Operator: Good day, ladies and gentlemen, and thank you for standing by. Welcome to the second quarter of 2026 Halliburton Company earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question at this time, you need to press star 1-1 on your telephone keypad. As a reminder, this conference call is being recorded. At this time, I'd like to turn the conference over to Mr. David Coleman, Senior Director, Investor Relations. Sir, please begin.
David Coleman: Hello, and thank you for joining the Halliburton Second Quarter 2026 Conference Call. We will make the 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, Shannon Slocum, Executive Vice President and COO, and Eric Carre, Executive Vice President and CFO. Some of today's comments may include forward-looking statements that reflect 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, 2025, Form 10-Q for the quarter ended March 31, 2026, 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 except as required by law. 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.
Jeff Miller: Now, I'll turn the call over to Jeff. Thank you, David, and good morning, everyone. I am pleased with Halliburton's second quarter performance. Our international business delivered its highest second quarter revenue in more than a decade despite the disruption in the Middle East. Our North America business delivered sequential improvement and my outlook for our business is positive. Here are a few highlights from the second quarter. We delivered total company revenue of $5.7 billion and adjusted operating margin of 12%. International revenue was $3.4 billion, an increase of 6% year-over-year. North America revenue was $2.3 billion, flat year-over-year. During the second quarter, we generated $824 million of cash flow from operations, $668 million of free cash flow, and repurchased approximately $200 million of our common stock. Now let's turn to our macro outlook. On our last call, I shared my belief that the situation in the Middle East would have meaningful and long-lasting implications for the global energy sector. What is ever more clear to me is how important energy is to a functioning global economy. The events we have seen since then only reinforce that view. Two points frame my view of the road ahead. First, energy security remains a central issue for both producing and consuming nations. To achieve it, countries must rebuild inventories, refill and expand strategic reserves, and diversify supply. I expect this work will take years, not quarters. Second, reliable and affordable energy are prerequisites for prosperity and quality of life. As the global economy expands, demand for that energy grows with it. I believe the path forward runs squarely through a healthy oil field services industry. Here is what I see today. In international markets, customer engagement is high. I see growing demand for our services and technology in every region we serve. Durable, long cycle investment is increasing in unconventional, offshore, and intervention markets, and Halliburton wins in all three. In North America, activity responded positively as we expected. Over the long term, North America remains critical to global energy security. I expect the market will require more advanced technology and greater service intensity to simply sustain, much less grow production. I believe the global outlook I just described and our differentiated technology and value proposition set the stage for Halliburton's future revenue growth and margin expansion. With that, I'll turn the call over to Shannon.
Shannon Slocum: Thanks, Jeff. Before I get into our operational results, I want to thank each of our employees who work in more than 70 countries around the world for their focus on our customers, safety performance, and execution. Let me start with international, where opportunities for Halliburton around the world are the strongest I've seen in many years. In the second quarter, Halliburton recorded international revenue of $3.4 billion and secured a number of significant awards. I'll start with the Middle East. I recently returned from the region where I met with our customers and our operations teams. Activity is recovering from the conflict lows, but the pace of recovery is still dependent on the day-to-day events in the region. Let me share a few observations from my visit. Land well construction activity was largely steady across the region in the second quarter, with the exception of pockets of disruption in Iraq and Bahrain. When production comes back online, I expect a tailwind for artificial lift and intervention businesses. Offshore activity increased through the quarter, though it's not yet back to pre-conflict levels. The offshore situation remains particularly fluid, with operators assessing reactivations alongside recent security conditions. Iraq deserves a specific mention. Yesterday we announced a significant Integrated Field Management Service Award. This is a foundational project that I expect will transform our business and country. It redefines our opportunity set and puts our latest digital and technology offerings to work at scale. While the conflict dominates the discussion today, I see a bright future for Halliburton in the Middle East. Our recent wins in onshore well construction, integrated projects offshore, and the resumptions of our unconventional fracturing operations in Jafura all strengthen my view. Next, let's turn to our business outside the Middle East, where we expect year-over-year growth in the low double digits. Our growth engines, production services, drilling, Unconventionals and Lyft are key to delivering on the outlook. Here are a few recent developments. First, in production services, the commissioning phase began for our newest North Sea stem vessel, the first operations of its multi-year contract expected at year-end. This deployment strengthens our leading global stem business and importantly represents the first offshore implementation of Octave, our automated pumping control system. Second, in directional drilling, Saccol, our recent acquisition, is fully integrated with our Logix automation platform and together they deliver Halliburton's closed-loop drilling solution. This integrated solution gives us a significant runway to scale on offshore rigs worldwide. Our system delivers more precise well placement, better reservoir contact, and faster drilling times. We saw this firsthand in Norway with back-to-back record wells for Ocker BP this quarter. I am confident this technology and the opportunity to further deploy it will deliver meaningful, profitable growth for Halliburton. Finally, in international unconventionals, we saw further progress in multiple regions. In Algeria, we secured Sonitrac's first unconventional award, a multi-well integrated drilling and completions program. We are off to a strong start and have already delivered the longest lateral drilled in country to date. This project highlights the breadth and depth of our entire unconventional portfolio in both drilling and completions and puts Halliburton in front of the next wave of development. In Argentina, our first Zeus fleet has been mobilized and is planned to start up in the fourth quarter. This deployment exemplifies Halliburton's unique capability to bring leading unconventional technology to international customers. I see a clear runway for Halliburton to build on its position in this growing market. Our international strategy is advancing. We differentiate on technology, we deliver on execution, and we collaborate closely with our customers. When I look at our growth engines and the pipeline of opportunities ahead, I believe that our international business delivers meaningful, profitable growth for Halliburton. Now, to North America, where Halliburton delivered second quarter revenue of $2.3 billion. Second quarter activity built on the momentum we saw in the first quarter, with stronger activity, modest pricing gains, and further technology adoption. Drilling activity was strong. Our D&E division grew 9% year-over-year. In completions, our focus remains on returns, not share, and our option to redeploy equipment to international markets set a high bar for any North America fleet reactivation. Halliburton's maximized value strategy in North America leads with technology. Automation, electrification, and real-time subsurface data gives our customers the tools to maximize recovery in their assets. Let me give you a proof point. This quarter, we deploy the latest version of Zeus IQ. This release adds near-well and cross-well subsurface measurements, expands data inputs, and gives customers well-by-well treatment control and somofract operations. In plain terms, better fracture placement means more value for our customers. Let me close on North America with this. The market is in a recovery, and I am encouraged by the shift in trajectories. Activity is up, pricing is improving, and our playbook works. I expect continued progress throughout the year. Our priorities are clear. We focus on returns for Halliburton, and we deploy technology that improves performance and recovery for our customers. Big picture, I like Halliburton's strength globally. We have a balanced portfolio that spans international and North America, onshore and offshore. Thank you, Shannon, and good morning. Our Q2 reported net income per diluted share was 64 cents.
Eric Carre: Adjusted net income per diluted share was 55 cents. Total company revenue for Q2 2026 was $5.7 billion, an increase of 6% when compared to Q1 2026. Adjusted operating income was $683 million, and adjusted operating margin was 12%. Our Q2 cash flow from operation was $824 million and free cash flow was $668 million. During Q2, we repurchased approximately $200 million of our common stock. Now turning to the segment's results. Beginning with our completion and production division, revenue in Q2 was $3.2 billion, an increase of 6% when compared to Q1. Operating income was $474 million, an increase of 8% when compared to Q1. Operating income margin was 15%. These results were primarily driven by increased stimulation activity in the Western Hemisphere and improved well intervention services in Asia. Partially offsetting these increases were lower specialty chemical activity in North America, resulting from the sale of our chemical business, decreased cementing activity in Latin America, and lower activity across multiple product service lines in the Middle East. In our drilling and evaluation division, revenue in Q2 was $2.5 billion, an increase of 5% when compared to Q1. Operating income was $338 million, a decrease of 4% when compared to Q1. Operating income margin was 13%. Revenue improvements were primarily driven by increased drilling-related services and higher wireline activity in North America and Europe-Africa. Partially offsetting these increases were lower software sales globally, decreased project management activity in Latin America and lower YLAN activity in the Middle East. Operating income decreased due to the seasonal roll-off of software sales. Now let's move on to geographic results. Our Q2 international revenue increased 5% sequentially. Europe-Africa revenue in Q2 was $1 billion, an increase of 19% sequentially. These results were primarily driven by improved activity across multiple product service lines in the North Sea, increased well construction activity in Namibia and Egypt, higher completion tool sales in the East Med, and increased project management activity in Angola. Middle East Asia revenue in Q2 was $1.3 billion, a decrease of 2% sequentially. These results were primarily driven by lower activity across multiple product service lines in Kuwait, Iraq, and Qatar due to the conflict in the Middle East. Latin America revenue in Q2 was $1.1 billion, a 3% increase sequentially. These results were primarily driven by increased stimulation activity in Argentina and Mexico and improved completion tool sales in Mexico. In North America, Q2 revenue was $2.3 billion, a 7% increase sequentially. This increase was primarily driven by higher stimulation and well construction activity in U.S. land and higher fluids activity in the Gulf of America. Moving on to other items. In Q2, our corporate and other expense was $83 million. We expect our Q3 corporate expenses to be about $80 million. In Q2, we spent $46 million on SAP S4 migration, which is included in our results. For Q3, we expect SAP expenses to be about $45 million. Net interest expense for the quarter was $83 million. For Q3, we expect net interest expense to increase about $5 million. Other net expense in Q2 was $31 million. We expect Q3 expense to be about $35 million. Our normalized effective tax rate for Q2 was 18.3%. Based on our anticipated geographic earnings mix, we expect our Q3 effective tax rate to be approximately 19%. Capital expenditure for Q2 were $235 million. For the full year 2026, we expect capital expenditures to be about $1.1 billion. Now let me provide you with comments on our Q3 expectations. In our completion and production division, We anticipate sequential revenue to be flat to down 2% and margins to improve 125 to 175 basis points. In our drilling and evaluation division, we expect sequential revenue to be down 3 to 5% and margins to improve 25 to 75 basis points. I will now turn the call back to Jeff.
Jeff Miller: Thanks, Eric. Here are the important takeaways from today's call. I believe the global outlook for Halliburton is strong and will lead to revenue growth and margin expansion. In the international markets, I am excited about Halliburton's contract awards and pipeline of future opportunities. Outside the Middle East, we expect our international business to grow low double digits this year. In North America, I am encouraged by the recovery we saw this quarter and we will execute on our strategy to maximize value. Finally, I expect that our consistent focus on returns and capital discipline will drive long-term success for Halliburton and its shareholders. Let's open it up for questions.
Operator: Yes, sir. Ladies and gentlemen, if you have a question or comment at this time, please press star 1-1 on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, simply press star 11 again. Again, if you have a question or comment at this time, please press star 11 on your telephone keypad. Please stand by while we compile the Q&A roster. Our first question or comment comes from the line of Steve Richardson from Evercore. Your line is over, sir.
Steve Richardson: Good morning. Jeff, last quarter, I think you showed quite a bit of foresight by talking about kind of the end of white space and the pickup of inbounds in North American completion specifically. I was wondering if you could talk about how that evolved during the quarter price costs and how much of that is kind of feeding into the margin outlook you have in the second half of the year, particularly in C&P.
Jeff Miller: Yeah, thank you, Steve. Look, as I described, we see positive margin trajectory and white space is filled. We've seen rig ads. We're seeing white space filled, and it's a very constructive environment. We are seeing price increases, and it's a steady march. It doesn't all happen at once. Anecdotally, we can describe price increases, but what our primary focus is is across the entire fleet. and I'm very confident that we are seeing that trajectory continue actually into Q3. So white space filled up, looking forward Q3, Q4, pleased with that. And so we are, again, focused on margin expansion, but all around the fleet, the entire fleet, not just one at a time. And in some cases, when we work on price that includes moving some equipment overseas and to do better margins. And so when we think about maximizing value in North America, that includes moving on price and also maximizing the value of the entire fleet, which will include putting equipment to work where it has the highest margins.
Steve Richardson: That's great. I appreciate that. And then I was also wondering if you could just follow up on last quarter, last You all were talking about sort of itemized the impact of what we're seeing in the Middle East and talked about a seven to nine cent kind of headwind. Can you maybe just maybe mark us to market on what you saw in the business and how you've kind of thought about the dislocations as it pertains to the second half?
Shannon Slocum: Yeah, Shannon here and Steve, I'll have Eric provide a little color on the guide. I guess let me just talk about activity in general in the Middle East. It's been really highly fluid. Customers are thinking about their long-term view. They're looking at capacity. They're looking at risk and really understand how quickly they can bring that back. In Q2, we saw a positive progression in the Middle East of what was going on. And then when we got here over the last week or so, obviously we've seen a little bit of step back of escalations. So we've kind of had a little bit of starting up and then a bit of pulling back. But I think it's important to maybe emphasize the bigger picture here as far as we think about what's going on in the Middle East. Regardless of the pace of when it comes back, Halliburton will be ready. We have the operational footprint intact. and also important to note is the business that we are winning in the Middle East, which is work that is absolutely going to get done. We talked about going back to work in Jafura and unconventional. The integrated work we want in reentry, the integrated work we want offshore and also a really exciting project in Iraq with IFMS. So the pace is highly dependent and fluid, but we're winning work that will mean something to Halliburton in the future.
Eric Carre: Yes, Steve, it's Eric. Regarding what's built in the guide, so our assumptions are for a steady activity compared to where we are today. So we haven't put in our guidance any recovery to pre-war level, neither have we built in any major disruption. So it's basically steady from where we are. It's just very difficult to forecast, as you understand.
Doug Becker: Thank you.
Operator: Thank you. Our next question or comment comes from the line of David Anderson from Barclays. Mr. Anderson, your line is now open.
David Anderson: Thank you and good morning. So you had a number of really nice wins in offshore this quarter. Europe-Africa outperformed as well. I was wondering if you could talk about your offshore business and kind of how you see that performing over the next 12 to 18 months. Should we start to see an inflection here by the fourth quarter and and kind of what are some of the key drivers? You're talking about technology a lot as an enabler here. So maybe if you could spend a little bit more on how that's driving growth going forward. Thank you.
Shannon Slocum: Yeah, thanks, David. I guess first, really love our position. Maybe just an industry comment. Then maybe a little bit more about Halliburton on the inflection point. Yeah, big markets around the world, deep water markets like in the Caribbean. the revitalization of tieback work, deepwater Gulf of America, Brazil, West Africa, as you mentioned, Norway and East Med are all really busy markets for us. And while we're seeing a tightening of, we're seeing rigs being tendered for those spaces, we're seeing a tightening of FPSOs in that market. Don't see that as a probably a Q4 event, what I see that as more of a 27 event, probably later half of 27. But I think really important here is to emphasize the bigger picture here is we were winning in all those markets. Just announced a really sizable win with Total Energies in Suriname. We still have a great footprint with Guyana there. West Africa, Namibia, Nigeria, and even Ivory Coast adding have a good footprint there or winning there. And obviously, Norway North Sea has been a big market for us moving forward. So really like the direction we're offshore going. And I think, again, more importantly is that we're winning in that space.
Jeff Miller: And maybe a comment technically, Dave, just to follow that up. I think a lot of those wins, most of that winning that you're seeing us do is on the back of two things, really. Our value proposition to collaborate and engineer solutions. to maximize asset value for our customers, and technology advances that we've made over just really the last few years with closed-loop geosteering, for example. You saw Sequire-Sakal. That's an important step towards better adoption of that technology. It broadens our ability to implement that technology on more rigs than before, and so very positive technically around what we're doing, and Again, how we're working with our customers are delivering real results.
David Anderson: I appreciate those comments, Jeff. Maybe if we could shift over to the international side. International unconventionals are becoming a bigger part of your portfolio. Vakamurta is clearly in growth mode. You talked about Algeria. I think you're also in UAE and Jafura. I was wondering if you could kind of put all this together and sort of kind of walk us through those various opportunities and your strategy. I'm also sort of wondering about the impact on the C&P margins. Is sort of the ramp up, is that kind of weighing down margins to a certain extent as you're sort of building up in these different countries and you're not quite at the scale you want to be? Thank you.
Shannon Slocum: Yeah, let me, I'll comment on some of the activities and ask Eric to give more of the guidance here. But hey, as you said, we're really excited about, David, the scale, converting at scale. Argentina with YPF, you know, Bigwin multi-year, multi-billion with Zeus. Going back to Aramco and Jafura, and if you kind of look at the big markets out there, Argentina starting there, it's growing market. Really, Argentina, Algeria, Kuwait, Saudi, UAE, we have frack spreads in all of those locations today doing unconventional work. But what I think is important across what we're doing in unconventional. This has been a deliberate focus of ours is continue to use our scale with a real emphasis on, as Jeff said, returns, but also putting technology at play globally and competing on technology, not on horsepower. So I think that has been the recipe for us to be in scaling this globally.
Jeff Miller: Let me take the last bit of that as well in terms of margin as you think about those businesses around the world. Yes, there's some mobilization that goes on around that, but it's part of our growth engines, and we know that with that scale comes margin expansion.
Operator: Thank you. Thank you. Our next question or comment comes from the line of Arun Jayaram from J.P. Morgan. Mr. Arun, your line is now open.
Arun Jayaram: Good morning, team. Jeff, I was wondering if you could comment on and Shannon on. Clearly, it appears that how is taking market share in international markets is just highlighted by a number of awards in the Middle East, LATAM, etc. I wondered if you could maybe break down what you think is driving some of those share gains. Shannon did mention that he would expect These new opportunities to be margin accretive and maybe you could just touch upon that as we think about framing second half of the year and into 27.
Shannon Slocum: Yeah, I guess the short answer is yes, these wins that we're talking about, we do see them as future work that will be accretive for a business. I think a couple of things have been driving it. One, the market is tight. Nobody's really overbuilt in that market, in the market. and that's a good thing, opportunity for expansion of margins for us and we think that macro outlook for what we're seeing will continue but I think going back to how we engage with our customers on some of these projects, we knew they were coming down the pipe, I think our value proposition, how we collaborate with our customers and really if you look at Halliburton's portfolio globally, technically, there's no real holes in it. We compete all over the world in 70 countries and I think it's a combination of Value Profit Technology has been the difference maker for us over the last 12 months. Got it, got it.
Arun Jayaram: And then maybe just to follow up on North America, one of the things that caught our attention is your intention to continue to perhaps mobilize equipment out of North America to meet some of these international opportunities. Is that just a reflection as you see better margin opportunities for unconventional now outside of NAMM?
Shannon Slocum: It really comes down to this. It's price first. We are actively working our entire fleet and getting price on that in North America. But we have zero hesitation of moving equipment around the world, whether it be in CNP or D&E, to a place that generates Returns for Helleberg. And when there's opportunities, we'll do that. That's what you've been seeing on the C&P side frack with Argentina. You've seen that in Middle East, Algeria, UAE. All of these places have been going to a home that makes better margins returns for Helleberg.
Arun Jayaram: Great. Thanks a lot.
Operator: Thank you. Our next question or comment comes from the line of Sir Rob Pant from Bank of America. Your line is now open.
Rob Pant: Hi, good morning, Jeff, Shannon, and Eric. Eric, maybe I'll start with a quick clarification question for you. I want to make sure I heard it right. I think the revenue guidance, Eric, for the third quarter calls for both segments. I think CLP flat to down 2%, D&E down 3% to 5%. And I think within that, in response to one of the initial questions, you were thinking Middle East is steady, right? So flat, let's call it on a 100 basis. Can you maybe talk to how should we think about the 2Q to 3Q revenue decline? Where is that coming from? Is it timing? Is it, I know the chemical business sale happened in May of this year. Is it past that? Maybe just talk to that a little bit, Eric, just to give us some color.
Eric Carre: Yeah, so I'll give you some color on the guide. So starting with the D&E division, Revenue are primarily affected by a drop in revenue in our drilling fluid and testing business. The drilling fluid in the Gulf of America and Europe testing across most international region. And there's really nothing structural. It's simply rig moves, end of programs, etc. Part of that is offset by the seasonal pickup of our software business in Q3. So that's kind of on the revenue side. On the margin side, the improvement is due to mix. Drilling fluid was a very large contributor to Q2. In Q3, we're going to see less drilling fluids, more software sales, which are running at a structurally higher margins, which explain the guidance. On the CNP side, Top line revenue, you mentioned it, we have sold our chemical business, so we're not going to have any revenue coming from that in Q3. We're going to be slightly down in Latin America and Europe, Africa, which had a fantastic Q2 of 19%, and some of that is going to be offset by the recovery of our Middle East business. On the margin side, the main drivers of the improvements in our margins is the North America land frac business, which is going to see improved margins, the lift business as well, recovery of completion to delivery in the Gulf of America, and also the Middle East recovery as in DNA. So these are the main elements of our Q3 guidance.
Rob Pant: I got it, Eric. That's very helpful. And then, Jeff or Shannon, maybe this one is for you. I want to touch on your landmark business a little bit. I know digital and software doesn't come up too much here in the Q&A for you guys, but you've had a strong business. Landmark has been a strong business for you, especially in drilling, logics, decision space. I think you've had a lot of success in that. And then, like you had in your prepared remarks, you acquired Seca last quarter. And today, in your press release, you had the acquisition of... Informatec. Maybe just talk to the landmark business a little bit. It seems like it's making a lot of positive progress. But maybe just talk to what you're doing there and maybe the opportunities over the next few years.
Jeff Miller: Yeah, thank you. Look, we really like our approach to digital broadly, both the software business and the automation business. And from a software perspective, you know, our absolute focus on open architecture is very attractive to customers. and so strategically AI, open architecture and then deep science, deep data management. Those are the four areas that I feel the most confident about where we are and look forward to watching that continue to get legs. Had several strategic wins over the last year and I expect not only do those grow but we just start to see a strengthening of that over time. From an automation perspective, you're correct. Zeus IQ, Logix, Sakal, acquisitions that we make that we know help our customers drill better, more precise wells or improve recovery or hydraulic fracturing for unconventional completions. And so that automation and answer products in terms of IQ, Zeus IQ and Logix and what it does have been a big part of recent awards. And so we're seeing that manifest in actually the contracts that we are winning. It is a differentiator and gives me a lot of confidence around why I believe or why the contracts that we're winning are creative over time.
Rob Pant: Fantastic note, Jeffrey. That's very helpful. Thank you. I'll turn it back to you.
Operator: Thank you. Thank you. Our next question or comment comes from the line of James West from Mellius Research. Your line is now open.
James West: Hey, thanks. Good morning, guys. Good morning. Jeff, you guys have stuck to your knitting in North America as the only integrated service provider, a fully integrated service provider that's really left in the market, but you've also used it as a a cash flow harvesting machine and that's led to, I think, some of the significant growth that you're now seeing in the international markets as you deploy capital to those markets, as you deploy capital into technologies and are increasingly taking share or at least minimum holding your own as others have failed there. Could you talk about that strategy how you see the evolution of that strategy in those international regions which are now coming to you. Just the amount of awards you've announced in the last two weeks has been highly impressive. I wanted to just touch on where are we in that kind of, I don't know if I want to call it a pivot, but just the deliberate strategy.
Jeff Miller: Look, it is a deliberate strategy. It's where we have Market leading both capability and technology that's sought after internationally. And as that market grows, we are leading that market and plan to continue to lead in that market. And unconventionals have been proven to be a successful way to deliver oil and gas. And now the rest of the world is doing more of it. We plan to lead there. Still focused on North America. And so, you know, we see Solid Trajectory in North America as well. However, we have leading margins in North America today and plan to continue to keep those. And so as we push price up, there's always going to be some bumping around in the market. And that bumping around in the market when you're already the market leader in terms of performance and margins comes with bringing up some equipment as we push. and the point is we've got opportunities around the world as well to put equipment to work. So this is, I wouldn't describe it as a pivot, James, I'd describe it as a conscious, deliberate strategy to take advantage of our competitive advantage around the world while continuing to drive better performance in North America. I don't think the two are mutually exclusive, But some of the bumping around you're going to see in North America is us putting real pressure on pricing and margins in North America.
James West: Okay, got it. That makes perfect sense. And then as we think about moving of equipment abroad, how should we think about, I guess, the kind of Margin Opportunity Set. I mean, I know Eric already gave us some guidance for just next quarter, which is margin, pretty significant margin improvement sequentially. But how should we think about the competitive landscape internationally when you do move equipment? You have two things. You have one, it's going to be better pricing, but also two, you're not going to need to put as much capital into the market because you've already got, you have the steel already ready to go.
Eric Carre: Yeah, I'll talk a bit about margins, James, and then I'll let Shannon talk about the competitive environment. So I think that directionally, I mean, you heard the Q3 guide, so margins are going to be up. in both completion, production, drilling, and evaluation. I think the trend will continue with margin up in D&E in Q4. We think it continues in 27. We think that the same trend is going to be there for CNP, although you got to take into account the typical seasonality in Q4. So we'll have to see. and then you get some Middle East unknown around all of that.
Shannon Slocum: Yeah, James, I guess kind of the short answer on how we think about when we move things around. You know, the country is moving to what is the efficiencies and logistics challenges around that? What's the scope of work? How long does it last? Everything from volumes being pumped to stages and access to sand and water. But really it's a pretty straight forward answer after you get through all that is do we have term and do we make better margins if we put it in XYZ country? And we make those decisions every quarter when we're looking at that as if we have an opportunity to move it or somewhere in the world. And it's really, there's different levels of maturity around unconventionals around the world. Those are mature, obvious, and ones we probably want to move as quickly as we can to. Others, we look and say, okay, is it AWELL or is it a long-term program? And we base our decisions around that. Got it. Great. Thanks, guys.
Operator: Thank you. Thank you very much. Our next question or comment comes from the line of Derek Podhazer from Piper Sandler. Mr. Podhazer, your line is now open.
Derek Podhazer: Hey, good morning, everyone. So you mentioned North America land, you know, that's helping improve the CNP margins. I think the guide at the midpoint was 150 basis points. Top line seems to be impacted by the chemical business sale. Talked about Latin America, Europe, Africa, which had a stellar quarter. But maybe some more color on what you're seeing activity-wise impacting your U.S. land frack revenue. 2Q, the theme was absorbing the white space. Are you still seeing that full calendar in 3Q as well? And the indication on pricing will be there to help even reactivate some sideline equipment? Or you mentioned maybe that international unconventional market is more attractive to deploy that idled equipment. Just some more color on U.S. landfracks specifically impacting C&P.
Shannon Slocum: Yeah, sure. This is Shannon here, Derek. Yeah, hey, we're seeing a positive margin trajectory for C&P and certainly Dean as well. White Space in Q2 was taken up. Q3, we're seeing the same thing in Q3. And I think an important point is we're also seeing pretty significant rig ads here. Over 30 plus rigs being added to North America. Not only is that a real positive for a D&E business, but kind of raises the bar, if you will, of activity sets moving in the future. So it makes us feel really good. And, you know, there's not a Very little capacity at all in the market on gas substitution, zero at all on electric. And so as we start seeing some of these smaller and medium sized players moving a little quicker, you know, nobody's doing less out here. So I think that's an environment. It doesn't happen overnight. It's a steady march and something, as Jeff mentioned, we look across our entire fleet, not just one fleet of raising, if we'll that tied up on the entire scope of work we do.
Derek Podhazer: Okay, that's helpful. And then maybe moving over to Jafora, you won an award there deploying a frac fleet for the basin. Obviously, there's a player over there that won majority of the committed work. Is this the uncommitted work? Is there upside to the fleet that you're deploying over there? Maybe talk about some of the technology you could add into the Jafora basin as it continues to scale over time. Just an exciting award, so maybe a little more color there.
Shannon Slocum: Yeah, that's my exact words. It's exciting. I'm really excited about it. It is committed scope. You know, we get terms that we're satisfied with, volumes and wells per pad. And I think a big driver is, of course, we moved it because of long-term work there in the gas. We can continue to see that market, in particular gas growing, not just in conventionals but unconventionals. But a big driver that was bringing really our automation subsurface and surface moving that to kingdom. And yeah, I think, you know, we're excited to be back and that will be a long term program for us moving forward.
Derek Podhazer: Great. Appreciate all the call, Shannon. I'll turn it back.
Operator: Thank you. Our next question or comment comes from the line of Neil Mehta from Goldman Sachs. Mr. Mehta, your line is now open.
Neil Mehta: Yeah, thank you so much, team. Jeff Shannon, maybe you can unpack a little bit about the opportunity set in Iraq. We've seen some of your large customers really lean into it and some big announcements last week. So as we think about the margin, the profitability associated with the opportunity set, but also how you're thinking about the some of the moving pieces around the geopolitics and the above ground concerns that the market historically has had in that region.
Shannon Slocum: Yeah, I'd say today things obviously are very fluid in Iraq. I was just there a couple weeks ago and just spent some time with the Prime Minister actually here over the last week. You know, I'm encouraged by the direction of policy that's being made within the country, wanting companies like Halliburton to come to work within country. As far as the war right now, it's still impacted as far as it's not close to pre-war levels, but What I'm really excited about is this integrated field management award that we got. It really encompasses, if you think about everything that Halliburton does, from field development planning, production optimization, responsible for well construction, digital, a bit of the UPCM work in there. But I think what's important is the big picture here is that is a contract for Halliburton that, yes, it's good for Iraq, yes, it's good for Halliburton, but it is Thanks for joining us.
Neil Mehta: One thing that has been a constant of 2026 is volatility, including your share price, which has done well but consolidated from peaks. And so, you know, how do you think about the buyback? Do we keep the $200 million run rate or is there an opportunity to be opportunistic with shares trading at a discount potentially, at least relative to where we were a couple months ago?
Eric Carre: Yeah, look, we haven't really changed our philosophy around buyback, Neil. We were a bit more conservative at the beginning of the year, as we indicated on the Q4 call, because the macro situation was very different at that time. Now our thinking is to reestablish pretty much the run rate that we've been on for the last couple of years. So you can expect buybacks to Thank you very much.
Operator: Our next question or comment comes from the line of Doug Becker from Capital One. Mr. Becker, your line is now open.
Doug Becker: Thank you. It really seems like we're seeing evidence of the international growth engines revving up. Back in January of last year, you mentioned the international growth engines could add $2.5 to $3 billion of annual revenue in three to five years. Is that still a reasonable target, or is there some upside there? And could we get a sense how each of the four engines is progressing relative to your expectations?
Shannon Slocum: Yeah, Doug, hey, I think not only we're ahead of schedule as far as that – you know 2.5 to 3 billion by 2028. We think there's upside on that number. We really love our position offshore and land on the drilling side of things. I think the acquisition of Saccol in particular on the offshore has really strengthened our offshore positioning or technology advantage there. Unconventionals we talked about a lot already whether it's the YPF or you know the Ramco work, SonicTrack all good business for us and I think that whole Technology that we're deploying internationally will give us more legs in the future. And as far as, you know, intervention and lift, you know, we have a really, we have a significant footprint on the intervention space, in particular, HDWO and coal tubing. But we're really excited also about the trajectory we're seeing on our artificial lift business globally. So, yeah, I think there's upside on that number.
Doug Becker: Certainly sounds encouraging. Eric, I did want to just first the second quarter C&P margin a little bit more. The guidance was for 50 to 100 basis points of sequential margin improvement, a little bit less than that, and just trying to get a sense how much of that was related to the chemical business versus a lower Middle East activity. Just want to understand that a little bit better.
Eric Carre: Yeah, I think in both divisions, we were a little higher than guidance on revenue. We were on the lower end of margin overall for both divisions as well. There's not a lot to read into it if you take the C&P margins, for example. We had higher maintenance costs and mobilization of equipment that hit the numbers. We had delays in the Gulf of Mexico, which is structurally a high margin business. And it was essentially a product line mix as well that drove the same results and the D&E guidance.
Doug Becker: Thank you very much.
Operator: Thank you. Our next question or comment comes from the line of Scott Gruber from Citigroup. Mr. Gruber, your line is now open.
Scott Gruber: Thanks. Good morning, everybody. I actually wanted to stay on the near-term margin guide. Eric, you mentioned mobilization, impact. I think it was C&P. Just broadly, you know, given the pace of growth for you guys, which is pretty impressive, and the new contract wins, Are mobilization and start-up costs a significant weight on margins today? And are those completely fading in 3Q? Are they still impacting just some more color on the mobilization and start-up costs and the trend towards normalizing?
Eric Carre: Yeah, I mean, I can't give you an exact number in terms of the impact of mobilization because you have mobilization happening, mobilization or movement of equipment happening at all times in our business as we try to optimize where we put asset to work. The contract wins that we have had have elevated that number a little bit. So we have some headwinds related to that. I just can't quantify it exactly.
Jeff Miller: I think one of the things just to point out under the hood in North America, we are seeing pricing and we are seeing improvement in that business. So as Eric described, Gulf of Mexico Moves and Mobilizations, etc. Underneath the hood, we're pleased that we are getting the traction in pricing and improvement in performance in our North America land business.
Scott Gruber: Yeah, that's where I wanted to go to next is on the medium to longer term outlook for improvement. And I heard you guys mentioned the new work is coming in. and that's going to be margin of accretive. I'm just curious on how to dimension that as we think about the go forward. You know, we normally think about incrementals for Halliburton in that 30, 35% range, but, you know, a lot of the new contract wins, you know, seem to be propelled by new technologies and those mobilization and startup costs, you know, should settle down in the years ahead and then Hopefully we have normalization of activity in the Middle East. As you kind of think through the potential path for margins, given those factors, should we be thinking about a couple years of above normal incrementals for Halliburton in 27 and 28? Is that possible?
Jeff Miller: Yeah, your incremental expectations aren't wrong. Those are my expectations as well. We're getting underway. I like the trajectory that we're seeing on the ground in North America. We're winning big contracts all around the world. Yeah, there's always going to be mobilization associated with those, but that doesn't diminish my, when I say revenue growth and margin expansion, I expect margin expansion. And those types of incrementals aren't inconsistent at all with my expectations.
Scott Gruber: Can we do better than normal on incrementals? I guess is the question kind of given all those factors around technology and the Middle East coming back.
Jeff Miller: Yes, I mean, I think so. It's always possible. And, you know, the middle is an odd mix with the Middle East where it is. We've got this pipeline of work that we know will be done and it will be done and it'll start late this year into next year. in different parts of the world. And so, you know, it's a bit of an odd mix right now in terms of Middle East, Lower North America improving. And yes, some mobilization going on.
Scott Gruber: Okay. Appreciate the call, Jeff. Thank you.
Jeff Miller: Thank you.
Operator: Thank you. Our next question or comment comes from the line of Mark Bianchi from TD Cowan. Mr. Bianchi, your line is now open.
Mark Bianchi: Hey, thank you. I was curious if you could share the impact of the Middle East on the business in the second quarter.
Eric Carre: It pretty much landed where we thought it would land. Now, it's difficult because it's difficult to say If there had been no conflict, the activity would have been that much, and then compare it to the actual result is something you just can't do. But in terms of how we were thinking the quota would evolve and the results that the Middle East delivered is pretty much where we thought it would be, broadly speaking.
Mark Bianchi: Okay. Okay. Thank you, Eric. And then on the comment that the international business X in Middle East will grow low double digits, I'm curious. What do you think the broader market is doing? And where I'm going with this is like, can we maybe infer some sort of, you know, growth above whatever the broader market's doing because of all these, you know, contracts that you've announced here in the last few quarters?
Jeff Miller: Thank you. Yes, I do believe we're going to see outsized growth. I mean, the growth engines that we described are driving this. These are places where we have clear competitive advantage. and they are outgrowing the broader market and I believe that we are outgrowing the broader market. So I look forward to, you know, as these things feather in over the next little bit, you know, the growth in our position in deep water continues to strengthen and a lot of that's outside the U.S. and then also our strength in the Middle East as we just described. Those are meaningful step forwards and most are on the back of our Technology, and Value Propositions. I'm comfortable those are differentiated.
Mark Bianchi: Jeff, would you say that the broader market without this benefit would be up something like mid-single digits?
Jeff Miller: Could be. It's tough to call the entire broader market, but I do believe we're going to be at the very high end of that.
Mark Bianchi: Yep. All right. Thanks very much. I'll turn it back.
Jeff Miller: Thank you.
Operator: Thank you. Ladies and gentlemen, that concludes our Q&A session at this time. I would like to turn the conference back over to management for any closing remarks.
Jeff Miller: Okay, thank you, Howard. Before we wrap up today's call, let me close with this. I believe the global outlook for Halliburton is strong, and our differentiated technology and value proposition set the stage for Halliburton's future revenue growth and margin expansion. I look forward to speaking with you next quarter. Let's close out the call.
Operator: Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone have a wonderful day. Speakers stand by.
