The operator introduces the Second Quarter 2024 Halliburton Earnings Call and hands it over to David Coleman, Senior Director of Investor Relations. Coleman is joined by CEO Jeff Miller and CFO Eric Carre, and they discuss forward-looking statements and non-GAAP financial measures. Miller then summarizes the solid second quarter results, highlighting the strength of the international business and the differentiation of North America service offerings.

In the second quarter, Halliburton reported a total company revenue of $5.8 billion and operating margin of 18%. International revenue grew 8%, with Latin America leading the way with a 10% increase. Despite a decrease in North America revenue due to a decline in rig count, both the Drilling and Evaluation and Completion and Production divisions showed margin improvement. The company generated $1.1 billion in cash flow from operations, $800 million in free cash flow, and repurchased $250 million of common stock. The CEO expects steady growth for the remainder of 2024, with international markets showing strong demand and high activity levels. The international business is expected to deliver 10% revenue growth for the full year. The CEO also highlighted the profitable growth of the Landmark Software business, which was showcased at a recent event in Athens, Greece.

Halliburton's latest offerings, such as unified ensemble modeling, scalable earth model, and developments in AI and machine learning, have been well-received by customers in Athens. The company's iEnergy cloud platform and DecisionSpace 365 have also been praised for their ability to drive efficiency and transform businesses. Additionally, Halliburton's artificial lift product line is experiencing significant growth in international markets through a combination of M&A strategy and organic growth. The company's GeoESP line, designed for harsh geothermal environments, has seen success in Europe. Finally, Halliburton's drilling services, including the iCruise X rotary steerable system and LOGIX autonomous drilling platform, have contributed to the company's success in unconventional drilling and set new records during the quarter.

In the Middle East, Halliburton's drilling services revenue grew by 30% year-over-year. The company is pleased with its international business and plans to deepen its strategy for further growth. In North America, second quarter revenue declined by 3% and the company expects a decline of 6-8% for the full year due to lower activity levels. However, the CEO expects activity to increase in the second half of 2024 and for 2025 to be even higher. He believes this is due to E&P companies completing acquisitions, divesting assets, and a potential recovery in natural gas activity. He is confident in the company's strategy to maximize value in North America and believes it will deliver strong results and shareholder value.

Halliburton prioritizes returns over market share by investing in technology to improve efficiency for customers. One exciting technology is the latest addition to Octiv, called AutoFrac, which allows for autonomous fracturing with the click of a button. This technology has completed field trials and is ready to scale, promising significant value for customers and Halliburton. Additionally, their iCruise rotary steerable system has seen rapid adoption in the Permian Basin, reducing drilling times and creating value for customers.

The speaker discusses the company's strong performance in North America and their focus on maximizing value in this market. They also mention their success in other regions and express confidence in the company's future. The financial results for the second quarter of 2024 are also briefly mentioned, including flat revenue and a sequential increase in operating income and margin.

In the second quarter of 2024, the company's international revenue increased by 3% compared to the previous quarter. Europe/Africa saw a 4% increase, driven by higher activity in Norway and West Africa. Middle East Asia also saw a 5% increase, while Latin America remained flat. North America saw a 3% decrease, mainly due to decreased activity in the US and Gulf of Mexico. Corporate expenses are expected to increase slightly in the third quarter, as the company continues its SAP deployment. Net interest expense is expected to remain flat, while other expenses are expected to be around $35 million. The effective tax rate for the quarter was lower than expected at 22.5%, due to discrete items.

In the third quarter of 2024, the company expects an increase in effective tax rate and a decrease in margins for its Completion and Production division, while expecting an increase in revenue and margins for its Drilling and Evaluation division. The company also expects an increase in free cash flow and plans to repurchase its common stock. The CEO is pleased with the company's performance and confident in its strategy. The company's international business is strong and its collaborative approach sets it apart from competitors. The call is now open for questions. The first question is from Dave Anderson of Barclays, who notes that the North American market is softening.

The company has a lot of its fleet under contract with e-fleet, which is a leading technology. The company has signed contracts with repeat customers and expects most of its fleets to stay with existing customers. The company is confident in its trajectory to reach 40% in 2024 and 2025. In terms of international growth, the Middle East saw a 5% increase in revenue this quarter.

Jeff Miller, CEO of a company, discusses their international growth and the potential for acceleration in the Middle East. He mentions their involvement with a big unconventional play and expresses confidence in their business in the region. In regards to North America, they expect a decline in revenues due to lower activity levels and some fleet retirements, with a particular impact from the gas market and M&A. He also mentions the company's technology and focus on efficiency.

The speaker, Arun Jayaram, asks Jeff Miller about his thoughts on international spending trends for the industry in 2025. Miller responds by saying that he believes there will be strong growth next year, particularly in areas where NOCs are driving activity, such as the Middle East. He also mentions his recent trip to Europe, Africa, and Latin America, where he saw potential for increased activity. In response to a question about the bottom of activity in North America, Miller says that customers are currently working on plans for 2025, but he believes there will be a bottom soon due to factors such as M&A and natural gas.

The speaker discusses the current state of the industry and predicts an increase in activity and new plans for companies. They also mention a potential increase in gas and express confidence in the ability of North American entrepreneurs. The speaker also mentions a consistent return of capital to shareholders and a focus on efficiency in working capital.

James West, an analyst from Evercore ISI, asks Jeff Miller, CEO of Halliburton, about the outlook for North America in the next few years. West is bullish on the oil and gas industry due to high oil and gas prices and increased demand from the tech industry. He asks about conversations with customers regarding how to get gas to market and prepare for the surge in demand, especially for natural gas-fired power generation for data centers and AI. Miller agrees and believes that gas will be a key resource for the country, but the timing and logistics are still being worked out. He is excited about the potential for data centers and AI to drive gas takeaway and create more opportunities for oil in the Permian Basin.

In this paragraph, Jeff Miller discusses the adoption and success of iCruise technology in North America. He mentions that the technology is in high demand, reliable, and delivering good performance. He also states that the company has a good runway for drilling in North America and that it is a strong cash flow machine. The international outlook for the year has been revised, and Miller explains that this is due to a push into 2025 for spending.

The company expects Q4 to be the highest international quarter, driven by software and tool sales. They are focused on profitable growth and anticipate continued international growth. Saudi Arabia and Argentina are currently significant markets, and there is potential for growth in the rest of the Middle East. The company has a proven model in two international markets and is in discussions with other places with good reservoirs and rock to potentially expand their operations. There is a shift in attitude towards testing and a pragmatic approach to achieving success.

The speaker discusses the potential for margin expansion in the D&E business, particularly in international markets, due to factors such as net pricing improvement and technology uptake. They also mention the progression of the directional drilling business in North America and the adoption of new drilling technologies in international markets as reasons for their confidence in the growth of D&E margins by 2025.

Jeff Miller, CEO of Halliburton, discussed the growth of their drilling business and the adoption of new technology, such as iCruise and iStar, which has led to increased efficiency and margin. He also mentioned the company's focus on retiring old technology and replacing it with new, which has improved their capital efficiency. On the production side, Miller mentioned the acquisition of Athlon and the company's focus on profitability and returns in that business.

During a conference call, Jeff Miller and Eric Carre discuss the benefits of e-frac technology, which uses compressed natural gas (CNG) instead of traditional diesel for hydraulic fracturing operations. They mention that diesel prices have come down and there is hope for a natural gas price recovery, but the economic benefits of e-frac go beyond just the gas arbitrage. The ZEUS platform, which includes e-fleets, provides better operating efficiency and advanced technology for clients. Additionally, the gas price would need to be significantly higher than $4 or $5 for the cost of fuel delta between e-frac and diesel to close.

The speaker discusses the potential impact of Octiv and AutoFrac technologies on the penetration and saturation of e-frac in the market. They expect e-frac to reach 40% of Halliburton's fleet this year and 50% next year, with continued investments in technology and software to improve productivity for customers. The speaker also mentions that Halliburton's North American revenue regularly outperforms the rig count, and attributes this to contracted e-fleets.

Halliburton's performance is leading in terms of efficiency and technology, and the company continues to invest in technology that sets them apart. Their strategy of maximizing value in North America involves targeted investments in technology that can solve for automation and subsurface understanding. This focus allows them to outperform in terms of revenue and gives confidence for the future. There is potential for continued growth even in a flat North America rig count environment. There is no risk of white space on their e-fleet contracts.

Jeff Miller, CEO of C&P, is confident in the company's contracted customers with long programs. He believes that the e-fleets will continue to work and deliver lower cost of ownership for clients. He is not worried about white space and believes that the fleets will always be working. When it comes to revenue, the uncertainty lies in activity, not price. The company's strategy is focused on maximizing value and they have tools to do so. The third quarter guide for C&P shows a steep margin reduction despite a decrease in revenue.

During the conference call, Eric Carre discussed the weakness in margins and how it is not solely related to North America. There are many factors at play, including multiple product lines. Jeff Miller emphasized that Halliburton delivered strong margins and free cash flow in the second quarter and is on track to meet their growth targets. He also mentioned the strength of their international business and their strategy to maximize value in North America. The call ended with Miller looking forward to the next quarter.

This summary was generated with AI and may contain some inaccuracies.