Halliburton Company

Good day and thank you for standing by. Welcome to the Halliburton Company second quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, David Coleman, Senior Director of Investor Relations.

Hello, and thank you for joining the Halliburton Second Quarter 2023 Conference Call. We will make a recording of today's webcast available for seven days on Halliburton's website after this call. Joining me today are Jeff Miller, Chairman, President, and CEO, and Eric Correa, Executive Vice President and CFO. Some of today's comments may include forward-looking statements reflecting Halliburton's views about future events. These matters involve risks and uncertainties that could cause our actual results to materially differ from our forward-looking statements. These risks are discussed in Halliburton's Form 10-K for the year ended December 31, 2022, Form 10-Q for the quarter ended March 31, 2023, recent current reports on Form 8-K, and other Securities and Exchange Commission filings. We undertake no obligation to revise or update publicly any forward-looking statements for any reason. Our comments today also include non-GAAP financial measures. Additional details and reconciliation to the most directly comparable GAAP financial measures are included in our second quarter earnings release and in the quarterly results and presentation section of our website. Now, I'll turn the call over to Jeff.

Thank you, David, and good morning, everyone. In the second quarter, Halliburton once again delivered strong results, driven by service quality, outstanding execution, and strong global demand for high-quality and high-performance oilfield services. Let's get right to the highlights. Total company revenue increased 14% year-over-year. Operating income grew 41% compared to second quarter of 2022 adjusted operating income. International revenue grew 17% year-over-year with strong activity in all markets. North America revenue grew 11% year-over-year. Our completion and production division revenue grew 19% year-over-year, while margins expanded by 320 basis points. Our drilling and evaluation division revenue grew 7% year-over-year, while margins expanded nearly 300 basis points. Finally, we generated $1.1 billion of cash from operations, $798 million of free cash flow, and repurchased approximately $250 million worth of shares during the quarter. Halliburton delivered an impressive first half of 2023. I'd like to thank our employees for these outstanding results. Thank you for executing on our mainstays and strategy deliveries. Now let's turn to what I see in the markets and what I believe is driving this multi-year upcycle's duration. Demand for oil and gas is strong, as demonstrated by demand growth of 2 million barrels per day in the first half of the year, compared to the same period last year. Oil and gas continues to demonstrate its critical role in the global economy, and meeting long-term demand requires sustained capital investment. Commodity prices remain attractive, When I talk to customers, they expect to work more, not less, and many of their activity plans extend into the next decade. Customers are settling in for a long duration upcycle. Overall, I expect upstream spending to grow in 2023 and beyond. For this year, I expect international and North America customer spending growth in the high teens and around 10% respectively compared to last year. despite reduced rig count and completion activity in the U.S. Now, let's start with our performance in the international markets. Revenue in the second quarter grew 17 percent compared to the same period of last year with strong activity across both divisions. Today, more than 20 percent of our tender pipeline represents incremental activity, which is as high as I can recall. Equally important, In addition to strong growth in the Middle East and Latin America, we see steady growth in activity across the globe. In this environment, I expect quality services and equipment to remain tight and pricing to continue to improve. Halliburton's strategy is to deliver profitable international growth. We are clear in how we do this, through differentiated technology offerings, selective contract wins, and a unique collaborative approach to working with our customers. Our differentiated technology and digital portfolio deliver high quality and high performance to our customers in all markets. Here are some examples. Our drilling and LWD technology platforms deliver better reliability, data capture, and efficiency for our customers while structurally expanding our margins. We build and deploy leading-edge drilling equipment that requires less capital to build and operate compared to the prior generation of equipment. One example, for a customer in the Middle East, Halliburton achieved a world record for the longest well ever drilled with a measured depth of over 51,000 feet using Halliburton's iCruise, iStar, and Logix technologies. Our leading position in completions technology is unlocking production for customers. We recently set another world record with the successful installation of the first 12-zone intelligent completion for a Middle East offshore customer using Halliburton SmartWell technology on our eCompletions platform. In our digital business, Equinor joined several other customers in selecting Landmark's Decision Space 365 as their standard subsurface data interpretation tool. During the second quarter, our Landmark software business closed on the acquisition of ResOptima, a leader in advanced ensemble modeling at the reservoir level. I'm excited about ResOptima's technology, both standalone and how it accelerates Landmark's roadmap for next-generation reservoir modeling technology. Now, turning to collaboration. Our value proposition to collaborate and engineer solutions to maximize asset value for our customers and our mainstay processes define how we consistently differentiate our services. This is the source of our competitive advantage. Our value proposition creates an environment where our customers and Halliburton collectively perform better. A recent example of this is Halliburton and VAR Energy's announcement of a long-term strategic relationship for drilling services. I expect we will demonstrate with VAR, as we have with other customers, that our collaborative approach creates significantly better operational and financial performance for both the customer and Halliburton. Our international strategy works. Our differentiated, cost-effective technologies and collaborative approach with customers empower us to strategically target work where we see a competitive advantage and a clear path to outperform financially. Turning to North America, we delivered a solid quarter. North America revenue grew 11% versus the same period last year, and margins were sequentially flat versus the last quarter. Looking ahead into the second half, I expect overall market activity in North America will be slightly lower than in the first half. More importantly, I expect Halliburton's North America margins to remain strong for the balance of the year. Our results in North America clearly demonstrate the success of our strategy to maximize value. We do this through capital efficiency, differentiated technology, and alignment with high-quality customers. During our last call, I outlined the steps we took in North America land to maintain pricing and deploy service capacity to attractive return opportunities or retire old equipment to further accelerate Halliburton's transition to our electric fleets. Executing on our strategy during the second quarter, we deployed additional Zeus fleets on multi-year contracts while retiring additional diesel equipment. Demand for our Zeus E-Fleets is strong. In fact, during the second quarter, we signed more multi-year Zeus contracts than in any prior quarter. The multi-year duration of these contracts provides both stability and secure economic returns, which furthers my confidence in the strength of our margins. I continue to be impressed by the performance of our Zeus E-Fleets and the optimization and efficiencies that come with scale. Our current system is the result of multiple iterations over several years and our continuous improvement processes. Every element of the value chain, from design and manufacturing to operations and maintenance, is continuously improved. Our advances in pump technology and system design result in higher horsepower density and pump efficiency. With Octave, we are automating equipment operation for consistency and reliability. We work to be the best at getting better. Today, Zeus is a fully integrated system. We deliver new equipment on time that works right out of the box. And on average this year, our E-Fleets pumped over 10% more hours than our high performance diesel fleets. For our customers, these improvements mean better performance and even lower total cost of ownership. For Halliburton, these improvements mean we further widen the moat around our growing E-Fleet business. In all markets, international and North America, I believe our strategies yield improved financial results. Let's look at the steady growth and margin expansion in D&E. This is the result of a structural change and technology overhaul that began several years ago. Our leading drilling platforms are lower cost and higher performance than the prior generation, which drives higher asset velocity and higher returns. In our testing business, our FlowConnect surface well testing service provides a safe, efficient, and automated platform to our customers while lowering our overall operating costs. In our wireline business, our examiner platform provides high-quality reservoir data, reduces subsurface uncertainty, and allows us to win high-value exploration work. Finally, across all product lines, Automation and remote operations are beginning to transform service delivery, driving higher quality and reliability while lowering total cost of service delivery. Looking through any quarterly fluctuations and seasonality, I fully expect D&E margins will continue to expand over time. Our strategy also generates strong free cash flow, and our capital return framework returns cash to our shareholders. I expect over 50% of free cash flow will be returned to shareholders this year. I am pleased with where we are today. In the last 18 months, we retired $1.2 billion of debt, strengthening our balance sheet. Twice increased our quarterly dividend, which forms the stable foundation of our capital return framework. and finally repurchased approximately $600 million worth of shares, including approximately $250 million this quarter. I fully expect that the execution of our strategy in this long-duration upcycle will deliver better returns, more free cash flow, and more cash back to shareholders. Now I'll turn the call over to Eric to provide more details on our financial results.