HAL - Earnings call transcript Q2 2019

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Operator

Good day ladies and gentlemen and welcome to Halliburton's Second Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, there will be a question-and-answer session and instructions will follow at that time. [Operator instructions] And as a reminder, this conference call is being recorded.

I would now like to turn the conference over to Abu Zeya, Head of Investor Relations. begin. may you Sir,

Abu Zeya

welcome Halliburton and conference quarter call. to morning second the XXXX Good

today's webcast days. is will a call As 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;

ended today our our forward-looking include materially forward-looking from actual future results on Halliburton's December the and in are comments views and Form XX-Q and XXst, uncertainties the year other filings. statements. statements, XXXX; XX-K involve our These for to XXst, matters Some risks discussed quarter Halliburton's These that XXXX; about for Form may recent Form Securities of March ended reflecting Commission current Exchange events. could reports risks cause differ X-K

or any statements revise any We obligation update reason. undertake for to forward-looking publicly no

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

directly Quarterly reconciliation included in and and the the in to of second details can quarter our are Additional GAAP release Results website. our press most financial measures found section be comparable

After that queue. question our be in others the limit may to during follow-up allow please ask Q&A order the who you we one related one time and in to for yourself remarks, prepared period

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

Jeff Miller

waters morning markets everyone. Thank you, Abu. Good second navigated during some quarter. Commodity choppy the

On the the concerns uncertainties one the demand hand, trade to there talks. are surrounding attributed of largely global oil U.S.-China the outcome

prices Venezuela, of and and hand, recently buoyed side U.S. been oil exports, Iranian other have production output on oil in plus political OPEC extension On cuts, Libya declines to sanctions the the Sudan. by supply instability ongoing reaction in

and our I in the execution with quarter am pleased very backdrop, outstanding was results. this Halliburton's Against second

North momentum on the internationally dynamics the successfully continue market and We build America. managed growth to in

of was a billion increases into dive here $XXX Before and revenue to the of adjusted second the we XXXX. XX% details, quarter quarter. first million, compared and operating Total representing company X% was respectively few highlights income $X.X are for the

X% delivering resulted revenue completion America margins. sequentially. division and globally Improved operating North income Production and activity and in grew in better-than-expected execution Completion Our land solid XX% our

division with margin Our product and quarter-over-quarter XX% XX%. Evaluation Overall, division incremental Wireline improvements Drilling from and Sperry grew coming income Drilling and D&E Perforating was service our operating lines. strong

America solid despite second growth this the X% cash North by rig positive Eastern grew finally, quarter. led delivering free flow International we quarter, operating increases revenue generated million sequentially, performance $XXX demonstrated in X% revenue approximately Hemisphere. in flow count. dropping activity And the in well as cash as the

the markets. like what Now, geographies, I'd with international regional and shallow by continued recovery I'm broad-based I by beginning see excited internationally, primarily to operations. commentary a water multiple provide some driven land across

sectors. the is Sea in busy Norwegian the both business North and in Our extremely U.K.

significantly of wireline increased Currently, in North market and our Sea. by large the We drilling sold winning tenders. share have out we're there tools

keeps independent work activity demand especially for U.K., over with tightened incremental come the pricing. ramping that As tools supply and operators balances I up, expect taking and better in IOC with assets will significantly

leads and to Malaysia, dynamics pricing edge pricing and the leading showing those growth. activity better are all activity the similar see We strong seeing markets. Australia, in dynamics Increased already markets. in we're Asia-Pacific improvement India of

has the certain tools open in For wireline of to raise tightness allowed us prices supply instance, hole markets. in

up we've and to change in market, signs offshore gaining future month rig appears consecutive the year-over-year broader growth. offshore anticipate the to for In the momentum. As be was June, seen enough XXth to count

being offshore XXXX start today of However, XXXX sanctioned a the majority have large date. or awarded or projects

high-pressure, jack-up and Arabian it drilling on includes win offshore the services integrated Gulf. an the exploration announced contract rigs is since in Kuwait wells Kuwait Company. we month Oil high-temperature with first two offshore this This six the example For project in XXXXs

services logistical tubing, coil well Halliburton will of summer, contract. under this construction and three-year services, well coring, next testing, the provide offshore Starting majority

entered a stronger Halliburton competitor. international this recovery much

the the increased can market decade, in opportunities that which we've compete. we have actions Over last strategic taken

substantial investments service We technology we line Singapore, manufacturing various our geographies in in downturn. presence I the in first, in international centers and footprint product important enough footprint to specific, be to expanded Arabia, To how in grow physical made our prior our India, international Brazil. the and cannot capacity emphasize increased is years opened markets. Saudi the

be must simply You present to win.

globally These Sperry used investments Rotary critical a lot product I've onshore strategic gaps technology talked in Drilling. both our rotary to drilling we steerable to are international iCruise are and lines platform. made offshore that and closed about believe steerables we the our lines are in for success product you Second, markets. new wells.

critical A competitive will services. cornerstone higher-margin modular not specs construction competitiveness, costs, maintenance of enhance technical this we're of a tool, Because replacing and superior iCruise on with of integrated improve it's it's drilling velocity. the well that our the because confident only our is business, legacy and technology also asset platform save design

U.S. Sea, the in in North it Latin the East. running the America, and Middle well as already as We're

it delivered well lateral Vaca the deployment. in first Muerta in fact, In Argentina's and longest its longest shale

the sensor other offerings. introduced so depth in Another that can than double of see now around we year on the industry the resistivity reservoir, last is EarthStar detection the XXX over wellbore Sperry more the ultra-deep drilling, beams turns while of innovation feet high

has critically in been Brazil, securing deepwater drilling instrumental is Norway, offshore contracts for Guyana. and and technology to important This exploration Halliburton

window, identify and a well Using data the in acquired production zones planned. the quarter, directly the able well's this most exploration Norway wells ever a the pay drilling potential. During tight complex by with second deployed precisely EarthStar were impacting tool, on to the secondary land operator the one well deepwater very of we customer to a

Today, and lines are wireline globe, These successfully highly advanced our and we've competitors. businesses. strengthened head-to-head production openhole openhole differentiated Halliburton testing. technical for going most are testing Other the the around competes and product projects key with wireline

this year. efforts recovery, growth give revenue of and to base capitalize we the high-single-digit All strong deliver on to a international these expect us international

part quarter. The second division, second team's the to the expected our for are ability all D&E highlighted, performed improvement I have margin and our confidence catalysts Drilling and by large in execute. as I international half As in driven intact, footprint, in Evaluation our

meaningful see revenue to earnest. and execution Norway starts costs mobilization India as wane and expect in in We ramps

I've will talked we're provides and that drilling about their other it market penetration performance. and continue deploying the cost D&E further savings our technologies Halliburton. to system iCruise the margin This and improve

margins. Finally, sales and should D&E software to additional end-of-year product provide boost

markets. As I look international ahead, pricing edge discussions various I'm encouraged the leading by in

Although, the we cut international of business. have growing not overall at done we so expense our CapEx

is decisions and right allocation the return pricing Our the CapEx reduction and driving discussions. capital right

internationally, slow to builds hard momentum down. activity the it it's Once

the contract XXXX. into pipeline, to expect timing Given continue the of activity awards growth starts the and current I

execution. North with North Halliburton to pleased our to am team I a performed Congratulations the turning Now quarter. America. for America in how America solid during North

we quarter. hours the and In in hydraulic in during modest saw fracturing in which quarter improvement manifested pumping activity mid the single-digit second a completed stages both increases

to we pricing were well business tell able we margins costs maximizing our conditions. control will we can remained reducing stable, mean While and when market control utilization. you what equipment I improve in perform to our and by our what any that is I This manage

note were fracturing business. on quarter to hydraulic of that results based important not our solely It's second performance

America meaningful C&P In in quarter. product contributions and in fact, service the revenue made other North to lines second and D&E margins both

grow contribution North and are well of America both to product It our results from services share non-hydraulic showing. the in fracturing increasing lines important. and internationally is demonstrates The per profitably our strategy

cement capital Despite dropping this remained our the the effectively count cementing to since no quarter-over-quarter. average number XX% first utilizing product by in with activity rig margins and and quarterly achieve the North grew America additional unit. line increasing per assets quarter, jobs able stable of We're

well technical circulation lateral As lengths slurry's and conditions, innovation increase more our lost a complexity become solutions results the barriers light dependable has mud cement the of in U.S. well curing unconventionals, differentiating losses on Halliburton delivered in century and from most Built critical. challenging competition. and creating

executed Halliburton Permian longest the over designs the with three Marcellus cement long. in and tailored DJ, laterals lateral date to each basins, miles With

driven perforating wireline portfolio generate service line growth and technology to its competitive Our diverse exceptional and product quality. by and profitable continued

modular gun than system. guns. them quickly can and Halliburton and velocity safer any the location our perforating be perforating faster In share lot with gaining deploy not we're makes North which wiring, proprietary business, easier America guns field conventional a integrated to require preassembled

delivering uptake Halliburton with fast more improvement XXX conventional in than quality between growing to runs a a customers, efficiency in seen launch. we're fourfold and misruns, XX% guns, year very compared shot have our a service of by velocity guns. gun With from to Modular guns the just

and to profitability. in ESPs both delivered continued Our our Artificial the have both revenue valuable consists market. It second unconventional very production a quarter and proven a electric primarily outpace pumps, to conventional of which be the asset serving markets. Lift growing submersible portfolio, business, record

budgets the of on that year within their be believe and cash remaining customers' our announced I their flow. for forward, cadence generating dictated activity rest the CapEx free by focus will Looking

scale and drop but will Some for term Majors stay likely Others growth will CapEx slowdown will guidance. will in the to rest may back executing meet their their most to shale the continue efficient of working the their they've continue within plans year their rigs, docks. completion objectives. as been down longer very programs U.S.

America we will basins behaviors, to to in the lower be the activity prices. As gassier down anticipate third different North quarter. more We these due result of be that pronounced expect slightly persisting than a gas customer slowdown in

stable softness margins in next remain near-term Despite the our activity, expect we to quarter.

margins protect performance as the actions by and C&P quarter actions our taking us evidenced working. to these allow are second are We that

in our As different executing a company than we the and navigate playbook XXXX is beyond past.

we to are Here's doing and cash delivering investors. our returns to keep flows what

the reduction to year-on-year capital majority recognize approach of XXXX, our the we from America. North came have CapEx customers our changed decreased First, behavior the spending. changing and of and In own XX% we

reason this the growth size returns. expense in see of comes market at We to and scale have and no sufficient invest when it in

do both flow. line The and improving in directed year to efficiency capital returns cash refurbishing increasing and U.S. mostly equipment, sight we spend of towards that is the this with

Second, we're costs. our operating reducing

profile organization, increased we market restructuring it's example, cost North For several has America The restructured layers of changed responsiveness. our also recently but removing our our certainly, management.

reduce logistics premier costs. We with are partnering our also our organization chain input supply and to

cost to company continue our will market opportunities operations the across right-size we evaluate for the America environment. and manage We North and reduction

fleet we're so imbalance. throughout margins. continue acceptable as our see supply pressure demand to and Finally, where The we afraid but to and we and returns. oversupplied to it to remains better and costs have saves our quarter near do the not contributes line stacked and market righting top lead believe may impact I pumping additional reduce in equipment the will maintenance do not size, term, will labor This the

the we to in generation pivot flow from unconventionals positively North most are taking by that enter will We and actions as differentiate drive maturation I'm these abundance, product In the and to contribute excited America. while growth service Halliburton view, cash prospects. technology about scarcity profit in phase, to expect continuing lines a to represented my our

and to are maximize solves productivity every well improve can required be every production These that success. to Customers their are they for the technology Halliburton dollar spend challenges day. will that key CapEx

cluster service every per well contribution For example, lateral foot sand makes fracturing ensures our a and meaningful automated placement optimizes production. to

wireline convinced the use to evaluate various is than barrel of that realtime. fiber And customers time am customers deliver changes Our is solutions per to open-hole aim better reservoirs their in and to We operators unconventionals, prior that as with engineer cost optics at stimulation collaborating in no performance Halliburton. one money make spend across lowest as growing increased I fracturing business them. basins and evaluating see

call the With Lance update. turn Lance? that, to a I'll over financial for

Lance Loeffler

Thank you, Jeff.

results increases an and XX% to billion company Let's respectively. was of adjusted of $X.X with revenue XXXX. the the first operating quarter quarter Total representing our and income of was compared quarter X% $XXX million, second begin overview for

by was was Now in East/Asia million increase tool reduced me America increase higher stimulation Middle and our in an Cementing increased America, These activity pipeline activity an were lift results to improvements of million were and America. or in activity In division, Completion and our $XXX internationally, representing divisional Production Europe/Africa/CIS. of Operating or results. income Latin increased by X%. These increased driven XX%. artificial North $X.X revenue completion $XXX activity billion, primarily let sales offset turn million, services and the stimulation in North $XXX

Middle globally, East/Asia. America, Latin and project and these an These or $XX increase increased were million improved increases activity In was and wireline our Drilling software or in and billion, of in management Europe/Africa/CIS XX%. activity America North by $XX and was X%. million, increase Operating North Evaluation division, Latin $X.X $XXX of primarily drilling offsetting in improvements America America reduced million an driven income fluids revenue revenue activity activity higher globally. Partially lower were

to X% on driven in and lift Improvements results. were of the artificial North XXXX higher activity by wireline geographical in our $X.X increase. Moving a second In stimulation land revenue primarily partially quarter Gulf was reduced America the region America, a activity were billion, and by in across results activity North offset of the and Gulf Mexico. in higher the of drilling These fluids Mexico. lower software revenue

America as was Mexico completion by software resulting Argentina. and Latin reductions Argentina, were reduced lower in quarter, higher in in the of tool this sequentially, primarily Cementing America the a we and a in activity second up revenue Argentina. well decrease Guyana increased drilling slightly from $XXX to half ramp expected These Even Colombia. and activity step year, and throughout in reduced partially sales Latin revenue was though up fluids X% in in activity million, as and the activity offset region, activity stimulation wireline lower with

XX% Turning lines North partially to in activity well multiple product by throughout driven in sequentially, increased higher revenue $XXX increase a Sea Europe/Africa/CIS. software reduced the construction Russia, the primarily offset million, service by Revenue across region. services and was

pressure In wireline was the Middle improved coupled East/Asia throughout These and from drilling in activity $X.X project in billion, and tool partially were the increased sequentially, drilling pumping, East. by Asia. with largely activity X% offset higher region, lower resulting results Middle increase a completion activity sales management revenue

our remain and expense at it million third the corporate and the quarter. levels to for second we quarter, totaled these In $XX other expect

primarily $XXX second and of pre-tax we costs. the million, a severance quarter, charge During impairments asset recognized consisting of

to structure and in cost operating adjust environment America. to continue As our footprint earlier, current we discussed the Jeff North

quarter it to for for same we $XXX Net approximately was remain reporting next interest million the expense and expect the the period.

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

third anticipate our tax earnings XX% Going and our effective expected XXXX based forward, be full rate we on quarter year mix. to

cash our slightly of quarter. approximately during collecting deployments. made million progress related receivables $XXX We technology our while generated operations to strategic We this in inventory increased from our

positive the rest year to and see direction We generated I the inventory through cash in second flow. free be right a expect quarter as consumed of we the step as

XXXX. year, will We capital flat as for On to working key we will still free year continue essentially cash flow a above expect a with levels. to And be at levels believe, the generate focus full for basis, full target we capital working or organization. XXXX the

full guidance year were remains million quarter and Capital expenditures during our $XXX the XXXX unchanged. CapEx

level, be while year spend to of significantly similar CapEx our While is capitalize this on capital This level anticipate America. responsive conditions $X.X in spend billion that. growth less international to in DD&A will to than to the XXXX our we being market us North of still the allow

At CapEx execution. of our strategy core the is at Halliburton,

the our our customers discussions environment. and focus cash this capital generating our Our returns on the with of drives with regardless and for allocation behavior flow internally both is investors consistent strong right market

Finally, we continue delivering our returns. focus shareholder on

share repurchases quarter $XXX second shareholders via the During we returned to and million approximately dividends.

our turning Now, to operational near-term outlook.

is the up. on shaping you comments believe me how quarter third provide with we Let some

expect Africa our be lower we Sea offset North America. by and and increases to the activity Asia in For Drilling division, in and activity North Evaluation

up expect we catalyst with margins All-in, sequential be margin for improvement Jeff basis see low increasing XXX points we revenue XXX that impact single the to described of to earlier. as the digits D&E

At by our of our activity efforts. division, Production activity offset and higher internationally North cost and reduction America will in Completion the impact lower be

that to single down revenue remain sequential believe low we result, a with margins digits expected As will flat. be essentially

turn to Now Jeff? for over closing call the I'll Jeff comments. the back

Jeff Miller

in XXXX. is should supply summarize equipment continue Leading balance various Thanks, and tightens upward today, trending edge demand is internationally geographies. improvement and building To discussion momentum activity pricing Lance. our into as

international to executing and North and recognize behavior generating growth. changing footprint cash We flow. the free and to capitalize customers playbook the American technology new portfolio on our are the a of has this expanded Halliburton returns keep

successful taking is to Halliburton market. be the right this actions in

overall returns and We pricing allocation in well. plan decisions is in have capital XXXX and CapEx XXXX do so cut driving right to as the This discussions. and

costs. We our are operating reducing

We our our American logistics chain partnering and organization with also input reduce have premier restructured and supply are costs. North our to organization

to with stacked equipment focus and so quarter throughout on have a continue additional will do the We returns.

of strategically fracturing are increasing non-hydraulic share per of growing lines. services service We well our competitiveness product the by our

that and a on And mature improve financial industry We productivity, will leading shareholder market. finally, consistent superior requirement remain focused delivering we're providing developing execution, generating of well unconventional technologies a performance returns.

And questions. now let's it open for up

Operator

Thank you. [Operator James Instructions] with Our first West question comes Evercore from ISI.

line open. open. button. mute is is your check Your James, your line Please

Jeff Miller

you James, there?

Operator

with Sedita Angie from comes question next Our Sachs. Goldman

is Your open. line

Angie Sedita

guys. Morning, Good Thanks.

Jeff Miller

Good morning, Angie.

Angie Sedita

in interested I comments. thought I was So your

on growth can a of even could Could you be as on see similar revenue for start pricing for And degree you did color momentum to the year. incremental international seeing see expect to do into Let's markets the could it levels more us then continue international a and you're it the next the in Maybe give or side change you XXXX? region-specific become on we the side, little in XXXX. we momentum going widespread?

Jeff Miller

Thanks, fast for example North International Yeah. as doesn’t America. move Angie. as

to see it of of encouraged because And stay types we're today So, a when started by tends that XXXX trajectory. on really that we seeing that XXXX. things trajectory, the FIDs and don't number until get of I'm

was next for doesn't Kuwait, the though won now. the it begin until middle of example, So really year

And for trajectory confidence XXXX. about we're give so, the now, that the seeing me FIDs

XXXX You're me. when yeah And into for XXXX early call I next that similar kind to But growth rates growth I yeah, XXXX. seems you over to see year. think that meant carried trajectory of reasonable a

Angie Sedita

Okay.

share. some first in versus And for proactive the then for -- market kudos being North helpful. flighting land equipment on America this market, Okay, stacking on

You and commented your some they one said as stable, pricing seeing peers seeing that of pricing you're softness. are

little a and QX even off bit of we into could talk drop could far as QX about then that degree in as So activity? pricing the maybe see you and

Jeff Miller

it terms I start for That me that a us stable balance, very pricing. see stable. let perspective was in pricing mean doesn't But isn't competitor. on there our of Angie behavior occasionally something by from through mean with QX. we Yeah,

look with from would weather down as more seasonality we year an down QX. As of comes at see budgets all the always Obviously, around said in I would step slightly certainly well the it be of given that activity we standpoint, balance I've that, suspect QX that.

out it what's will we're equipment, just sharp stack do is the described where and demonstrated think returns and focused our mean out. important it we playbook We've we here We're I taking see stack way really I equipment different. very as is come approaching market, costs on the you that But needs dead margins. to around are

And way so the the of the we that's see half kind second of year.

budgets Obviously customer I that, talk spend instructive second what the they're but in QX, know thinking, of But we through be We we also that yet. the think our when know look so where don't year. customers, those that we do the on QX. come at to fact need out we will know half is to

customers, the markets I as traction driving And that I capital And certainly seen and we're North pricing tool It one We've with in We're that well. shortages is around discipline the demand the the guess us. in we it you'd getting few anyway our question seeing right other by conversations just of international choices on see is ask traction. and think pricing. getting quite standpoint driving Sea. a frankly that's follow-up right from It's part what Angie. international that

Angie Sedita

turn I'll Great. over. it Thanks.

Operator

you. Thank

Meakim JPMorgan. comes with question next Our Sean from

Your line open. is

Sean Meakim

Hi, good Thanks. morning.

Jeff Miller

Good morning, Sean.

Sean Meakim

how walk playbook, And terms is this a at you a cycle agree thinking like approach. points? that a you and flex different early maybe in putting some evolving flex with about mentioned is year, still together. of CapEx thinking you're that it's different seems your of working looking from but the around us bit you're bit you're I that year. given know how in I of budget it Jeff, certainly the So Could through next just a little

questions a I frac into next frac out or with with most that fleet, thoughts maybe legacy you now us electric help, think may not is, little investors those largest may for bit? year? for one factor common into how wrestling of the the Could Halliburton, frame are

Jeff Miller

planning around wouldn't CapEx the planning in Thanks, mean, wasn't we're But early highlighted Clearly, to XXXX. I Yes. the it meaningful. for Sean. if in be I we're have stages. early going

XXXX, to important, capital So, XXXX. sacrifice don't decisions and kind the to and believe support if kind that room continue we America that we that have we and grow in firmly of of CapEx is we and just internationally, into scarcity opportunities North still behavior customer that, discuss will driving, growth then budgets

is With know something and now. in respect for some fleet to we been time those a and a we lot the electric fleets, field this we've is about testing this also had --

So, -- we new how also to But this deploy and isn't going about we're be it's thoughtful us. to capital. where

look we So, is that's the particular market at space, -- as that over-supplied.

I with we presented fuel year to choices about that at electric mean, every And from some replacement. CapEx, see as of to that. look the we lift that we and but an that rolls Do replace don't the of that So, evolution, our so, think part or when fleet with a every be when customers today. at point, off a see standpoint fleet quiet dual get could for and willing case around fleet end year, we're And I we is pay in we asset this fleet? or more an this

frame we how of kind that's electric right now. So

Sean Meakim

will look that environment the about collections the in to capital? Are normalized the source across bit impact can there's in You at mentioned half How talk first fairly some we at Thank stage? frame here? for convert the build And more challenges this still and of XXXX? would we the as you would a feedback. you types or you out we back your back I How half. operator expectation characterize I in appreciate that cash a that. different a of that then mean, of that half inventory Lance, the year working little

Lance Loeffler

for thanks question. the Sean Yes.

trend of two the free that So, that $X generated over expect look in last billion over continues we've flow cash I years, XXXX. and

of path improvement second But throughout but We D&E to and improvement first free with to business, our right? QX progress the that the continue in flow I course half sort half second starts QX making that that of generation work got margin particularly DSO also of on to it year. the with includes do cash we've saw the the of year, will XH, collection. Now from the in suspect

is in considerable In the We've a I inventory and first to amount well that invested it half in to second we terms of deployment burn to year in half inventory the as true. of expect that the addition as iCruise normal in expect you year of Sperry as deploy the our the technology us mentioned, half in year. of down the back that delivery traditional completion we tool the continue

So, I momentum cash our of adding be flow. think both free those to will

spend We I'd not around unusual. too, of reiterated billion of also is the in of year. first in was rate the $X.X our point spend year Now, heavier CapEx in half this out our guidance which the

will have well. spend as it So a slower in of second rate half the

Sean Meakim

the it. you details. all for Got Thank

Operator

you. Thank

with West Evercore comes James Our from ISI. question next

is open. line Your

James West

guys. good Hey, morning,

Jeff Miller

James. Hi

James West

hear right? can So you now, me

Jeff Miller

Yes. can We hear you.

James West

Good. All Okay. good. right,

phone That was issue that. today. about Sorry a

So question Jeff, see my first international we're starting acceleration. to some here

type or you the you we of double-digit of Could out we XXXX? XXXX some where see to get maybe in start got kind some a of even levels, current plus in at kind likely going look growth offshore, internationally into plus be dip As above volumes into pricing. to you're to scenario growth

Jeff Miller

to not James, Yes. this to ready XXXX call reason believe not possible. I no that's I'm there's point, mean at but

into thing unfolds. think, and we to sharp going we going eye and again as But margins grown keep And though are want dead I focused are we're where to with to margins market be on going going the can quite stay that I a XXXX profitable demonstrated we're on internationally. we bit a we've grow we think, growth.

James West

enough. the tight Fair tight. a we're profile. hey, the What's having you're markets, that on obviously Good. market of of in I or the pricing, margin know and is back big the to understanding adequate part level lot these international road Equipment's level need conversations, And push now you -- when what's is on Okay. return? generate pricing a you're the

Jeff Miller

bigger Well at pricing work and it's I service the those with that state returns and and look customers would well need we all say to sold adequate done group gets aren't that of be bigger of a that bag. also lot can our a so say do more It mean and and customer. realize the that are also adequate mixed by isn't that tools when we a scenario time. out success I making have or It a demonstrate that's of choices we group and customer helps helps. and customers that

quality that it has seen quite frankly I've Our service a never is before. level Halliburton

and is we offer so And to very we're a talking have what product fantastic pricing comfortable so about today.

James West

Got it. Thanks Jeff.

Operator

Thank you.

question next comes Citi. from Scott Gruber with Our

Scott Gruber

Yes, good morning.

Jeff Miller

Scott. morning Good

Scott Gruber

approximates at So your days come market build-out? but at the in to that rate e-frac the back to relative a for industry I you demand assuming it's a the realize wanted technology, that I pull to share look for strong e-frac. early does materialize capacity the technology, would

How slowly and is than the free important share for flow Would enhance seeing e-frac smaller that cash an it's about you risk e-frac share? more your factor of share think your flow balancing free look with within you do invest to at cash you? to that even current

Jeff Miller

first foremost are us. Look for returns and

of And the and sort replace. pace we're terms just make choices that are this what so we normal in keep how That's we all share with those schedule It's returns. on. of just looked the we market. perfectly around with technology where we already to is From if up that the happy replacement perspective, a deployment at in a we're the adequate I'm actually of describing returns

making together to saying better -- or it's we that's pumps, return. what's to are our I but it have not same where From approach is perspective we see the not or and pumps we have where be. want power it capital at least that capital be certain to what returns than doesn't proliferate. not out around today That's make a returns it's really somehow so there saying going the a a don't endeavor love really that less to the participate, more Halliburton we today And make want it's more for lower efficient I'm or we

Scott Gruber

Got based ramp turning just to does more a year-on-year. you. it guidance that D&E. the you material flattish in margin then to that's like revenue XQ achieve Lance and in required provided on And look the

like incrementals. that's Something XXX% over sure if Not almost maybe possible.

for numbers around are it have year-over-year But to incrementals incremental you looks if basis? revenue a trying from quite flattish that rate shaping still about the play just elements are and be to some using large. perspective there XQ the I'm would growth. the thinking and mid-single-digit like margins up How with on

Lance Loeffler

continue -- I to India. We're fourth doing see the the activity we'll like places quarter think to in and see terms the Sea also going continued we'll of Look in we're in we've than have of the to North more a had that years tailwind got sales just several around given that recovery be strength this in the also last will prior year software we've -- visibility in that. international the momentum

just think But to to back D&E I XQ come I it, produced XQ. look incrementals to believe XX%

I think that talking that business clearly been about. the international recovery what helps and we've

I But as a by while halves timing two halves describe the terms to to And going things that the or you're business communicate perspectives the we in to continue down that is what is of trying to we're it of tale technology message was Sperry see certain think year. a Street. two in to certain right that's that, we're new of our weighed difference trying market deploy The from the

Scott Gruber

color. the it. Appreciate Got

Lance Loeffler

Thanks.

Operator

Thank you.

Our with next Herbert comes Bill from question Simmons.

open. is line Your

Bill Herbert

D&E a for morning. second here. just sticking good with Lance Thanks

regard been half drives first the between the D&E persuasive in mean second terms and what get half with you've of difference margins. to So I fact. consistently

we're conviction in dead -- But to to second to for XX% XX% which beat the is the implies just in get trying reiterate the D&E year-over-year question, flat margins of relatively of QX? and to here. half be margins Sorry kind neighborhood -- the going horse high to is a

Lance Loeffler

Yes. Look that the ballpark. Bill, be I said think on I of prior or in sort the flattish call we'd

forward in in second look, execute looking stuff a that D&E of behind think picture we I to paint the a very go what tailwinds first profile got but there's margin the for they of different of half the terms lot and than year out did have we've the half. for

Jeff Miller

we are guns finishing, we're see about implementation now. on I out. helps. them that velocity mobilizations D&E other rolling equally some those They're those the clearly of the Bill That ramping. talked finishing and Sperry means, things other technology helpful. technologies There call certainly are

sales And the it's year-end then in software the past. better not is visibility than been but around product just

I the so, are we're intact. certainly confident but prescribe half ramps can't catalysts around And We up. the -- think necessarily, cadence second

Bill Herbert

right. specific I Thank influx. build but you. conceptual the I'm reason, to hear again And trying get number I to No, get a within just you.

for the contribution question C&P of kind if rank you first, Second could margin me improvement, quarter-on-quarter. multifaceted,

is did as sales the extent frac get what of you. also I'm trying And now? percentage product improvement? And drive your to is what then margin what Thank to stacked fleet

Jeff Miller

or decisive I sure of managing mean, we're allocation America in I'll the great, of and that question great C&P Tools in sort on I being in important. terms what's is But think start performance margins. and your sort -- Completion around that's the costs what of quarter. had seeing I of But a of we're C&P the sort North of majority as look I we're results the with making think think doing we're moving quickly reflected well. some

Bill Herbert

Okay. And your that's with stacked? regard to of percentage fleet the

Jeff Miller

Yeah. Bill, I not going into specifics. competitive mean, we're

sense you in what have is. a I market the you're that so think of

come make point certainly that it will continuing revenues, I stack think to is I that higher but lower slightly we And with are margins. equipment the when sense. think doesn't

Bill Herbert

Thank you, Okay. sir.

Jeff Miller

Bill. Thanks,

Operator

Thank you.

Our Bank with next from Merrill question Chase comes of Mulvehill America Lynch.

open. is line Your

Chase Mulvehill

morning. good Hey,

gun you compare that on and into have trying push integrated the solution the the a that about the earlier So, maybe the you wanted that to leaders talk call. I the to bit solution guess, you I little market? perf then mentioned Could talk maybe frac about talk preassembled there? impacts kind out you're to of market of this some about And out just how solution it

Jeff Miller

Yeah.

this So very is tool. competitive

In fact, making business solid a got been years. in building because Texas we've we've charges where for we're and fortunate, Alvarado, manufacturing

guns So effective. go market as highly velocity into the

to it's We my us. for of bringing And have also part benefit is certainly different to view ability say just I'd configurations, the as tailor overall, cost. those the down in required a which

around effectiveness America. North integrated wireline the is in This

the having can together. get performance, there work things we actually cost two So than a sitting we different and which change is that out lower way better to to just

Halliburton, number goal to shot to on-location allow described cost number the just we guns potential continue mean, but by unit the who technical -- I not volume. drive grow. as us us -- what of I'm guns misfires. XX% is velocity really the excited of down volume continues And misruns actually it people, change of about guns. to gun the of the But as changes a doing reduces the of lot content which is It the the we those or the see allows to certainly the

the competitive over just it's -- that one of time. that things gets So more

Chase Mulvehill

obviously Sperry. All we of leveraging better kind And and the sense. talk your Okay. and Sperry opportunity edge of have to a of working Appreciate Sperry back Could mean, lot little color. leading coming bit, and to have about in land That a companies I been think you kind rig technology? a right. when you about potentially guys with penetration Sperry some to closer makes the investing then

Jeff Miller

we look Look, those things at. all are

I the different rotary so, sort and animals very really think the exciting a the in very about many. of steerables but and real-time What in really marketplace. fantastic just that. really kit, it's is integrated motors this steerables mean, into are of excited rotary doing I and data automation, is we're real-time, not piece for and

you of and contractor. lot at be market, I've be if just always been choice open by clear want believe one, can architecture that America, that that we look example, is there an aligned didn't customers. with it's I to North a for exercised

put providers. make functional So, of lots really sure to of with is we the in been what market we've always careful

And certainly the sort so a steerables. that's thing of around rotary one

I'm quarter of last solutions our it I customize about now talked In excited allows Motors the to that, performance. really clients Excellence. Center motor, because motor us about And for around our

in do in and but there very XX-hour rock So performance a And that business. of bake retain learning of only that efficient of the and into in-house not is motors. allows terms the customization, the also lot to having turnaround type a us variability sort of

standpoint way So got and does us now. it operator from we there how work we've is, align best I it is something about proposition for but it with how think that's I value think interesting, more a it that the

Chase Mulvehill

I Jeff. appreciate right. the All Very Thanks color. helpful.

Jeff Miller

Thanks.

Operator

you. Thank

comes Kurt Our next from with question Hallead RBC.

Your line is open.

Kurt Hallead

morning. good Hey,

Jeff Miller

Kurt. morning, Good

Lance Loeffler

Kurt. morning, Good

Kurt Hallead

Hey.

have in can being frac-related businesses. context Wondering you I of stacking color capital to and I equipment question. disciplined the guys as dynamics give So on appreciate are first you the stacking guys some fleet? as relates frac retiring U.S. if that's about or look on us industry thinking versus own at equipment just say equipment? How what you let's whether sense the might attrition your you be, it

Jeff Miller

Yeah.

there's gives all I think the so together. retire, the I replace -- and to would ability when view a in of my us the always have repair, say that. -- managing is And that we're and it fleet guess, replenish, fleet, always clearly way we the we big I take

Some equipment that stack ready back. is go to

out Some is I equipment system being have that we pace. at how was what that describing is comes of equipment actually around and that the replace where equipment retired the choice we

don't don't is just and capital no fleet think the the coming hard working. We occurring in new I equipment spend equipment question it's So, see There's -- attrition up. is the way. marketplace. going working with how know and into we We see careful that market that the really we're harder

that of all attrition. conspires drive to So,

at know the physics all As and but pace in I until that call sand steel there's of of having in America. America, the I've fleets the on hard on see I effect broadly there attrition point, is the North fleet through equipment. always a suspect North said it's its do some to fluid pumping will be

Kurt Hallead

Yeah. And then maybe great Appreciate Lance. That's color. that, for Jeff.

Completion the a gave Production. typically revenue you of margin decline when insights dynamics rest for a certain business some it. the in I You good decline you'd color segment year. was on some along And with would us really margins maybe give if on additional and D&E the see the wondering as well

have your points decline guys level that quarter business you revenues that going C&P specific you of to for can given of here flat. such margins -- cost be that momentum to down, have decline hold You your think C&P efficiencies margins even though kind if third they is are to are even where going quarter Do data in suggest structure are kind in internal stable? that your a again could fourth at the the were

Lance Loeffler

view towards Kurt. I Yeah. I good what that's got the right? quarter in specificity of America quarter. to we North cost call can quarter's continuing talk terms fourth intent. what controlling I quarter what we'll mean But that's call and quarter when working in give control. for in the any better third we out next save like that's mean so on get question, Look what a mean obviously, C&P. for we've I'll But think, the manage we of looks I about one fourth a That's the to we're

Kurt Hallead

really color. Nice, Thank you. Okay. That’s great. appreciate the

Lance Loeffler

Thanks.

Operator

you. Thank

comes Our next Anderson question from Barclays. David with

open. is line Your

David Anderson

I in America. was into new just think who a I Jeff have as wondering Western dig you new Hey, there evolution in Richard you know view well. the of head Hemisphere, there could of in I is on playbook just maybe Mark if North a this been bit little his putting

market if confirmation little almost fleet sounds probably is as now arrived playbook? early well. as us during always can you're be you long to this background like remember can I as stacking how -- HAL as of as guess may sought -- downturn But improving a But share I new per It as equipment. give you at far the just that playbook? the EBITDA

Jeff Miller

Yeah.

best you're to Just And new yes. chase, answer we to that -- we yes. patterns. is there's when -- returns. recognize want to the a the cut address it has But action. that playbook is in The in change the changes What to is spending the what customer seeing

years a seeing the was customers right needs spend ago change of what action. several so what was when to different playbook in so and you're cadence pace and there And that's today

downturn around to into sharp capital see going what QX. we're be described but super downturn. we slowing say for activity I is I the so And the that

something with most back. waiting not if to the return below on be to we're that somebody and quite for -- back is equipment. that and spring down is sure to it's else But back our capital slightly to people add want not system that us important cost. are want we the make required, to we What how our comfortable let it's we know prices equipment return go CapEx. I'm is -- when down us the so we that when we'll reflects CapEx there a most demonstrated our importantly But making at that slightly do below what's We've

we're I playbook. that's the So we're how how But that’s that's the it clear. new thinking we're way about hope on not that's executing thinking about –

David Anderson

In talked integrated product its new certain this bundled other models you say? whatnot, like lines hurdles? past playbook, you this defining lines our How one in return each each each and on words to So has because product and have -- more sounds hit lines of we'll one get of Is view stand viewing separately? model but to service are do about and we've in your own. them that basically fair the to of

Jeff Miller

the down around we was of revenue executing that's spend return. with America. in happy lines. lot everything say was a of has And each cost, the around XX% would fair. of half year-on-year. Though work the we we're do same year, Yeah, Sea, per speed at of it's but And make a a doing that do up the we America pleased really in in and time, around equally non-frac America I to when to of yes, decision-making lot and like integrated But the I'm North our available the service of was North the and that that North in those so reorganization North part rig first world report

of around of all that's those So, focus service sharp evidence that lines.

David Anderson

just lines in this trended the is out you of other could those product how driver service How spend general a if lines revenue. has how and being of How that lift and NAM I of year? trending. lift -- is compares and that in market pace one just called the wondering talk talked are you about Lift that lines higher you that about was Artificial the So, installations?

well? all you We expect about still kind to ESP with trending. holding how Do hold lift? up the up Could know on -- doing what's completions. well? going color pretty little you on But just market a it it's what to that the drilling capital Is is that's of provide

Jeff Miller

really OpEx and in that's out to business of production those feel clients some what means and part clients production that's growing by that's prove produce we've say I they Yes. like growing business. work. reason every customers. for and I excited matters needs about in well businesses. it's and building And and ways talked an a because OpEx important to production. the chemicals think about that lines ESP And production the same support our our Dave that I And I But mean seeing production you're way lot falls it's to effective along so because spend the

David Anderson

Okay. Thanks Jeff.

Jeff Miller

Dave. Thanks,

Operator

concludes you. This like I to turn the for now Thank question-and-answer remarks. would conference session. closing the over back Miller Jeff to

Jeff Miller

Yes. Shannon. Thank you,

of reemphasize I'd close, points. like a we just couple to Before

building the that's and the into and new In costs, of First, and I'm cash XXXX, about drives reducing North playbook balance the America, international reducing stacking fleets, better execute XXXX. CapEx XXXX. flows margins that momentum for plan and to our recovery, XXXX for the excited free we growth

to a forward service and please on talking close lines terrific for growth. focus well-positioned next non-frac the profitable Look you again deliver our is to Halliburton to Shannon, out and Our organization opportunity is call. quarter

Operator

wonderful Thank a gentlemen, and and day. concludes joining Thank you. conference. today's you have Ladies this for

Halliburton (HAL) 22 Jul 192019 Q2 Earnings call transcript