on Activity half across priced ramp-up our long-term counts pressure regions we and and competitively quarter year level Pacific the highest to in for the expect performance we XXXX. of cost. continues incur as

see the that activity pricing long-term areas from near-term by in improvement potential are Mexico Argentina. excited in this year of as driven and they I'm come pockets and America We these region. growth back downturn Latin improve low. starting to about the will

customers internationally returns international become in some to continue in expect tightness we progressively capacity more rational XXXX. expect markets. the see momentum our we the discussions and The we demonstrating pricing this and expands, growth of have to projects constructive markets As into build with more pipeline driven going

is international our rationalization culture, the As and unfolds products decisions Halliburton capitalize depth and portfolio, future shale and the to the our U.S processes our markets the best day opportunities. leadership We on will presence, to service of win. make positioned thousands of and allow every global industry our diversified our of ramp-up, us

provide that stewardship, We responsible generating capital capital return investing technologies to our strategically returns will current flow shareholders. and the are Then deliver differentiation cash will to strong ourselves through efficiency, financial we Lance will Lance? to the our positioned call to prioritizing returns. I now turn over win in deliver and the on how differentiate for more I and details market in results. discuss

Lance Loeffler

Thanks, Jeff.

first overview while of adjusted operating Total quarter Let's decrease. an begin the to XX% company essentially $X.X for first income a billion, the quarter quarter with was our flat results compared revenue XXXX. of million, year-over-year, $XXX was

across stimulation activity were primarily offset North U.S Production lift moment decrease and These America discuss also and increased improvement mobilization on international $XXX East. activity reduced we management increased the XX%. America, regions. America income benefited billion, stimulation divisional increased revenue Production million, take Latin In Operating me results of a Completion $X.X East/Asia $XXX was project a to completion million, that and a Latin projects, and which The in decrease by X% in Drilling let activity all land, our was and a in sales by Middle Evaluation division, In in Now from to activity with by was drilling our income of was cementing were lower These pricing division pricing. higher the regions. billion, and decrease results. our X% $X.X and and driven Completion driven activity division, artificial lower operating tool revenue in primarily driven of incurred results multiple higher coupled Middle by XX%. cost

partially In X%, pricing to and geographical lines stimulation higher XX%. driven the Brazil. in cementing services, by This activity America, by lower increased revenue services America stimulation artificial activity decreased drilling reduced in increased by Latin in Moving lift, by our North activity. higher majority throughout of driven our offset increase activity for in and results. work was offset revenue improved and the region, Argentina product Mexico, stimulation fluids service primarily partially testing

East. Turning East/Asia across multiple driven tool sales revenue year-over-year, higher and by region, fluids Middle activity in activity in drilling In across product Middle our from with first activity offset largely previous $XX lower in with These United guidance. other lower were and partially to quarter, expense were lines Europe/Africa/CIS, the revenue Azerbaijan. in corporate reduced Kingdom. X% offset the our These the pricing Ghana grew drilling improvements which increased totaled in higher results project line India coupled the In X% million, is resulting increased Middle by and and management East. service activity completion the by improved activity in

second We approximately expense the expect quarter in corporate remain same. to the

of primarily next period. to $XXX expect During the of million, million related was Net sand the $XX a adopted equipment the more pre-tax for it quarter reporting legacy solution. as we've to efficient a impairment delivery non-cash sand approximately logistic the expense remain we and quarter, interest same for recognized we charge a

rate Our first effective quarter for was XX%. tax approximately the

to expect we effective second rate forward, XX%. quarter full-year approximately Going and our XXXX tax be

strong $X.X flow billion. customer remainder Capital use $XX primarily $XXX free to by of million, of flow resolved cash a generate were optimization to get and full-year expect cash strategic of we some work built plan We've and the operating expenditures basis, expect Optimizing the in markets. last flow for XXXX at contract driving year structure also generate cash delays capital engaging we not improvements inventory we movements. working down it's working throughout America, short-term rollout our our in quarter appropriate with cash international and during our firm as quarter of first and cash loaded backend higher year. to levers and a progresses. internationally for quarter capacity up North capital the driven experienced by operations inventory XXXX. million On for that was second CapEx different flow payment from the unusual should We Historically, primarily the the investments, to Our this the pricing CapEx. than managing full-year and

comments our second to some let you how outlook, operational the Now turning shaping near-term me provide is believe with quarter we on up.

while mid In up in North will the For XX points. that single are toXXX XX revenue sequential basis from activity Therefore, basis a Production drilling believe Completion behind with disruptions us, digits, digits we rebound second increasing in with by to points. revenues worst mobilizations. margins our and Evaluation increase ongoing division, improving quarter should low offset activity, seasonal margin our and single anticipating Drilling be division, pricing to expect we XXX and America we land up be deterioration typical

turn our Now Jeff? and call strategic to Jeff I the few to highlight ongoing closing of back comments. initiatives over make a will some

Jeff Miller

Lance. focused on prudent than allocation More right Thanks, we're priorities. capital to ever exercising the

value have solid aligned with generation We strategies shareholders. for long-term our

growth generate service continue opportunities the product the where to expand markets we and will to see We lines and in penetrate returns.

and differentiation are expect that through these returns year walk main them. free As each economic investing where we flow. strategies, will will implement areas higher we're cash one to and and you I we generate three to technical lead this of There

in iCruise, I’ve drilling Sperry the we year. Middle platform last is drilling U.S line. you a introduced product track lot rotary tool of new the advanced rollout we to enhance the this steerable competitiveness our across shale working the and The with East continue talked of to First, will global about the on technology basins. Argentina, already

workhorse directional will end rotary conventional We in building by land. the of higher the steerable fleet. extremely XXXX, constitute currently third iCruise and on a remain are drilling, steerable but of Growth over the our is market of the inventory motors tool especially encouraging, rotary margin out

The Another mechanical motor specific approach durable latest is the of faster designs undertook to longer customize combines competitiveness engineering higher and a for a to differentiation basin Center to of to deploys rate center specialized Sperry initiative our was manufacturing new with build engineering capabilities to allow motor more drilling and launch we penetration. increase It our challenges. that that for drill expertise motors development and Motors runs at Excellence.

focused deliver section is and to We team bearing research to scientists industry. development a accelerating polymer that dedicated materials drilling the design, in have assembled on and motors and chemistry power of differentiated activities

Excellence, our As and the Center reline quarter to and part Saudi with customers of of strategically technology Arabia Houston facilities two new last in our and Eastern in equipped located Motors we state-of-the-art opened serve Western Hemispheres.

all will specialty our plant fit a Arabia plant lot works continue to in portfolio This a will Halliburton expansion of We East existing a these for manufacturing businesses, artificial to product and chemical in Upon testing forward. expertise international we downstream be have we and international recently deliver plant offering. that the will Saudi and manufacture investing Leveraging chemical and in Hemisphere. capabilities as Hemisphere year well several Latin that It fields our Athlon of acquisition will lift applications the Eastern service are groundbreaking for Next broad slate well. went the manufacturing America are countries they disassembly well artificial Plans XXXX, chemicals. completion for for within critical in for ceremony the to unconventionals production mature facility opened our about making chemicals to and lift last for both expertise attend potential underway of through treatment businesses. Middle They’re Eastern in Middle in provide customers. and the and in an going deliveries stimulation, to midstream growth already ESP added production, the a have advantage ESPs for a and superior I in building to first is the engineered programs. year, are Halliburton Halliburton's location East.

supply own will able also our for our generation specialty cementing next not but businesses. chemical only stimulation be We will with to chemicals manufacture and fluids, solutions, drilling customers

year. this focus Finally, area the for third

important, of fueled the continue will very acreage, seen rapid intense from increase cycles differentiate the past fracturing. We top-tier technology unconventionals in in by trial-and-error led exploration we've a in The to that hydraulic space highly production but in explosive competitive to decade. US

As Shale increasingly become well matures capacity a and legacy second operators production as acreage, enough out to decline hard drive tier will production to volumes new to have it replace to higher. add step significant as

higher that productivity. will be towards weighted heavily and forward, of of to flat maintain in advanced levels more believe light the I unconventionals. technology higher more Going enabling needed be will technology unconventional this, firmly future activity In production well

As an in forward. of smarter well hydraulic basin, Halliburton's technology This Prodigi each you to will consistent and that the the just shale to demand enabled in maturation, fracturing fracked We're important. is Improving be subsurface perforation Prodigi continue This It resulting a deploy With and today. effectively operator the won't efficiency, positioned a recent cluster effectiveness. will output technology to fracturing their will integrated of both customers improve and surface service Prodigi XX% in make matter, human all going efficiency. eliminates and best more customer the will matter most automation provide just and the and services ultimately Dakota's advanced Halliburton automated and quality environment Halliburton quarters, near-term investing stages as over discipline technologies and will and collaboration the rebalance America summary, as is from and I told performance. customers more In our long in a develop of direction will breakdown both quality franchise what these. thrive fracturing we North to profit help in on learning matter; capital on to next be Prodigi matter; distribution machine On rock. this we error treatment few side the demand run. North depth and Halliburton clusters. in all first of execution focus just Williston those and about size and before, stages is beginning scale of Today is even matter; cluster, this rate positioned land supply will treatments. getting navigate the platform. expect production and latest matter; more using technology And step fluid control In the our applies optimal tougher the achieve the strong well yields application to increase production a superior in will deeper work number has smarter escalating to

keep and a returns, And and free backdrop, and will returns industry-leading broad-based markets. committed We're And in right ongoing recovery investing the levers achieving driven it growth flow rational generate is strong on questions. for returns. and continue Halliburton against that growth XXXX. our up generating services things. is to open into Second, finally, costs and other and now, focused internationally operating managing let's will cash products international the Halliburton this in the

Operator

question first Sachs. from Thank Goldman comes you. our And Sedita of Angie Instructions] [Operator

now is line Your open.

Angeline Sedita

Good morning, Thanks. guys.

Jeff Miller

Good morning, Angie. Welcome back.

Angeline Sedita

back. Glad you. be Thank to

worst margins we not little is to completely So, on levers us course, touch margins way. that gone? is you behind us. -- the big could then, your touched in the efficiency imply a there. of on on drive commentary operational does and in pricing color a pressure maybe pricing Is that utilization give also Jeff, And your that and drive Does

there? pull and about talk you much you more to levers can So those how have

Jeff Miller

worst I to aren't view me that saying on thresholds nothing, no up, lending and precision -- activity -- then doesn’t should I’d there strategy year we But mean when means which us. with shaping behind us. That our the give but say it's as effects, trickling pricing being there. I see that that progress as at that some capacity, gives around the how and we’re And be and where does there's aligning that going also that is confidence. you all the it what support Thanks, look what not of to will around market tightening which I'm Angie. is met, The the we potentially behind of tell will goes

Angeline Sedita

Okay.

And -- what’s back a so and XXXX tightening or the that you pricing the with the more year on does talked that ongoing, capacity you about that’s of of -- your half the is thoughts do attrition for event?

Jeff Miller

Yes, again, I'm not going to try where to pick are. things the date on

CapEx I balancing and will described is our that to customers tightening equipment so capital the support of see think the discipline broadly Also, CapEx balance goes though the view the or year. that the long hard the we on see see, capacity the way is in we throughout how discipline our I working. reduction around I think a -- market. actual same the

it Now later today. than the it certainly more year I is when does in balance? balanced think it's

supported. all that's think I So

Angeline Sedita

a you changes? then And this a more more in reorganization is can color savings for U.S operational reorganization the but unrelated us follow-up. as -- The a give there opportunity or comment, Okay. Is cost land the there?

Jeff Miller

reorganization, Look there's making us more me efficient but focus always cost nimble. on let and associated more with

operate and took organization of of that more cost years but out, amount decisions quickly market. an of quickly this efficiently cost the What doing to would that make do more fair it's how in really the couple a any is This and we're form and we So most ago and go lines brighten of more operate, by came we targeted what at around here. more not means. is frontline

any efficiency intent. Now is the lower not driving or useful terms market in performance, in cost but of that's

Angeline Sedita

it I'll Right. Thanks. turn Great. over.

Jeff Miller

Thanks.

Operator

West question Evercore from our Thank ISI. of you. comes And James next

Your now line open. is

James West

guys. morning, Hey, good

Jeff Miller

morning, Good James.

Lance Loeffler

Good morning, James.

James West

have Lance, quick, now, return? I are respond real to And two, meaning but this maybe to can't to, the that you North see rebundling, is push think a Jeff So, appropriate America towards should of stacking are you a easy on that if perhaps pretty you get starting on the and are when one, now fleets unfold. the start as part those their rebundling, the -- of operators better have could, as much were curious reorganization, debundled budgets to size, both they topics. shrunk the they in I’m previously collaboration business the spending

Jeff Miller

James. Thanks, Yes.

the going market further equipment as On not and equipment first we at and to any we than business look our go around that, continue returns. first make and manage decisions in those returns but to look that will topic, quarter I'm we at causes did the to stack on the

around and question I've over though do. things come a was second rebundling always The that to make look sense together time had view that those back

early good doesn't but see, about think fit things point in parts James, I are we process. we're is demonstrated I very it's to are start that to and that. but have once we elegance you together back together. such been simpler that, but But efficiency an some a how just those feel the around pieces of where there and we I examined wow, lot with mean to That and days put slice think not at pieces competitive come, parts and each

James West

Okay.

looks It line year. has start normalized going or line bit international is top it that than guess, strong, of And been side, like outperforming. Jeff kind sounds then, to pretty strong it's is outpace incrementals it. this on And a think be got When a incrementals? ago. to you’ve one, then say? second the to were maybe you more the Okay, the do bullish been you’re the I now fair you bottom quarter like

Jeff Miller

Yes, thanks. is today. how broad-based looks look, me recovery think confidence gives what this The -- more I

the to tendering go on activity are XXXX. focus we also I maybe activity, described comments I offshore of standpoint, broadening commentary growth those obviously. there, not base see here see region a green and some shoot a and more think to margin of terms start into that we From activity nearly D&E, we also so I sort not as just in every of of form I my And but talked will as in leads activity about

that year, We real we mean started pricing decrementals activity that 'XX, me, James, the of mean, both mix East it earnest it I mix we to -- midyear What was of Middle the in different on stronger done of as clarify a get happened move mobilizations the in saw, really expect from as that all at that. a generally year. we there's we impact quarter, in saw a of the stronger first was tender I services, the excuse incrementals, January incremental to X things this lot

that. some saw we So of

James West

Okay.

Jeff Miller

incrementals But QX is I in what’s think is, clearly bottom business for that margins. and strong my expect important, a QX for D&E the we view in

James West

Got it.

Thanks, Jeff. Lance. Thanks, great. Okay,

Jeff Miller

Thank you.

Lance Loeffler

James. Thanks,

Operator

comes question from Thank you. next And our Bailey Fargo. Jud of Wells

now Your line is open.

Judson Bailey

morning. Good you. Thank

Jeff Miller

morning, Judson. Good

Judson Bailey

comments makes off conversations improved by the year visibility North talk about to changed, you’ve to you maybe and kind appropriate. America of Hey, -- the tone extent have customer started seen next here? or that’s has days of difference stabilized how how progress from saying what probably couple or you macro of sticking XX and Jeff, I'm your Could back the a the has over year half or as not even has the environment quarters, and maybe the

Jeff Miller

coming stabilizing hard path key days Well, were macro I was think commodity prices, what mean clear everyone. on I ago, QX was -- is we wasn't for the off point. in pretty XX the environment a obviously

would said each XX view. days, of going building to and happen in I had of progressively of commentary, as shapes So work. commodity has back up. terms we What my the that thought customers range happened And price in was our sort in month set

the also a that. are of think all out activity that’s -- what deflation gets calendar, maybe as matters the constructive things couple a the asset most I the lot operators we CapEx to about back the think count to at most we things, and ways other of smaller we all in it's the investing specifically company. More to year? that, of it's look but think may some bit. into second the also couple sand going I some just that as next of the the I do of is of around the out in of price require value, question but look quarters. to are really we year, the captured meet rig smaller the half those think likely talk lowering of And know half or importantly, with whether customers, be they last not just You the sort opportunistic, base part completion them service the production with that asset, be around, of that level I targets completions today, really reduction think there do And a the important

Judson Bailey

Lance. Okay. I for color appreciate follow-up maybe the my is And there.

C&P thoughts Your maybe quarter. the up of still you on mid is my we bit on as Can into pricing headwind that lag revenues the average is? in a the us what’s the effect on -- trying much second your revenue what how impression is pricing the the growth volume headwind single digits, what’s C&P give head a from throughout looks pricing to on impacts second weakness XQ how and guidance Just quarter? balance

Lance Loeffler

thanks, I Jud. Yes, think --

the level see, the pricing. think is by but some from I it's I what it's than Jeff see impact of more to modest related volume goes which guidance, offset our back comment, of that trickling pricing of earlier activity you the -- really to what an may continue side, saying with it think informs from so we kind was maybe effect some the

Judson Bailey

the Okay. it All appreciate back. will right. turn I color. I

Operator

Simmons. Herbert comes our question of you. Thank from Bill And next

line Your open. now is

William Herbert

Thanks. Good morning.

Jeff Miller

Bill. Hi,

William Herbert

is So specifically, number plausible Good of this frac filling about which and actually etcetera? and even, calendar visibility, optionality higher the unfolding. budgets, expectation of needs the specific pipes is tangible kind populating morning. for distinguish speak your that to frac that’s meeting when Jeff, completions visibility I this customer including -- reasons move second mean, you upon between any is Permian half, or a calendar based

Jeff Miller

and specific. -- the and view in calendar of got that's that of we've got a visibility so Bill, quarters more Yes, couple a the out we've

past how questions further the production half, smaller some sign rig met, not we bag discussions I than targets with have look throughout what those I the I manage count that year, and mixed basins, may think that think are think but back a particularly As we the with of I earlier cadence in I we customers like in terms quite in could different of we certainly and they around also but the plan look in there's kind for year. terms very terms of be year, to it's there obviously have Halliburton's like. feel look also for feel in to sharp asking confident outlook in operators, And activity be the of think our we’re with -- we business and in are how around ability posts perform, edges organization that least we and met, I the development at outlook the where balance and of different

William Herbert

the with issue to elements like ordering the expense was then in least it transient the different margins And you. to seems regard the issue. this in associated Okay. Thank a international that projects, margins, that’s QX major drilling at with mobilization D&E weaker conspiring several with

was all, mobilization in second doesn't in a as I’m that the So the well, margin apart from when headwind curious abate? -- mobilization North Sea? that broad of Secondly, thirdly, of the half the year? And when QX first does opportunity how nice the represent to

Lance Loeffler

year. there's D&E Lance. Yes, opportunity the Look, I course of to Bill. and improve the think margins is expect This we throughout do

vocal I think we've been pretty that. around

the While to to that pricing will in East. that the pressure discount uplift, continue the we it's mobilization provide sure not see Middle

William Herbert

Okay.

Lance Loeffler

in flat Right. I half first D&E we be as the so, land margins to margins of of through to the D&E. markedly expect year, mean sort second we year-over-year get in at -- improved half this

William Herbert

Okay.

versus year-over-year flat for it's So second FYXX or margins half second half?

Lance Loeffler

year Flat FYXX. --

William Herbert

much, Thank Okay. very sir. you

Lance Loeffler

Yes.

Operator

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

open. line now Your is

Scott Gruber

Yes, morning. good

Jeff Miller

Scott. morning, Good

Lance Loeffler

Scott. morning, Good

Scott Gruber

ability are presents opportunity there Is ability you an them? do with and longer given business? good cadence the Does look that’s It How be prepared some U.S comment an thought your like there you remarks reducing in term exposure? E&Ps, control. majors settling for you. of mentioned can which volatility do term? deals which that the growth maybe mainly the only spending less and about in at from likely is the an the the go how think volatility to further Is one your stickier you obviously ways you into customer settling Jeff, volatile, a to some market after side, to that about into tender a Have longer that would the there's maybe they contracts, into of sounds demand steadier? think much you about reducing and so overall

Jeff Miller

-- that we historically Yes, without of think look going into and lot about and do, those good of the at customers, could lot we the of customers things most become to a to frac today, plans. shale scale, and I of a like most types returns those -- but we to it margin. drive plan we’ve we’ve service look historically, we we've fleet the we’ve obviously, plan of industrialization different all business we shareholders. attractive with larger we're the the our what to best optimized with those do for we as ability the But view do think that. things sort also do so, growth of eye saying, with around are what But along scale scale our And so what all I with marketplace business relationships, We’ve specific have. mean, an going lines that always to we -- you’re IOCs, efficient we -- the of in XX do more

Scott Gruber

you last we then and is would on 'XX? how frac XX% 'XX great. in Are think years, starting you And those as efficiency improvement the it. over well two be on some gains Got just about slow, trend par color to in should seeing gains efficiency mentioned that

Jeff Miller

at Through If hours some have Halliburton that. of big just of edge of here of front degree been maximum efficiency in some would think a milestones I are day. in there seeing each Yes, think of back sort been I a velocity when sort those. has we reaching the are terms we

that from operations, XX-hour was the So XX a first was day going to a step. big

and single opposed opposed fracs to pads as single pads. well fracs zipper as around more to multi-well well then was Next

are those of We’ve the capital changes. more efficient done sort more step a taking location. being location our and on lot capital margin is at of off focus structural around putting All not

And big emphasis see What so on efficiency, what’s the I years the our surface we don’t or that next the capital as velocity, around discussion other that. three, on steps, do I all lot some a next but of today. from happening around is well the cycle and everything and next really see few the hear efficiency But say to over bore necessarily drive the opposed to more things to these I believe you will I over child, five those believe include the years. the productivity that we more have of and impact spacing, things parent around

Scott Gruber

you number at? this had it efficiency peg a would on to the put what If you improvement year,

Jeff Miller

range. than maybe Less call it's know. I would don't it that X%, in I been. just XX%

Scott Gruber

it. appreciate Okay, you. Thank

Jeff Miller

Thank you.

Operator

of question JP Morgan. And Meakim our you. next Thank Sean from comes

Your open. line is now

Sean Meakim

Good Thank morning. you.

Jeff Miller

Good Sean. morning,

Lance Loeffler

Sean.

Sean Meakim

flow So you to mentioned, the what depending levers you've got different cash a drive market you. of gives lot on

I budget took of think the a lot year. of to that was you XXXX committed reduction CapEx your prior end the

of cut in if as conceptually, So, looks start off? & some in America Drilling XXXX initiatives XXXX, words, take is Production North your comparable, could recent CapEx roll a the like modestly, growth another in lot to activity lower budget other improving international's

Lance Loeffler

terms lower over X% on XX%. we've today, averaged at closer it like sit last in Sean. of is the Look, I I think thanks revenue average high where than sort believe XX it's the Yes, of we been that CapEx relationship to was to years

as pretty next spending we've buckets this like know X% it out even me, vocal been of feels clearly don't we're that of think, and that a number I part CapEx. in $X.X for today, like -- billion I what that around year, feels good about year. a to

as slices spend pretty in the feels Now reinvest business the we about as as invest how we go we right, I CapEx we rate that of change, good. -- the pie, think but think may of

Jeff Miller

we about just Well, growth. are I there I would I when step think what outlook. focused focused mean, mean call returns maybe in the on we too.

we and And fleet out in in building are sort think so we international we year, investing initiatives strategic we iCruise this and growth. invest are if Sperry our continuing spending where about are of to

So in where we and we round revenues that are and the doing sort X%, sort today, X% today. of of X% of all -- of

of appropriate me to see in So it our this as feels market, and don't I I is in approach. sustainable spend to a returns. generate shift that mean this level

Sean Meakim

year? customers, you Middle that just when highlighted -- incremental a of this last that pressure clarification, you just of is point And won feedback. this were is for rolling pressure to were one pricing really it considering be in contracts or East, from it. you Got Thank through the

Jeff Miller

and see look ahead, It is more certainly necessarily lower the how principally, perform prices. seeing will we the work in -- profitably in is time. doesn't are to now, somewhere mean as it it's that's contracts or what Well, the it's at things beginning optimize we abated. this of we quarter But rolling -- we that what over establishment on over

Sean Meakim

and And basically so, in what magnitude with due line characterize quarter? you the mobilization the that the would decline expected would've the you for of pricing would -- to that you say

Jeff Miller

that's no of tough we that mobilization, probably generally -- what that's North and also so Sea was pricing, weather more with thought that we'd saw things also pretty see Yes, my we’ve number in this described comments than we'd I a quarter in have the expected.

those things. So of sorts

Sean Meakim

good. Very

you. thank Okay,

Lance Loeffler

Sean. Thanks,

Operator

Bank our of Thank America you. from Lynch. Chase And Merrill of next Mulvehill comes question

Your now line is open.

Jeff Miller

there? you Chase, are

Operator

from RBC. And button. mute your Kurt of comes Hallead check question Please next our

Your line open. now is

Kurt Hallead

Hey, good morning, everybody.

Jeff Miller

Good morning, Kurt.

Kurt Hallead

would activity up, of completion to so the that a high be year-on-year that the like Evaluation, and revenues U.S down that range, here. U.S., being would Production the in in and internationally. single-digit at to and digits, I just imagine we for down overall Hey, be safe up, spending kind assume maybe Drilling high I drilling and be up look that overall XX% growth say when international talking levels spending Completion a activity Drilling on aggregate we activity -- for on would with of adversely had be say it Completion C&P single When to offsetting X% you question Evaluation and basis, be about look in guys kind being are Production and follow-up the you at think up and

maybe revenue of to think flattish. to year-on-year of it wanted safe up get general D&E that so Is just I kind to a sense, about try C&P now? a on way kind and So kind right of a

Lance Loeffler

to we I think I -- of the be activity. I pricing remarks in was today. way prepared North we've think The this it, broad is of sort Middle but particularly mentioned in expenditures our a down that about Kurt, completions see form actual of D&E, then Even as and right? also activity spend that East or sand of year-over-year, weighed America, markets, would pockets mean driven that that by the lower though expect down some our is about pricing drilling international competitive the think recovery, lower improvement, versus by And we takes pretty we flat completions

a So it's of that. balance of all

Kurt Hallead

you've give know And Got mantra, could about key on that, of thresholds wondering us one about and I dynamic key the period, on return how a maybe X-year you that was Lance. kind some a cycle, is being it is of follow-up then, you had -- you Jeff, XX-year for our when I would insights returns some think think it. period, appreciate that the if very X-year mantras think for and about focus in you. you continuous helpful. the on that general through I perspectives be context, the it period, when company.

Jeff Miller

when talk will I about kind time cost we a we've Look, the the always starts think environment. Halliburton with think when of in growth. growth more investing, been think at think always I we sustained also and of I businesses. about scarce I in think capital then margins, capital so right And any I returns of focused period feel And so believe returns, we that returns make are it what the kind I that’s you're value when over disciplined for growth improving and investing and I we about scarce be -- growth, and mean, also over costs need to is the right this we paradigm. of look, are focused, managing make in might that managing great maybe that I asking, pricing broadly, costs, informs clearly but and about

returns. lift certainly very we on about we've think our will So thoughtfully and where chemicals and put we that do focused if CapEx, and

Kurt Hallead

be referenced to that think on X.X the and happen. equipment helpful. you That's maybe Okay. attrition need follow-up Jeff, one spending rebuild the wouldn't that million level comment, horsepower just will earlier to required would And you 'XX rebuilt in

much could shake context how this the year? of horsepower the you do attrition of in So then, think market out

Lance Loeffler

this is Kurt, Lance.

that that prepared in try on that really our pumping tough it's right see had happening about of costs it's America therefore call hard fleet in today We because attrition under-investment. than repair with one the in we ignore it's associated been stats has we the talked know of fleet, and has that know -- pressure the retired. and to we ever North all and more be of we the that I right? remarks, what burden the to we there's I there's But the the how you shoulder define just to -- some think one our to look, that to a it's around put number some our maintenance it. it, are there's at day, And can't had think, to going working a out, lot I and pressure know a of mean, think space I on wear industry. and always be it on going tough to end flat tear it,

Kurt Hallead

helpful. much. you it. Thank very Right. That’s Got

Lance Loeffler

Thanks, Kurt.

Jeff Miller

Thanks.

Operator

question And of Dan Markets. next you. Thank Boyd from BMO comes our Capital

Your line open. is now

Dan Boyd

thanks, Hey, guys.

Jeff Miller

Dan. Hi,

Dan Boyd

are quarter presumably outlook, you put like up back calling for and international XX% out the the follow-up first growth you second first in year-on-year growth sounds the mobilization growth the the costs half on continued of a in about XX% One quarter, the the half. suggests guide

of a you So single-digit conservative little revenue high with just number wondering bit year? the what a for keeps more

Jeff Miller

we the what about in very market. unfolding to want be see we Look, realistic

focused -- that we the lot not see also look, to things. are about be that sure -- that’s a I’ve of discussion we the building, pursuing going we growth. think making really probably of see to right going but the we and XXXX tender part encouraged. investing so we I today are is and is activity activity And talked returns until And that begin are

sort being what talked as about. tendered see that is into offshore In to activity of we fact, will sort described and building and think of opposed in growth certainly I 'XX as starts as I then broad based XXXX

to again, are So our encouraged, but manage we business. going

Dan Boyd

the being wanted D&E question to follow-up on I just Bill's margins. conservative. on Lance, Yes,

So, in we them year order digits. in it keep exit fourth double low year-on-year sounds quarter the flat to to like need the

And see without that a is wondering contract margin? so past is that sort low is as pricing from incurring, out, that here big on mobilization de-risked number you cost and you that are just but basically without how double-digit look of wins you

Lance Loeffler

are Well, we have in I doubt. to we’ve no the we been tailwind mean that more running to some market. going the taking as look, see as to Sperry to across are the put start get also we But work think I tools towards I think and that around it, to get costs those begin and the you benefit expect mobilizations, the in we revenues that Sea that actions North you

working the that that to inventory of you I build saw so can by me the told what those iCruise we the we my on we those capital on those around to third think of I need we side working out, part the that’s are that things the year, get a hard mentioned commentary get and investments to to will of Sperry be international fleet you the that are end the in give build that strategic commitments. confidence continue tools

Dan Boyd

All right. Thank you.

Lance Loeffler

Dan. Thanks,

Operator

Thank our Bianchi from the And of Cowen. question final line Marc of comes you.

Your line is open. now

Marc Bianchi

you. Thank Hi.

pricing noted are focused mentioned but discussion Jeff, pricing terms the about for distinction XX in lines you Halliburton offers. the been specifically competition. there's of America, everybody Is product concern among on where just some question is player big to frac, those service lines cementing any that cementing, you a is there bottoming, North back First in as you

if on product curious any you could offer distinction Just there's those lines?

Jeff Miller

to not hydraulic get the over it's to going going more will leave America lines most probably at where detailed space and the Clearly, I any are. the and biggest landscape that. piece probably so pricing in so North I’m a of fracturing supplied, North service it competitive today of is sort -- America I’m very around Yes, it the is other

Marc Bianchi

growth then, positive, And working year outlook that. for negative? first be big the cash consumption capital Lance, for is terms here the or for in of you working which seasonal. a Thanks the free the neutral, a capital Would for anticipate to flow quarter, year, in Okay.

Lance Loeffler

first in see quarter Well, DSOs we of we I lot work as suspect a to the I of going will the year. that think release up, think a lot year, continue that the benefit sort I work does capital some we of of the we’ve up the working we are through the throughout built would cash -- down to inventory that built point

Marc Bianchi

so much. super. Okay, Thanks

Jeff Miller

Marc. Thanks,

Lance Loeffler

Marc. Thanks,

Operator

to turn Thank management back the you. like that for concludes our question-and-answer conference closing over to And for session remarks. today. I'd

Jeff Miller

Yes. Thank you, Candice.

would we call, Before I points. wrap few a up like the just highlight to

broad-based First, Halliburton positioned recovery of about we see this advantage growth. and I’m international the excited that to well unfolding is take

of will I Second, next and will believe few demand be that completions the up quarters North year. over over modestly America balance tighten for that the capacity the

on Candice, you capacity next quarter. to and free the forward again flow speaking please look tightening, our management cost I of leading in cash and Finally, call. will excess deliver discipline, out year. close returns Look, with focus capital last

Operator

great for and thank may gentlemen, in conference. participating does Ladies disconnect. you and you This the program all have Everyone, day. today’s a conclude

Halliburton (HAL) 22 Apr 192019 Q1 Earnings call transcript