The paragraph is from the introduction of Halliburton Company's Third Quarter 2024 Earnings Conference Call. The operator announces the start of the call and mentions it will be recorded. David Coleman, Senior Director of Investor Relations, introduces the speakers and notes that Jeff Miller, Chairman, President, and CEO, and Eric Carre, Executive Vice President and CFO, will be joining. Forward-looking statements and risks are discussed, along with mentions of non-GAAP financial measures. Jeff Miller then begins by highlighting the company's third-quarter performance, reporting $5.7 billion in revenue and a 17% adjusted operating margin.

The paragraph reports that the company achieved $3.3 billion in international revenue with a 4% growth year-over-year, driven by a 9% increase in the Middle East Asia region. North America saw a decline, with revenue dropping by 9% to $2.4 billion. Despite a cybersecurity event and storms in the Gulf of Mexico affecting earnings and free cash flow due to delayed billing, financial expectations for the year remain unchanged, with an anticipated acceleration in the fourth quarter. The company also repurchased $200 million in common stock and expressed gratitude to employees and customers for their resilience during the cybersecurity incident. Looking forward, the company predicts modest international growth for the next year.

The paragraph highlights Halliburton's confidence in delivering value through its strong international business lines, advanced technology portfolio, and global reach. It emphasizes the company's leadership in the cementing, completion tools, and drilling fluids markets, supported by consistent service quality and technological advancements. The transformation of the Sperry Drilling business, with successful innovative tools like iCruise and iStar, has boosted Halliburton's international competitiveness. The company operates extensively worldwide, with a significant portion of revenue from offshore operations. Halliburton's collaborative approach and strategic alliances further enhance its ability to maximize asset value and deliver industry-leading performance.

The paragraph expresses confidence in Halliburton's international business growth, focusing on its strong technology portfolio, clear strategy, and experienced workforce. It highlights anticipated significant growth in the areas of unconventionals, artificial lift, and intervention by 2025. Halliburton is a leader in unconventional developments, evidenced by its operations and contracts in the Middle East. The company also reports a 30% year-on-year revenue growth in its international artificial lift business, driven by innovative technologies like the TrueSync hybrid motor and Intelevate service. These advancements are expected to fuel further growth, particularly in Latin America and the Middle East.

The paragraph discusses Halliburton's growth in well intervention and international markets, highlighting a 50% increase in monitored wells and over 160,000 remote interventions in North America. Halliburton's Production Solutions has outpaced the overall market, and the company has made significant technological advancements, such as its riserless coiled tubing intervention service developed with TechnipFMC, enabling more cost-effective subsea well interventions. The speaker expresses confidence in Halliburton's international business strategy driving profitable growth by 2025. In North America, however, revenue declined 4% in the third quarter due to reduced hydraulic fracturing activity, with expectations of a full-year decline. The strategy to maximize value in North America remains consistent, with a focus on outperforming competitors leading up to 2025.

The paragraph highlights Halliburton's strategy for maximizing value in its Completion business through unique technology and efficient capital use, with 90% of its fracturing fleets committed for 2025. Key technologies include the Zeus platform, electric pumping units, Octiv Auto Frac, and Sensori subsurface measurement, which are increasingly being adopted by customers. The company has secured contracts for new and existing fleets and expects over 50% of its active fleet to be comprised of e-fleets next year. The deployment of Octiv Auto Frac is expanding rapidly, projected to be on most e-fleets by 2025, while Sensori fracture diagnostics are helping improve recovery rates and are being integrated into more customer workflows. Halliburton anticipates ongoing adoption of the Zeus platform and its technologies.

The paragraph discusses advancements and growth in drilling technologies and services. The author highlights the integration of the Zeus platform with other technologies to improve efficiency and recovery in drilling operations. The North American drilling services business reported nearly 20% growth despite a decrease in rig count, with expectations of continued growth into 2025. Notable tools like the iCruise rotary steerable tool and LOGIX drilling automation platform are enhancing operations in unconventional basins. Halliburton's technologies, including the Aurora magnetic ranging service in Canada and the EarthStar ultra-deep resistivity tool in Alaska, are favored solutions, and there are expanding opportunities for logging while drilling and directional drilling services as projects increase in these regions.

The paragraph discusses Halliburton's strategy and financial results, emphasizing their focus on delivering performance and value rather than market share. The company aims for profitable international growth and maximizing value in North America, prioritizing capital allocation to high-return opportunities and cash flow generation. Eric Carre reports Q3 financials, with a net income per diluted share of $0.65 and adjusted net income of $0.73. A cybersecurity event and Gulf of Mexico storms impacted earnings by about $0.02 per share and incurred $35 million in expenses, which are excluded from adjusted results. No significant additional costs are expected in Q4 related to the cybersecurity event.

In Q3 '24, the company faced challenges due to system outages, impacting free cash flow as invoicing and receivables collection were disrupted. Despite this, they anticipate over 10% growth in full-year free cash flow compared to the previous year. They paused and plan to resume their stock repurchase program in Q4. The SAP S4 implementation in one country was completed, but the timeline and costs increased due to issues. Total company revenue was $5.7 billion, down 2% sequentially, with an adjusted operating income of $987 million and a 17% adjusted operating margin. The Completion and Production division saw revenue of $3.3 billion, a 3% decrease, while the Drilling and Evaluation division remained flat at $2.4 billion. Geographic results showed flat international revenue, while Europe Africa revenue decreased by 5%.

The paragraph provides a financial overview of a company's performance in various regions during Q3. Revenue in the North Sea and West Africa declined due to decreased drilling services and tool sales, though North Sea cementing activity partially offset these losses. Middle East Asia saw a 3% revenue increase from pressure pumping and tool sales, despite lower drilling services. Latin America experienced a 4% revenue drop, mainly from decreased hydraulic fracturing in Argentina, while North America also saw a 4% decrease due to reduced services and storm impacts. Corporate expenses and SAP migration costs were below prior estimates, but expected to rise in Q4. Net interest expenses were $85 million, projected to rise slightly, while other net expenses exceeded expectations due to foreign exchange issues, but are expected to decrease. The effective tax rate was 21%, with a normalized rate of 23.5%.

The company anticipates a Q4 effective tax rate of approximately 23.5%, with Q3 capital expenditures at $339 million. For 2024, capital expenditures are expected to be 6.4% of revenue, and free cash flow is projected to increase by at least 10% from 2023 levels. In Q4, the Completion and Production division expects a 1% to 3% decline in revenue and a 75 to 125 basis point drop in margins, while the Drilling and Evaluation division anticipates flat to a slight increase in revenue and margins. CEO Jeff Miller expressed confidence in the company's international business and growth potential in the international market and North America, particularly through the Zeus platform. During a Q&A session, Dave Anderson from Barclays asked about the potential impact of election-related changes on the business, specifically concerning reduced regulation and increased onshore activity.

In the article paragraph, Jeff Miller discusses the positive outlook for Halliburton's North America onshore business and the Gulf of Mexico. He expresses optimism about the reduction of regulatory risks and red tape, which could lead to increased investment in the energy sector. Miller highlights the importance of energy development in the U.S. and suggests that the industry's current environment is favorable for growth. He believes that decreased regulatory challenges, particularly in the Gulf of Mexico, will create better opportunities for operators as they manage long-term investment risks.

The paragraph discusses the economic outlook and strategic considerations for a company, focusing on its Zeus platform. The speaker notes a general slowing towards the year's end, with pricing pressures affecting margins in the fourth quarter. They speculate about the variability in pricing among different energy technologies, such as conventional diesel and electric fracturing (e-frac), and whether that might necessitate accelerating the rollout of the Zeus platform. Jeff Miller responds by affirming the demand for the Zeus platform, emphasizing that its adoption will naturally accelerate as customers recognize its value. He indicates a strategy focused on maximizing value rather than hastening expansion through increased spending. Additionally, Miller mentions that as traditional diesel operations decline, they will be replaced by electric options. Arun Jayaram then asks about the company's expectations for North America's completion and production trends in the next year, highlighting that a significant portion of their frac fleets has commitments extending into 2025, with up to half potentially being Zeus fleets.

The paragraph features a conversation between Jeff Miller and Arun Jayaram about the outlook for the non-fracturing (non-frac) segment in the coming year, particularly looking ahead to 2025. Jeff Miller expresses optimism about 2025, emphasizing customer plans for increased efficiency and improved recovery, which aligns with their strengths in technologies like the Zeus platform. He mentions having 90% of their fleets committed, which shapes their strategic view. While acknowledging a market downturn over the past 18 months, Jeff highlights their continued focus on improving drilling performance and widening the adoption of their solutions. Arun Jayaram notes that investors are interested in the dynamics of North American fracturing, particularly the trend of increased pumping hours and completion footage.

The paragraph discusses the advancements in efficiency within the energy production (E&P) sector, specifically focusing on Halliburton's strategy. An operator mentioned they could achieve in 2025 with four frac fleets what previously required five in 2024, highlighting improved equipment efficiency and its potential impact on profitability. Jeff Miller from Halliburton explains that the company is at the forefront of these efficiency improvements, utilizing strategies and technologies like the Zeus solution to generate equal or greater revenue with less equipment. He emphasizes that this focus on capital efficiency benefits margins and positions Halliburton as a leader in the industry. Despite increasing challenges in further boosting efficiency, Halliburton is confident in maintaining its leadership and success in this evolving environment.

The paragraph is a portion of a conference call where James West from Evercore ISI questions Jeff Miller of Halliburton about the company's emphasis on intervention strategies. Miller explains that intervention is crucial for maintaining global oil and gas production and highlights Halliburton's ongoing R&D efforts in this area. He emphasizes that Halliburton has historically invested in important business directions, such as unconventional drilling and Sperry drilling, and is now focusing on enhancing intervention techniques, including advancements like riserless intervention, to make wells more economically viable.

In the paragraph, Jeff Miller discusses the company's focus on international growth, highlighting the long-term work with the FMC technique and the expectation for outsized growth in these markets. He notes that growth in the interventions segment of the business can lead to more stable earnings by reducing cyclicality, suggesting a higher market multiple as a result. Miller contrasts North America's advanced use of technology and efficiency in operations with international markets, where technology application is less advanced. Despite the challenges, there is significant opportunity for growth their business internationally.

The paragraph discusses the potential for growth in the consumption of equipment in international markets like Argentina and the Middle East, driven by technological advancements in well creation, primarily provided by Halliburton. It compares these regions to the early stages of the U.S. market, where there's a strong push for increased activity and efficiency has not yet reached its peak. The conversation shifts to Roger Read asking about accelerating drilling speeds in the U.S. through advanced drilling devices, with specific interest in the use of rotary steerable systems and their potential expansion into Latin America. Jeff Miller responds positively, acknowledging the prospect of increased penetration of these technologies in North America in the coming years.

The paragraph discusses the growing market for rotary steerable systems, emphasizing the efficiency and precision they offer for drilling complex and lengthy wells, especially in North America. The speaker highlights the success of their iCruise tools due to their reliability in drilling curve laterals and notes similar successes internationally, particularly in the Middle East. The speaker expects growth in unconventional markets globally due to the performance of the iCruise CX tool, which is driving market share growth. The speaker is optimistic about the future, believing that the market will continue to evolve towards using these technologies for more efficient and longer well drilling. Afterward, there's a transition to a question from Neil Mehta of Goldman Sachs about a cybersecurity incident and its implications on the company's ERP system rollout, prompting Jeff Miller to respond.

The paragraph emphasizes the importance of preparedness for cyber incidents, highlighting the need for effective collaboration with top industry professionals like Mandiant. It discusses the impact of a cyber incident on an SAP ERP rollout, noting that IT personnel were diverted to resolve the incident, causing a delay. The incident affected the finance and procurement teams' ability to continue with the rollout, leading them to catch up on manual transactions once systems were restored. Localization events, necessary for understanding country-specific requirements, and the rollout's early phase in Canada provided learning experiences that prompted a reevaluation of training and management processes. Consequently, the overall timeline for the rollout has been extended by three to six months, pushing completion into the first half of 2026.

The company has a planned average of $250 million in stock buybacks per quarter, aiming for $1 billion annually, an increase from 2023. In Q3, due to cautiousness following a cyber incident, the company paused open market purchases, resulting in buybacks below target. They use both a 10b5-1 plan and open market purchases but cautiousness due to a cyber incident led to below-target buybacks. They intend to catch up in Q4. Their strategy is to use buybacks systematically over cycles rather than opportunistically, possibly increasing the amount in 2024.

In the exchange, Saurabh Pant from Bank of America asks Jeff Miller about the outlook for the offshore business, especially in the context of potential delays in contracting due to macro supply chain issues. Jeff responds by expressing confidence in the stability of major markets like the Gulf of Mexico, Brazil, and Norway. He clarifies that their business is not directly impacted by rig contracting status, as they focus on equipment movement and client work regardless of rig availability. The main takeaway is the continued strength and optimism in offshore drilling activities, irrespective of the challenges faced by offshore drillers. Saurabh Pant then seeks clarification on a statement Jeff made earlier regarding fleet commitments.

The paragraph is a discussion between analysts and executives from Halliburton about their strategic approach to pricing and profitability for their fleets, particularly in the context of market conditions for oil and gas. Jeff Miller emphasizes that Halliburton is focused on staying out of the spot market and sizing their fleet according to market needs, while leveraging their high-end technology performance. Eric Carre is asked about capital expenditure guidance for 2025, to which he responds affirmatively. Kurt Hallead from Benchmark then raises concerns about oil demand growth, excess OPEC capacity, and their impact on crude prices, acknowledging that these are ongoing discussions within the industry.

In the paragraph, Jeff Miller discusses the current positive outlook among their customer base, especially compared to the commodity and equity markets. He attributes this optimism to the presence of large, well-capitalized operators in the market who focus on technology and efficiency. These operators follow long-term plans and are less reactive to short-term commodity price swings. Miller appreciates working with such stable clients, as it provides clarity for his business. He notes that their improvement in operations and access to capital, alongside favorable commodity prices, drive consistent activity and profitability. The industry is seen as becoming increasingly effective, productive, and profitable. Kurt Hallead then asks Eric a follow-up question regarding capital expenditures (CapEx).

In the fourth quarter, CapEx is expected to be around $450 million, which is $100 million higher than the usual quarterly run rate, largely due to the rollout of new e-fleets. For next year, CapEx is anticipated to be 6% of revenue, with some e-fleet deliveries planned for 2025. The increased CapEx this year is slightly above 6% due to revised revenue projections and extended lead times for capital equipment. The company is balancing investments between North America and international markets as it grows internationally. Jeff Miller concludes by expressing optimism about growth prospects for Halliburton across various business lines and regions.

The speaker expresses confidence in the company's international business, highlighting a robust technology portfolio, unique value proposition, and clear strategy. They mention expanding their Zeus platform and growing their drilling business services in North America. The speaker looks forward to discussing further in the next quarter. The conference is then concluded by the operator.

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