HAL - Earnings call transcript Q1 2021

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Operator

Ladies and gentlemen, thank you for standing by and welcome to Halliburton’s First Quarter 2021 Earnings Call. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to Abu Zeya, Head of Investor Relations. Please go ahead, sir.

Abu Zeya

Good morning, and welcome to the Halliburton first quarter 2021 conference call.

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

me Miller, Lance Jeff today and Joining and CEO Chairman, Loeffler, President CFO. are

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

also sales impact the to equipment. non-GAAP exclude modified from include other include comparability dispositions plant, and our this that measures a of our measure it metric including metric, nature Beginning flow of of believe asset large is non-GAAP today this improves this we and relative the charges. We impact financial recurring peers. financial free and to in Proceeds of Our quarter, have impairments cap property, item comments cash

for prior in the most quarterly we please queue. others Additional details our ask for period Presentation yourself you recalculation in are can allow be found and Q&A first and also our of follow-up one remarks, maybe the that this comparable one quarter reconciliation to results to our section of who related question the including the during GAAP website. prepared After to in limit periods and measure directly included measures financial earnings release and time

over turn will the to Jeff. I Now, call

Jeff Miller

everyone. and Abu, you, Thank good morning

continue world lockdowns, five-year increasing down economic Oil good prices. start actions is off is to demand build. and experience though demand globally. even to The averages, are some are near Oil and overall their recovery support We to regions commodity still reopening continues year. OPEC+ this and a inventories

quarter strengthened confidence how our this will about transition first year The play out.

of strength strategy in global Our this first market operating leverage our and the performance quarter recovery. demonstrates

while highlights. more the XXXX. revenue in North America markets, some drilling completions the in other revenue Marketing XX% expansion recovery regions, offset Latin as grew inflection our margins in are strong declines Higher remained International the X% significant activity Here disruptions. quarter and operating despite sequential resilient. than supported fourth international compared and of utilization grew activity up America both to leverage quarter. and throughout weather ramped margin

North and Our offsetting Completion and increased America Production activity regions. Latin seasonal with declines America in division X% other revenue grew

Evaluation and in Our stronger margin and Drilling sales X.X across division America points, by percentage and activity XX% delivered solid margins increased performance. North software driven revenue multiple regions. grew Revenue while drilling

which the success. quarter, is This Finally, another flow and of great approximately free delivering free step for that quarter cash million delivered in execution will first solid to we a path Halliburton’s priorities our define five full strong was year. on strategic of flow drive first our cash $XXX the

cleaner integrate in digital internationally; committed improve efficiency; in North participate technologies; profitable actively to maximize accelerate and We are affordable value capital growth advancing drive and America; energy.

performance cash quarter free flow these and generation. first our boosts Our returns that actions strategic aligning our priorities demonstrated with

industry-leading returns We move year. delivering flow strong expect free to cash the continue and through as we

anticipate activity we activity all Today, beyond. We second quarter saw regions first growth that across by will the we during international early indicators in in inflection momentum the are and internationally. gain the of recovery encouraged see quarter future and

upcoming throughout leading indicator a significantly orders, The increased. the first has of tool completion orders of tender Our volume quarter. grew work

see coming a experience the increase the multiple will conviction compared greater that We in Latin Middle to the us markets activity year-on-year. followed value international the the year signs growth. last give low second These on of pace work most by believe will East, America. are of in We double from bids with this double-digit to NOCs year nearly years the of international half submitted

However, and international prepared from better from is cycles this Halliburton’s expected be to benefit to prior business structurally upcycle different it. is

why. is Here

the We other cycle and increase the and this growth. will the demand future to producers investments meet share NOCs to Halliburton capitalize expect short on barrel growth. has footprint and established oil relationships gain customer

should deals harder work In service markets, intensity. production complex, Their As meet oil are incremental more demand operators become of hands. more changing pursuit certain assets barrels. smaller maturing growth to produce require future and to higher

portfolio, markets. flexibility New owners efficiencies technology remaining Multiple require revitalize helping of reserves. production equipment commercial local international In and was XXXX, availability technology collapse. back to customers proven early of limit and Halliburton’s tightness, service with demand and reductions unlock but increase pricing international company the paused their objectives. on these years the pre-COVID, experience are their broad equipment and expertise, assets the to achieve oil in beginning CapEx

rebounds, expect pricing to tenders remain edge we competitive, increase. activity leading but As should the and large world reopens

this: profitable is us Our strategic We innovations help priority our to growth market the as factors recovers. believe deliver us the expected expect we investment will recovery ongoing international first, accomplish following benefit as the technology unfolds. clear; in

improved material it high For well downhole innovation for a seal operations. introduced rock-like metal suited for abandonment a high a is example, and integrity as into in as with when we pressure completions specially material the and fluids. Ovidius permanent reacts as well long-lasting leader the to and Ovidius global Isolation plug temperature It uses alloy creates environments, Expanding science Packer. technology, transform

the is example our of deliver iCruise to of Our incorporates latest the Middle drilling pipeline. China. rollout drilling XX% speeds drilling digitalization. this good sensors, in completion successful quarter, science, increased The an offset intelligent three system pipeline results. In material wells in in East; and continues compared for offshore the customer iCruise a improved Sea North first rates time days XX% R&D saved to tools operator rig advancements excellent the of Ovidius in and telemetry one

start multiyear potential solutions electric East and Middle fields to to volume in plan second the local first year. this our ESP in contract ESPs many executing artificial as pump production. Middle continues strong and in unique internationally for East require the focus natural on submersible our thrive proven off technology, Production future expand with lift Second, sustain business and the growth We a a opportunities. flow significant of on mature see growth, this expect presence, Summit come to growth half the We With across region market. we profitable to in

progress Saudi towards we we plant chemicals completing in actively participating specialty Arabia, As activity. are regional tendering our in

new will plant business this addition manufacture our chemicals providing In also for opportunities, internal to consumption.

in and for deliver beyond. Halliburton to profitable growth XXXX savings and plant new the expect We cost

drives latency essential deployment This believe algorithms. accelerating efficiencies. transmission first digital North fidelity, we is digital system the of data virtual technological and use to international our introduced and for are differentiation, with Finally, integration we quarter, technologies low block a in data a margins, the and intervention real-time and customers. higher highway creates new are an Sea. high data remote In internal human We tailored real-time the for operations that building major customer performed contributes without

service specific It integrated cloud a digital important management, is extract We the workflow an employees variety a technology better helps digital processing in uses our decisions. lake. are proprietary while services collaboration a private This information language on workflow in virtual of and efficiencies. also associated execution. from our to a knowledge These operational in natural locate digital in and digital East. action launched from contract improving make new technologies Middle journey documents data our This planning milestones facilitating to for data

staging the integrate real-time to platform architecture that open In technologies oil price our a will asset. the and a larger entire environment, digitally-enabled capabilities Halliburton’s many Halliburton’s information strengths deliver profitable international viable of providers using across recovery. a are recovery. third-party healthy shale current We new the multi-year operators believe current growth customer, North portfolio I America from and economically in projects. Today, is have

cadence operators increase and unfolds. Privates year to serves improve. groups and year. capacity. our to their in rig in average budgets a we the of year recovery of expect the customers longer steady market announced grew aligning these to the stages. have flow we the a spend public work activity their sequentially continue solidifies this program customers the remain The quarter, outpacing are to term the today customer activity our majority seeing allow that year. second as cash their disciplined objectives. But companies the some rest our maintain capital efficient XX% and what as the prices for programs. meet As productive in to dynamics result, confidence operators should Supportive first the led first commodity in the transition completed to the count a still with expect both should of land half in mix growth of more Customer committed half We Halliburton U.S.

increasing out Last operations. year, differentiation our for for continued filling reset redesign and we year. in is our America calendar drive create our we digital cost and technology approach the demand XXXX, of result, our to service a delivery Adding used significant structure. As our is cost in the to rest our equipment of up North to cost

how use supply As an addressing loads day platform transform Without software our thousands also and and per Land trucking artificial to platform business technology we issues to optimizes a buy, and identifying America. Operations. North fits drive with and an of human This example, designed leverage intelligence Vorto’s our move, America. digital within size intervention, in we’ve engaged sand our chain to down our U.S. sell relative our company differential Vorto, that with margin competitors priorities Together to logistics while value widen sustainable strategic operating and should in before they our maximize our to costs in North occur. with scale,

right improving direction. first step are performance margins was another our quarter We in and steadily the

As utilization, grows. to smaller we and alignment a customer technology, first base with as based demand innovation, performance see better and on Utilization the to look step continue upside we utilization the optimizing intend is right we our pricing. market equipment to ahead, margins margin

in Given scale, today, the operating command emission Technological solutions flow the increases premium demand digital expect low and should expands. Halliburton market both and our America. is alone they leverage cash as our innovation from fuel the generation electric we North market a step. leading has and differentiation the will utilization in improve dual next impact

the wireline source. our all-electric in delivers limited Permian system, scale our than pumps in substantially using new electric and unit efficient As horsepower X,XXX E-Winch to up depths the only e-frac. tech reduces deliver pumping our emissions has Halliburton Zeus Deployed and for hydraulic includes fracturing, center fully R&D a the electric command power-agnostic, grid proven frac Basin, the power electric Zeus capital by higher ExpressBlend the flagship XX% integrated to conventional pumps, site our solution levels and unit, leader QXX built blending performance

and suppliers inflation our components As our seeing customers our line our rise, we of are with in with certain costs we in market. cost pricing to input are adjust working gross the

sand, power customers While and materials Service deliver increases more raw and economic additives, Halliburton a Halliburton’s such these improving step. technology procure pricing have winter activity our disruptions manner, and allowed improvement both and is weather to us and in cost-efficient chemicals, U.S. cement to the materials costs, in that competitive. purchasing led are final

We improvements. are pricing future of equipment see but signs limited drive has rebalancing yet positive we environment. there market the to current capacity Total grow not pricing in fracturing room that should

we We in take will advantage Continued we maximize more than all we priority integrated companies to market is includes strategy, the and of and from key to many will dynamics, multiple market. with whether for and others efficiency capital we in important service digital that grow strength advancements on lines pace us and with dynamics North working takes to intensity cash our or the allow Halliburton’s deliver insufficient in the positive benefit move attrition to Consistent market value up. actions knob solid reduce capital every free businesses generation. to equipment to moves opportunities. this strategic America and and improve of technology because finally, flow provider, pricing drive that leadership participates required Halliburton industry in manage product turn service This when greater our continue North forms business. many consumption related, equipment rising today to our returns changes speed process the And believe service an which and America and respond are altering

of continue we was a actions. demonstration to first and quarter build this these The will on good

innovation of a on also impact cleaner affordable reduce achieving to advance our priority We producing and and sustainable has to executing to this and the advancements are oil using three-prong energy support to approach strategic objective. gas. technology energy Halliburton environmental

our from the targets Scope commitment our to of to in environmental footprint released and two emissions by and First, year. with reduction baseline. follows set This XX% our goal the to consistent XXXX impact achieve we our one recently target XXXX announced last operations and carbon reduce is science-based

innovating. are we Second,

to their gas We continue to solutions carbon current and oil and profiles. develop emissions deploy help low operators lower

We in applications. energy also technologies our existing renewable use

market For is for opportunity example, expansion growing attractive Europe lift today, the rapidly business. an in geothermal our represents and artificial

currently geothermal supplying electric designed bore project in pumps temperature, large on the applications the are We high specifically for submersible well Germany.

and to are geothermal waste our wells companies. batteries power, high and quarter, And are are renewable a excited services clean chemical. first Halliburton carbon progress We cementing working the They generating for new the and water techniques and temperature on of In accelerator. energy we recycling Labs, in increase electricity about announced for into organic We of and group lithium-ion converting Halliburton providing inaugural sites’ hydrogen-rich cementing finally, plastic that drilling participating drilling solutions also transforming dioxide, formulations we economics. capacity renewable geothermal Indonesia. directional and improve project platform Labs’ developed of

We companies future are these the space industrial collaborating Halliburton’s as clean inform energy and decisions and increase engagement strategic with achieve the expertise further and This transition help evolves. energy scale to valuations. in capabilities their them world-class will providing

Lance of cash more applications we sum continue of details year. the and half returns deliver believe to to recovery are recovery Halliburton multi-year free innovation. as companies We momentum participants strategic industry-leading second we unfolds. Labs. now on up, over execute key the turn on taking positive in America our focused will on the and market to solid to international entered financial the our the optimistic to North priorities next will Halliburton clean XXXX for will flow To in I anticipated and results. provide in continue accelerate call Lance? early-stage cohort will early bringing continue We the as that the energy

Lance Loeffler

you, Jeff. Thank

company an this an quarter operating income our fourth an fourth and in quarter begin of overview was adjusted X%, X% of the Let’s Total morning compared to the XXXX. million, was our $XXX the billion, quarter first income to the $XXX quarter $X.X XXXX. of of of with results, compared of for revenue operating million increase increase

Russia, intervention completion pressure activity Operating tool increase negatively Eastern Eastern services Hemisphere. by completion stimulation representing divisional reduced impacted by operating and Hemisphere. Now, of well pumping and increase Argentina seasonal $XXX million, pressure division, North results the in me in lower These Latin little sales and let a improved revenue services moment were stimulation higher activity increases sales in take Completion in tools was decreased in cementing or America, offset higher decrease activity America. and as in by more an East, our North in of in a in to X%, primarily Production and driven billion in was lower sales artificial a our In income completion revenue lower The activity Middle XX%. was and cementing discuss while partially income the activity the detail. reduced bit higher was Sea, primarily pumping Mexico lift the as tool well $X.X

offsetting Norway and or and Evaluation Our in and software an due Western increase $XXX XX%, XX%. increase lower services the management $X.X These across income was drilling-related Partially of Hemisphere project increases and an improved these revenue drilling-related while billion internationally. were higher wireline was operating were of globally, sales activity million, to Asia. services activity primarily Drilling increased increases

North of activity North results an on results. drilling-related driven increase artificial by higher America revenue Moving and XX%. stimulation billion, These geographical our were was as $X.X Land, in America, to lift In services, primarily and North reduced these America Land of activity well Mexico. offsetting of were Gulf tool Mexico. and Gulf the increases Partially wireline the and as lower sales cementing completion and in software sales fluids in higher activity representing

higher as America, across these Latin increase an multiple activity revenue and service resulting from the million, Argentina lines Moving well to of lines offsetting increased service Mexico, in improvements primarily product reduced in as representing in multiple Caribbean. Colombia. $XXX was in Partially was services product activity fluid XX%

In from million, a with resulting and activity completion across coupled revenue sequentially, to tool Russia intervention Africa, services the and mainly reduced lower $XXX decrease a intervention Saudi Asia. China, or tool decrease. X% lower and sales region, well results CIS, completion our totaled region. in $XX were Turning Europe, was improved reduced drilling-related in quarter, Indonesia activity These driven were corporate activity the North Sea and stimulation These first region. and were in lower across X% lower In million fluid offset project well across Partially Middle software decreases activity increased Arabia the Kazakhstan. offsetting management construction Middle by in East million. in was and by $XXX East, the partially primarily well these in Asia, services sales wireline services across higher higher the sales and the and revenue Iraq expense activity declines

second be million slightly the to of result corporate quarter this drift level expense a ahead reduced for $XXX interest and of Looking expect was our lower debt slightly interest expense Net second we quarter we expense the higher. quarter, the balance. to anticipate as in to

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

mix, our be based into XX%. approximately rate environment we geographic forward expect effective we go earnings anticipated the full As our and to XXXX, on year tax market expected

quarter we Turning generated cash flow. flow, $XXX of to million cash first cash and of from free million during operations $XXX the

in We million. the the debt leverage in during in also repaid Capital and maturing hand first the expenditures reducing with continue prioritize we’ll in $XXX cash came quarter $XXX quarter on million to near-term. at

remains guidance unchanged. equipment in projects as ramp half XXXX full up and year the to international We result, deliveries a for the CapEx of expect second year capital our

outlook. Finally, our to turning near-term operational

In sequential broad drilling continue, the momentum will both we with Let how a different to but on some In we completions of markets, which a international activity growth the should activity expect expect we activity vary me North across based and increase, second America, you unfolding. seasonal moderate. see comments the quarter provide pace rebound regions. and

and As digit as leverage margins Jeff. software to mid-single Evaluation moderate sequentially. in division, over in Drilling reduction I’ll a our expected the division, anticipate expand a for attributed margins XXX of Production our margins to back Jeff? globally. basis strong by we points declining all with growth now basis and In Completion anticipate our to we a The with XXX points double-digit revenue growth the result, our across markets. sequentially operating seasonal revenue low XXX turn to anticipated and primarily call XXX sales are decline to increase result

Jeff Miller

Thanks, I Lance. outlook is up, transition experience objectives. about on and continues regions year domestically, right direction to headed am is optimistic To this shaping shareholders internationally lockdowns. on how the year Halliburton improve up. The sum in to some both focused things even the and as is demand This our right still deliver

profitable We increase growth year. throughout our expect the improvement international our business Digital and increases operating our strong is North activity business and recovered efficiency has our revenue our us as its reduce leverage. America, operational is continue of on customers strong and helping the costs. to margin growing In back demonstrating and

Our is the cash us And energy free capital for questions. cleaner commitment positions finally, future. let’s we that efficiency flow for growth to solid to support generation. believe up our well advance And strategy it now to open and expected affordable

Operator

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

James West

guys. Morning

Jeff Miller

Morning, James.

James West

as United which this are the and on half in important, the XXXX, Photonics So back days so half call increased conference should more is international Silicon more point. and between. on XX second good think where at But your even in the have looks I your from Jeff, we last clearly, visibility

I of continue? regions, to as kind then we And this so recovery going how international really, double-digit on you of to but year-over-year where should takes so, is markets, half that of should kind about and year, love into the second be How it shape, double-digit runs I’d have momentum understand XXXX. the thoughts your hear be thinking growth

Jeff Miller

things strengthening, for improving around improving to tender James. see year, – XXXX XXXX. we pipeline that sort XXXX visibility all these Yes. start are of the but in and both this see really and The – start confidence sometime and strong, get when for yes, in XXXX our later Thanks, transient and I fact, outlook even

barrels barrels, fact service are programs the we are is, define. terms seeing of the Some cycle those in the of shorter but are actually that

So it going seems that’s drive. to

James West

Right.

Jeff Miller

even more confidence More is and upstream so I just faster today. outlook spending if at look XXXX

it improving to I a think improvement – thought which earlier. flat an at from is we earlier see what year-on-year minimum we

James West

Right.

Okay.

America, Okay. – to obviously certain they’ll probably this oil It cash as are year year sense. then of cash price flow makes spend step given good flow. remain where the but and And show we E&Ps big is, about some percentage North it think a the really disciplined capital up next as going

North So, and be are XXXX reflection as sort into are they you as could starting kind were higher spending this the prices increase going of think to have of in America conversations what oil or XX% then about to it than year?

Jeff Miller

James, steady are Yes, cadence we see of year as into this and we year. going even next increase the sort of the move think I through to

what the replaced. just where see a lot XXXX. They today, and is is because needs and inflation think, around can cost as also is get of I discipline production everything what those just do of be that think to will service we and profitably there they into face improvement sense I feedback

of think think governor. tightening and certainly capacity of be and won’t don’t a is good – I that that it the will I be So, for it’s – a the be very think bit I won’t Halliburton anything that same

James West

you. Got

Okay. Thanks, Jeff.

Jeff Miller

Thanks.

Operator

comes Our Citigroup. next question Scott with Gruber from

Scott Gruber

good Yes, morning.

Jeff Miller

Good morning, Scott.

Scott Gruber

and which we of we some your to some has could that? level the around a So, How there with expand heard and we domestic as guys of half margins XQ just if do XQ continuing be no C&P than starting net we put probably U.S. the mix pace And think can about year incrementals you in some international guide the assuming the we should second better and on How obviously. about color given the concern pricing thinking U.S. to completion of terms half as side the to towards some market should the the Halliburton around around been start heard the in kind second platform. conversations more XX%? be looks efficient high like accelerate, streamlined and investor

Jeff Miller

thanks, Scott. look, Well,

North we I substantially have we towards right what But super And drive steady will think actually improvement in is of value that in cadence to certainly I America we and C&P the and fact in improve, We this I are progression America to – I alive respect maintaining, efficiencies North and that drive in is visibility keeping confident of which is maximize think well for around year place. the the I’ve business goal pricing about think our those our globally. are we and expect The mid still think to outlook solid and increase incremental full teens reflecting year charge that that’s reset to and pricing continuing a in last driving now, with number the pricing, opposed our margins cost. that’s did I will think as no and is activity what incrementals. the that. a said building further And

Scott Gruber

the should applications up margins of internationally? the digital bottom, of Got diminished is, that the the D&E about off potential and really cycle question streamlining startup half we’ve is the in as the front couple seen similar costs, start of international D&E you. expansion think business as for improvement software And we that the margin at cycle. be the the seen the sales. the the some for given half we’ve risk the at Is But second question color it the side. some guess, on often noise or least this accelerate past on will platform? D&E, margin I start a around the things second in take How Obviously, a on the to side maybe quarters

Jeff Miller

the it Look, important. last finished think Thanks. higher did point a Yes. year I D&E at is starting than

important though One, is I improving. think software the that and accretive says is it baseline the and breadth the of strong margins, things. D&E’s our of the rest business also business margins, two it’s just

out as we the knocking look are of rest we double-digits so, through And on year. the

that. positioned at for international we As back on today expansion I the look are half for D&E, the

And baseline to it March. we margins the the in so, view want business. of are making, We that to investment we of as improve kind continue

So, it’s continuing to improve.

I so, XXXX. we’ll see think in And improvement

I beyond think that. that continues

I see the outlook so, we when we North I largest we are I mean, that’s also And lot baked of grow year And what around. is repeat. contracts those in ramping seen D&E in to things see the have capital is a to the for our kind don’t of might into the were that our headwinds don’t continuing Sea. ability margins. a the for some getting that of move one of efficiency benefit ago of

In fact, core manifests that that’s other itself capital and think efficiency and we is tools I at the things. of strategy how our around move

Scott Gruber

Thank Jeff. the color, Appreciate Great. you.

Jeff Miller

Thank you.

Operator

question next Barclays. David from Our comes with Anderson

David Anderson

DGB engines; to is pumping certainly want to Hi, good about market. E&P could morning, Jeff. the pressure increasingly looking from I was just wondering if talk diesel. move you just talk away about briefly I

and it you starting you was equipment? any type in are of on Some if this where tell And see us pushing of just of this market pricing stand bifurcation pricing wondering could customers you equipment for the suggesting of kind your are on higher be I separate the this? may to and because on

Jeff Miller

those Look, more Dave. think Thanks, and I get the as look we Yes. solutions types into so. future, pricing of will earlier

more those solutions. for types We seeing are of demand

or the a Tier-X leading also dual have it’s position electric. whether We fuel around

And are seeing so, we yes, the demand.

we at and gradually market the because way equipment is one, so put that replacement equipment generally. things; simply into bifurcation the do happen look think the of that that’s two will the to ability I

got to of So that equipment our we’ve XX% year. XX% goes off every

– when that’s the we kind those but what replace we about horizon time, I of any able premium equipment when better I view And would of then making we that derisking key particularly the to technology of new that’s new this, returns around with equipment returning but returns see. technology do time look think over and sort And at higher of also so, be equally we impact all some is but equipment, think the other for that what key. also pacing pricing, the we components are more we margin, mean, of expect around

David Anderson

to growth Arabia. sense. Or improved more more was this in increasing beginning of could and talked of you are And of for exposure but course look your Saudi to if NOCs? the business, then, behind you preferred I contracting management That makes assuming improvement? about switchover – comfortable is to phase the talk just multi-year side, this we just activity? noteworthy Iraq out project at I is was management the are of this anything importantly I the there tendering activity kind model as first, activity international so, a there, be a guess, you and going project at wondering if

Jeff Miller

to the this we first times. activity different improvements question, is We see answer course that of see sort at more normal The Dave, business. of

really that’s that. to read So, on through all

and we in a think future, obviously, important around that the – of around most increase risk. I with thoughtful to certainly understanding be manage very component respect broadly of the managing project in the exposure, risk. looking lot activity those is things how of we that, the those at management we’ll And how see fact, we contracts types that and

David Anderson

course. Of

Jeff Miller

about me hear it I am And the profitable also, say you internationally. it’s a talking one of but lot, reasons growth

component going is internationally. profitable that grow around lead be how punch to we the so, And

are we Certainly, business. that. take we’ll that So in

We at also But money are doing that. we are good we make circumspect how around that business. pretty

David Anderson

Thanks, Jeff.

Jeff Miller

you. Thank

Operator

Sean Meakim with Our next JPMorgan. question comes from

Sean Meakim

good Hey, you. morning. Thank

Jeff Miller

Good morning.

Lance Loeffler

Hey, Sean.

Sean Meakim

for shift you the quarter of recovery. some pretty early year. C&P led mix the good Private very back had half So, the E&Ps considered, expected always

the are they under also mostly price to They than rigs the of some back end different oil environment? suggest But two-thirds half. as the private their of suggesting are are not the add that in are publics you they economics from this Does what can as They the E&Ps think current are rig been that rigs the maybe today. trough. have count half – over publics’. You

curious your for balance year. just the So on the activity the of private visibility E&P

Jeff Miller

leashed They are the on most to as Yes. headline Look, I production They think that to impact engage. move also nimble number they quick a the are also. groups. overall going the have

am that. by that the I So seen. that, to continue really I The think we’ve ability encouraged activity

they and decisions their making their are I lot make economic direction. beyond owners without the that all think a of really they own stakeholder

natural what the reaction market think don’t are we I indicative it’s But I behaves. seeing how so, of that. think to a is And whole

a they so, they them production and start down slow it changes ramp and up as ability real to busy to bit have little it get the see and their then, economics. for down And back

obviously up march is much as not – necessarily operators hard a disciplined They their decisions back So, will have in plans what I and that’s into group. more they off, could they the easily not decisions own I to say, other right and to going do make am all a think start place. but those ramp make

point key at to the here the end think make I quarter. first though, are the we of

of outs We of the talked wow, oh, prior are And haven’t about kind about I, years where, we in we we’ve blow overspent. any budget into QX. that talked

there to is So something coming see. slow That’s going things we all down. that’s not what

busy are half I in in and up am likely of is, the that terms fact, year of through marching the going stay what confidence second confidence to and In we some. the describing cadence the cadence the

fact, America, on full think close is our maybe to the year. North up In outlook XX% I today

but still So, moderation, growing. that’s that’s some

Sean Meakim

the That’s a software results point. good appreciate I’d into impact sales impressively On spilling D&E the obviously feedback. unpacked of seasonal that first of quarter. sort

You been have and lot new agreements to initiatives. of digital the releasing contracts press tied a also

confidence curious could from mix around improved of maybe commentary just your the eventually is it materiality underlying driven how digital to to margin So digital? enhance some justified disclosure results? the much by be of And your the

Jeff Miller

and our it digital aspects expect into that’s enhancing margins. that baked we see also certainly But want – all to It’s that’s to certainly we and of business. our continue. Well, it’s go where

they parts, when technology digital at also internally consulting of I sales. those business, the built our of equal and the performance is so back we which impact baseline again sort our software look making the D&E is I back from more on margins, tools. value importantly, helping, and does equal by answer drive - there. improving performance they down through and yes, there what them course it sort just to better, tools iCruise and of It’s is of So, wireline And own parts customer-oriented and a that technology then of to think cost but it so become normal meaningfully sell the perspective, of but products finally,

more we that kinds operational. margin multi-year a are going see things of traction. drive kinds XXXX. things that’s them. those that traction, upcycle Those to So, can the what’s are as of We look broad them getting We XXXX, see into XXXX, internationally, up

Sean Meakim

helpful. Thanks, Really Jeff.

Operator

Our next question comes from Ian Macpherson with Simmons.

Ian Macpherson

Thanks, update ask to your on operations. for good an wanted I morning innovative Jeff, guys. you frac

but accomplished that, quarter know on fleets seen talk blossoming about SmartFleet IP in incremental don’t has going? don’t over update contest kind been frac And we’ve of as we to what varieties? with how grid there. about an those those technology You need year edge you’ve some I well spoke the course the I fracking. just the last see leading how on there that – operations of as the with you domestic are of interestingly

Jeff Miller

we should done. like look, We Yes, ways fleet is advertised. quickly. do. The more which got solution more effective like what to to it that technology. the I continue more as even allow I we’ve But really trials deliver to smart scale to find

it’s around technology us or and gain of going we certainly efficiencies we’ve value on from to maximizing an the that traction, horse that implementing to we because think From standpoint, capital-efficient Lot seen. both to continue to very interest per with a are equipment of e-fleet deliver drive pleased implements the But with dollars customers kinds probably remember it would the North we performance see America. again, continues of just in terms for utilization also. of in power. Yes, lot that approach I technology, it have.

when equipment the return and put this we our it horizon. – do So expectations we only this meets time can out

going it’s replacements not opposed it’s of more replacement investment. look sort like of so, to – new upgrading to as And

Ian Macpherson

I in Understood. and And the want into to was for year. Lance, CapEx the QX. separately, Thanks, then, about QX the rest Obviously, progression Jeff. cash flow light ask free loaded you going

the working total dollar on maybe not thoughts absolute general, sequences a refresh just sorry, cash? working how no, free year bottom-line through but capital, And – CapEx just year? so, And on the capital framework this for

Lance Loeffler

us little Ian. by in cash cash for flow I more margin efficiency. disciplined remains no. efficiency and Look, progression remarks the driven and free Jeff free what on. remaining maximizing then working Yes, key the are and of so, is and excluding and see bit target, this around in flow pretty already focused confidence the around us think, aspects capital we we will sits question capital are I be all even cash means as quarter. progression more a margins profit this priority knows, around outlook overall, But change everyone flow of covered free sort CapEx. his ahead we all about prepared know, Look, Good ahead we’ve more optimistic today which that improving consensus XXXX discussed the we’ve gives morning, what our operating of today activity of that metric that outlined the that on we based where obviously for

Ian Macpherson

Perfect. Thanks, Lance.

Lance Loeffler

Ian. bet, You

Operator

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

Chase Mulvehill

Hey. Good everybody. morning,

Jeff Miller

Hey. Chase. Good morning,

Chase Mulvehill

and Jeff Hey Lance.

year. you compare prepared you a to what So, of that bids I value the the doubling last guess, in across we your saw remarks, about submitted of market international talked

to lot mean bit most get mix willing then, regions so, provide and you what guess, activity IOCs, kind in of you be might a to see I into the don’t little for out maybe would start pick XXXX was I So, NOC, if maybe you it hoping you’d signing we step the squeeze that little of up activity. as if between bidding E&Ps a relative know and independent a I contracts. of And the that these could or kind color

don’t activity know to some the that talked continued you some And you’d bid side and on quantify so, this just you international given the about over strong at if the growth seeing. point I medium-term. like But know I growth are

Jeff Miller

type weighted that America, of broadly seeing Latin East, Middle of in towards is terms think I probably are we activity. activity look, the Yes, tender more

think the kind am not that to in deviations things I growing market and indicative our I of try are that’s is, that quantify over view that what kind a two time. market grow derivatives, but of a will to going certainly future, of

is growth going and drive successful. see international price market revenue that see say and but are sort the sort up. at standpoint. opportunities a international is, equally A. big from as in that our so then up, But is tenders engage of that that is are where that recovery the we to to typically more to price – of to to important participate see up be and price in which market we these on based think are it, of I fill end bring start going that But to we and see to the lead always We and also focus way, shaping how kind we is that broader starts the competitive very growth but improvement profitable view

we So, I concept think are terms to growth. that’s an of in equally seeing what important

Chase Mulvehill

share a bit maybe And activity back privates. high your oil obviously willing Okay. the onshore privates publics Thanks are for know the tease kind U.S. the can be there. in color of kind they kind continues half publics come if a I I of to continues shift between don’t to privates kind of more to and and see responding as out to of a try you’d are U.S. I versus publics little know, to mix conversation publics around versus the not. onshore. is today and in rig rebound activity overall the because the to roughly while privates it price towards of

you mix kind your just advantages what opportunities maybe think more your competitors? to you the talk when kind So, private to on of look of pursue side and you have versus

Jeff Miller

America. position in work all North really we Look, great of America. for got we a in America, North leading a the customers in which means have footprint North We’ve

opportunity. is uptake look what and We efficiency. a on look we technology for for from opportunity perspective, mix for and growth We look we So, for look performance.

about. have A kind that are they the market proposition us around, so, less versus characteristics value I the the maximize B, and talking we And market the that’s more it’s returns in like the of our way do think we but drive view allow – to

whole so, moves I on that it is, different that, easily And think the doesn’t times in lot. where but change depending market a

Chase Mulvehill

back it Okay. Jeff. turn Thanks, I’ll over.

Jeff Miller

you. Thank

Operator

Bianchi Cowen. from with next Our comes question Marc

Marc Bianchi

any increased there with forward, out are and hopefully travel normalization structure cost that year? a guess, to how risk margin of have of there going back COVID I thinking about you coming headwind could maybe be into and I variables is you. outlook there I get margin where, the the half few COVID sort maybe the factors to if curious expense. that we Thank am the entertainment think some of as into

Jeff Miller

Yes. of outlook. in Thanks. our are those Look, types costs

I we We don't we coming bow how move how around I see of So, reset it work people – all don't reset earnings. and time. how market. back. we to wave and go the in of We've the cost manage of a that terms we

to forward the market look opening. So,

continue I those lot standpoint, drive going think demand demand I for from our will – to But think more drive costs. just to we manage going from that oil. a that's we're – to

Marc Bianchi

for lines cap then, Yes. Lance, over And I Jeff. the drag course those as then just or working to neutral, that? think was positive, year, about talk you this free expect Could quarter, net a two would another of Thanks that, the positive XXX outflows. you negative? operating be about the them flow, there cash And other of but outflow number from sort on back was

Lance Loeffler

Yes.

et in pretty that property the taxes, So, tends are item as, to line quarter. first We've first flow as heavy well tends cash cetera. be to got the compensation quarter, in the operating hit with in heavy taxes other

And not so, perspective. from cyclicality intra-year from us a, that's atypical

obviously Q, that's color into but We would up expect give of the I you on to that sort – that. lighten that's

Marc Bianchi

that. it I'll for Thanks Okay. turn back.

Lance Loeffler

Thanks. Thanks, Marc.

Marc Bianchi

Thank you.

Operator

comes next Our Connor from Stanley. Morgan question Lynagh with

Connor Lynagh

was on Yes. in the point Thank I put we discussion could you. pricing finer of on a hoping international. some

we competitive, edge You pricing about? impact increase. meaningfully leading pricing contracts from book looks edge large obviously maybe to there what different higher that edge you're talk of if made the contract the like? follow? Or which that imply sort other is be will for moving a words, more frame market-to-market should should will would pricing tenders Can extent is you leading comment In leading that but is pricing us

Jeff Miller

No, I create themselves contracts will think helped even – also higher large to that works time and starts It the alternatives way think over pricing that having pressure follow there. in The contract are is that improve on generally. contracts. I pricing priced pressure upward

Lance Loeffler

what start describing activity to Obviously, were were we pause with But that market. think we and competitively. levels in dynamic optimistic we to are perspective. level I creep is And those a or of seeing back see terms I XXXX large expect early was that's what Jeff the add. part exactly would late was that we rising period broader – of XXXX we the the bid a of as still from I in activity where COVID, is mean, took time, but the see in that we tenders tightening part of we rest pricing same at behavior of

Connor Lynagh

guess, conditions increase of a you improving and near the terms it. improved the margins Do improving the other your potential guys of guess, do without can the How about made large of softer types to maybe of the Got some further on some before just different about tender for elements discussion It sense. the lot And that, pricing. is, makes you ancillary term? there think drive you've I or been feel I you, question changes to And so side pricing? maybe things, cost in charges has structure. in

Jeff Miller

we on T's and Always to Yes, edge come they we see of that that's and working continue very sort will on to easier that are become leading do. that we on activity important expect do do C's. improving There to we as things overtime margins. come to working see are always

all all this. those the we doing time of through of are of implicit digital are sort those doing and now. We Also,

you when better of all driving margins time. our digital the see improving So

think, margins the we us the I the think what we And but that's see where pricing, I we improving and to so, even really see traction before allows real see pricing, incrementals. should that's

Connor Lynagh

color. the Appreciate Thanks.

Operator

Voie question Wells next Chris with Our from comes Fargo.

Chris Voie

Thanks. Good morning.

that impacts recovery flowing that? quarter first get mentioned ask there going on that to the is is pretty getting Is some could maybe to price tailwind next? inflation Just any and from third want curious the through as there second was cost if prepared any in in in this near-term be the the offset that Or remarks. mostly you of quarter? Just

Lance Loeffler

largely, what's North Chris. I growth that happening lot driven a Yes, is we in the we This of cost by the seeing America mean, and that’s that of Lance. is there. inflation are Yes, describe

impact chain. right saw that look, gives commercial customer. shortages of storms, to to us us deals the Some some lot the by our a size the was the pass in value say, arrangements we it that of our across allow the would an to to And extent those scale through the I of inherent the But advantage negotiate driven of best of and consumables. a lot and

sort the baked to to in always the how that. think, Our in at playing the America But be we've into are challenges near-term value see and look, least, of maximizing of And continuing guidance regardless I obviously North incorporates out overall outlook focus going of we we the given that’s sort on environment. the our year.

Chris Voie

then, maybe Thanks. And on Okay. helpful. That's CapEx.

in the So, the with amount really of looks the I past think very you it to not has like up service work X% Pricing high. said that’s is In X% range. intensity getting caught data done.

X% So X% to the in just check curious to range. on

and as If be you probably would expect XXXX well. place in for XXXX still that

Jeff Miller

revenues of CapEx of that's business. X% talk our That's to all Yes. spend. capital mean, parts of Yes. us terms through and about capital to that allows efficiency to what what driving get we in efficiency I X%

XXXX So XXXX. and for yes,

Chris Voie

Perfect. Thank you.

Jeff Miller

Thanks.

Operator

Jeff to session. back for I'd That Miller call question-and-answer the today's remarks. turn to concludes like closing

Jeff Miller

Okay. Thank Liz. you,

I'd to recovery. momentum encouraged comments. a and make call, this few year's positive the end we Before like by demand am closing I

positioned steady which Halliburton with please digital quarter. and leading its value to technologies, We with for are and next maximize well for call. our the America look out to expected cadence you demand. forward Liz, North allow growing The We again activity international close in globally shareholders. us speaking

Operator

this call. participating. Thank you Ladies gentlemen, conference today’s for concludes and

disconnect. You may now

Halliburton (HAL) 21 Apr 212021 Q1 Earnings call transcript