Halliburton Company Q2 2026 Earnings Call

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the second quarter 2026 Halliburton Company earnings conference call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question at this time, you need to press star one one on your telephone keypad. As a reminder, this conference call is being recorded. At this time, I would like to turn the conference over to Mr. David Coleman, Senior Director, Investor Relations. Sir, please begin. 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 31st, 2025, Form 10-Q for the quarter ended March 31st, 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. 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. 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 oilfield 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.

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 our 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 in 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 Jafurah all strengthen my view. 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 lift are key to delivering on the outlook. Here are a few recent developments. In production services, the commissioning phase began for our newest North Sea stim vessel, with the first operations of its multi-year contract expected at year-end. This deployment strengthens our leading global stim business and importantly represents the first offshore implementation of OCTIV, our automated pumping control system. In directional drilling, Sekal, 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 Aker BP this quarter. I am confident this technology and the opportunity to further deploy it will deliver meaningful, profitable growth for Halliburton. In international unconventionals, we saw further progress in multiple regions. In Algeria, we secured Sonatrach'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. 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 deployed the latest version of ZEUS IQ. This release has near well and crosswell subsurface measurements, expands data inputs, and gives customers well-by-well treatment control in simul-frac 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 trajectory. 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, with a balanced portfolio that spans international and North America, onshore and offshore, mature and new plays. I am excited about our contract awards and our opportunity pipeline. I am confident these will translate into revenue growth and margin expansion. With that, I'll turn the call over to Eric Carre to provide more details on our financial results. Eric? Thank you, Shannon Slocum, and good morning.

Our Q2 reported net income per diluted share was $0.64. Adjusted net income per diluted share was $0.55. 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. Turning to the segment 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 land 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 land activity in the Middle East. Operating income decreased due to the seasonal roll-off of software sales. 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 Mexico. 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 S/4 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. 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%-5% and margins to improve 25 to 75 basis points. I will now turn the call back to Jeff.

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.

Yes, sir. Ladies and gentlemen, if you have a question or comment at this time, please press star one one on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, simply press star one one again. Again, if you have a question or comment at this time, please press star one one on your telephone keypad. Please stand by while we compile the Q&A roster. Our first question or comment comes from the line of Stephen Richardson from Evercore. Your line is open, sir.

Hi, 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 and Production 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.

Yeah. Thank you, Steve. Look, as I described, we see positive margin trajectory and white space is filled. We've seen rig adds, 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 across the entire fleet. Very confident that we are seeing that trajectory continue, actually, into Q3. White space filled up looking forward, Q3, Q4. Pleased with that. We are, again, focused on margin expansion, but all around the fleet, the entire fleet, not just one at a time. In some cases, when we work on price, that includes, moving some equipment overseas to do better margins.

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.

That's great. Appreciate that. I was also wondering if you could just follow up on last quarter, you all were talking about, sort of itemized the impact of what we're seeing in the Middle East and talked about a $0.07-$0.09 kind of headwind. Can you maybe just 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?

Yeah. Shannon here. Steve, I'll have Eric provide a little more 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, really understand how quickly they can bring that back. In Q2, we saw a positive progression in Middle East of what was going on. When we got here over the last week or so, obviously, we've seen a little bit of step back of escalations. We've kind of had a little bit of starting up and then a bit of pulling back. I think it's important to maybe emphasize the bigger picture here as far as we think about what's going on in Middle East.

Regardless of the pace of when it comes back, Halliburton will be ready. We have the operational footprint intact. Also important to note is the business that we are winning in the Middle East, which is work that is absolutely gonna get done. We talked about going back to work in Jafurah in unconventional. The integrated work we won in re-entry. The integrated work we've won offshore, also a really exciting project in Iraq with IFMS. The pace is highly dependent and fluid, we're winning work that will mean something to Halliburton in the future.

Yes, Steve, it's Eric. Regarding what's built in the guide, our assumptions are for a steady activity compared to where we are today. We haven't put in our guidance any recovery to pre-war level, neither have we built in any major disruption. It's basically steady from where we are. It's just very difficult to forecast, as you understand.

Thank you. Thank you. Our next question or comment comes from the line of David Anderson from Barclays.

Mr. Anderson, your line is now open.

Thank you, and good morning. 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, what are some of the key drivers? You're talking about technology a lot as an enabler here, so maybe if you could expand a little bit more on how that's driving growth going forward. Thank you. 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. Hey, big markets around the world, deepwater markets like in the Caribbean. The revitalization of tieback work, deepwater Gulf of Mexico. Brazil, West Africa, as you mentioned, Norway, and East Med are all really busy markets for us. While we're seeing rigs being tendered for those spaces, we're seeing a tightening of FPSOs in that market. Don't see that as probably a Q4 event. What I see that as more of a 2027 event, probably later half of 2027 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 TotalEnergies 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, we're winning there. Obviously, Norway, North Sea has been a big market for us moving forward. Really like the direction we're offshore going, and I think, again, more importantly, is that we're winning in that space.

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 us acquire Sekal. That's an important step towards better adoption of that technology. It broadens our ability to implement that technology on more rigs than before. Very positive technically around what we're doing and again, how we're working with our customers are delivering real results.

Appreciate those comments, Jeff. Maybe if we could shift over to the international side. International and conventionals are becoming a bigger part of your portfolio. Vaca Muerta is clearly in growth mode. You talked about Algeria, but you're also in U.A.E. and Jubail. I was wondering if you could kind of put all this together and sort 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 hold it 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. Yeah. I'll comment on some of the activities and ask Eric to give more of the guidance here.

Hey, as you said, we're really excited about, David, the scale, converting at scale. Argentina with YPF, big win, multi-year, multi-billion with ZEUS. Going back to Aramco and Jubail. If you kind of look at the big markets out there, Argentina starting there, it's growing market. Really Argentina, Algeria, Kuwait, Saudi, U.A.E., we have frac spreads in all of those locations today doing unconventional work. 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. I think that has been the recipe for us to being scaling this globally.

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. It's part of our growth engines, we know that with that scale comes margin expansion.

Thank you. Thank you. Our next question or comment comes from the line of Arun Jayaram from JPMorgan.

Mr. Arun, your line is now open.

Good morning, team. Jeff, I was wondering if you could comment on, and Shannon, clearly, it appears that Hall is taking market share in international markets as just highlighted by a number of awards in the Middle East, LATAM, et cetera. I wondered if you could maybe break down what you think is driving some of those share gains. Shannon did mention that you 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 2027.

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 to our business. I think a couple things have been driving it. One, the market is tight. Nobody's really overbuilt in the market. That's a good thing. Opportunity for expansion of margins for us, we think that macro outlook for what we're seeing will continue. 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. 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, I think it's a combination of value prop and technology has been the difference maker for us over the last 12 months.

Got it. 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 NAM?

Hey, 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. We have zero hesitation of moving equipment around the world, whether it be in C&P or D&E, to a place that generates returns for Halliburton.

When there's opportunities, we'll do that, and that's what you've been seeing on the C&P side frac 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 Halliburton.

Great. Thanks a lot. Thank you.

Our next question or comment comes from the line of Saurabh Pant from Bank of America. Your line is now open.

Hi, good morning, Jeff, Shannon, and Eric.

Hey, Saurabh. Good morning. Eric, maybe I 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, C&P flat to down 2%, D&E down 3%-5%. I think within that, in response to one of the initial questions, you were thinking Middle East is steady, right? Flat is call it on a run rate 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? I know the chemical business sale happened in May of this year. Is it part of that? Maybe just talk to that a little bit, Eric, just to give us some color.

Yeah. I'll give you some color on the guide. 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 Mexico and Europe, testing across most international region. There's really nothing structural. It's simply rig moves, end of programs, et cetera. Part of that is offset by the seasonal pickup of our software business in Q3. 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 structurally higher margins, which explain the guidance.

On the C&P side, top-line revenue, you mentioned it, we have sold our chemical business, we're not gonna have any revenue coming from that in Q3. We're gonna be slightly down in Latin America and Europe, Africa, which had a fantastic Q2 of 19%. Some of that is gonna 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, a recovery of completion tool delivery in the Gulf of Mexico and also the Middle East recovery as in D&E. These are the main elements of our Q3 guidance.

I got it, Eric. That's very helpful. 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 LOGIX DecisionSpace. I think you've had a lot of success in that. Like you had in your prepared remarks, you acquired Seequent last quarter, and today in your press release, you had the acquisition of InformatiQ AS. Maybe just talk to the Landmark business a little bit. It seems like that'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.

Yeah. Thank you. Look, we really like our approach to digital broadly, both the software business and the automation business. From a software perspective, our absolute focus on open architecture is very attractive to customers. Strategically, AI, open architecture, 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, Seequent, acquisitions that we make that we know help our customers drill better, more precise wells or improve recovery or hydraulic fracturing for unconventional completions.

That automation and answer products in terms of ZEUS IQ™ and LOGIX and what it does have been a big part of recent awards. We're seeing that manifest in actually the contracts that we are winning. It is a differentiator, and it gives me a lot of confidence around why, I believe, or why the contracts that we're winning are accretive over time.

Fantastic note, Jeff. That's very helpful. Thank you. I'll turn it back.

Thank you. Thank you. Our next question or comment comes from the line of James West from Melius Research.

Your line is now open.

Hey, thanks. Good morning, guys.

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 cash flow harvesting machine, and that's led to 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.

wanted to just touch on where are we in that, I don't know if I want to call it a pivot, but just the deliberate strategy.

Look, it is a deliberate strategy. It is where we have market-leading both capability and technology that's sought after internationally. As that market grows, we are leading that market and plan to continue to lead in that market. Unconventionals have been proven to be a successful way to deliver oil and gas. Now the rest of the world is doing more of it, and we plan to lead there. Still focused on North America. So, 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. As we push price up, there's always going to be some bumping around in the market. 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.

The point is, we've got opportunities around the world as well to put equipment to work. This is-- I wouldn't describe it as a pivot, James. I'd describe it as a conscious- Right 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.

Okay. Got it. That makes perfect sense. As we think about moving of equipment abroad, how should we think about, I guess the kind of margin opportunity set? I know Eric already gave us some guidance for just next quarter, which is pretty significant margin improvement sequentially. 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, also two, you're not going to need to put as much capital into the market because you have the steel already ready to go.

Yeah, I'll talk a bit about margins, James, I'll let Shannon talk about the competitive environment. I think that directionally, you heard the Q3 guide. Margins are going to be up, in both Completion and Production, Drilling and Evaluation. I think the trend will continue, with margin up in D&E in Q4. We think it continues in 2027. We think the same trend is gonna be there for C&P, although you got to take into account the typical seasonality in Q4. We'll have to see how that one plays out as we get closer, to Q4. You get some Middle East unknown around all of that.

Yeah, James, I guess, the short answer on how we think about when we move things around. 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. Really, it's a pretty straightforward 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? We make those decisions every quarter when we're looking at that. If we have an opportunity to move it or somewhere in the world, 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 a well, or is it a long-term program?" We base our decisions around that.

Got it. Great. Thanks, guys.

Thank you. Thank you very much.

Our next question or comment comes from the line of Derek Podhaizer from Piper Sandler. Mr. Podhaizer, your line is now open.

Hey, good morning, everyone. You mentioned.

Right North America land. That's helping improve the C&P margins.

I think the guide at the midpoint was 150 basis points. Top line seems to be impacted by the chemical business sale. You talked about Latin America, Europe, Africa, which had a stellar quarter. 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? Any 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. land fracks specifically impacting C&P.

Yeah, sure. This is Shannon here, Derek. Yeah. Hey, we're seeing a positive margin trajectory. C&P and certainly D&E as well. White space in Q2 was taken up.

Q3, we're seeing the same thing in Q3. I think an important point is we're also seeing pretty significant rig adds here. Over 30-plus rigs being added to North America. Not only is that a real positive for our D&E business, but kind of raises the bar, if you will, of activity sets moving in the future. It makes us feel really good. There's very little capacity at all in the market on gas substitution, zero at all on electric. As we start seeing some of these smaller and medium-sized players moving a little quicker, nobody's doing less out here. 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 you will, that tide up on the entire scope of work we do.

Got it. Okay. That's helpful. Then maybe moving over to Jafurah. You won an award there deploying a frack 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 Jafurah basin as it continues to scale over time. Just an exciting award, so maybe a little more color there.

That's my exact words, exciting. I'm really excited about it. It is committed scope. We got terms that we're satisfied with, volumes and wells per pad. I think a big driver is, of course, we moved it because of long-term work there in the gas, and we can continue to see that market, in particular gas growing, not just in conventionals but unconventionals. A big driver that was bringing really our automation, subsurface and surface, moving that to Kingdom. Yeah, I think we're excited to be back, and that will be a long-term program for us moving forward.

Great. Appreciate all the color, Shannon. I'll turn it back. Thank you.

Our next question to comment comes from the line of Neil Mehta from Goldman Sachs. Mr. Mehta, your line is now open.

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. As we think about the margin, the profitability associated with the opportunity set, but also how you're thinking about some of the moving pieces around the geopolitics and the aboveground concerns that the market historically has had in that region.

I'd say today things obviously are very fluid in Iraq. Was just there a couple of weeks ago and just spent some time with the prime minister, actually, here over the last week. 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. What I'm really excited about is this Integrated Field Management award that we got. It really encompasses, you think about everything that Halliburton does, from field development planning, production optimization, responsible for well construction, digital, a bit of the EPCM work in there.

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 foundational building for us within Iraq, something we think we can scale and build on. Broadly great for Iraq, but also really good for us in our Middle East business.

Thanks. The follow-up is here for Eric, is just around share repurchase and buybacks. One thing that has been a constant of 2026 is volatility, including your share price, which has done well, but consolidated from peaks. 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 of months ago?

Look, we haven't really changed our philosophy around buyback, Neel. 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. Our thinking is to reestablish pretty much the run rate that we've been on for the last couple of years. You can expect buybacks to pick up. We are going to continue to do this on a continuous basis rather than jump in the market.

Okay. Thanks, Eric. Thank you very much.

Our next question comes from the line of Doug Becker from Capital One. Mr. Becker, your line is now open.

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 billion-$3 billion of annual revenue in 3-5 years. Is that still a reasonable target, or is there some upside there? Could we get a sense how each of the four engines is progressing relative to your expectations?

Yeah. Doug, hey, I think we're ahead of schedule as far as that. $2.5 billion-$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 Sekal, in particular on the offshore, has really strengthened our offshore positioning, our technology advantage there. Unconventionals, we talked about a lot already, whether it's YPF or the Aramco work, SonicTrack, all good business for us.

I think that whole technology that we're deploying internationally will give us some more legs in the future. As far as intervention in lift, we have a significant footprint on the intervention space, in particular, HWO and coiled tubing. We're really excited also about the trajectory we're seeing on our artificial lift business globally. Yeah, I think there's upside on that number.

Yeah. Certainly sounds encouraging. Eric, I did want to just parse 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. Just trying to get a sense how much of that was related to the chemical business versus, say, lower Middle East activity. Just want to understand that a little bit better.

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 cost 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 in the D&E guidance.

Thank you very much. Thank you.

Our next question or comment comes from the line of Scott Gruber from Citigroup. Mr. Gruber, your line is now open.

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, given the pace of growth for you guys, which is pretty impressive, and the new contract wins, are mobilization and startup costs a significant weight on margins today? Are those completely fading in Q3? Are they still impacting? Just some more color on the mobilization and startup costs and the trend towards normalizing.

Yeah, I can't give you an exact number in terms of the impact of mobilization because you have 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. We have some headwinds related to that. I just can't quantify it exactly.

Okay. No worries. 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.

As Eric described, Gulf of Mexico moves and mobilizations, et cetera. Underneath the hood, we are pleased that we are getting the traction in pricing and improvement in performance in our North America land business.

That's where I wanted to go to next is on the medium to longer term outlook for improvement. I heard you guys mention the new work is coming in, and that's going to be margin accretive. I am just curious on how to dimension that as we think about the go forward. We normally think about incrementals for Halliburton in that 30%-35% range. A lot of the new contract wins seem to be propelled by new technologies and as mobilization and startup costs should settle down in the years ahead and then hopefully we have a 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 of years of above normal incrementals for Halliburton in 2027 and 2028? Is that possible? Your incremental expectations aren't wrong.

Those are my expectations as well. We are getting underway. I like the trajectory that we are seeing on the ground in North America. We are winning big contracts all around the world. There's always going to be mobilization associated with those, but that doesn't diminish when I say revenue growth and margin expansion, I expect margin expansion. Those types of incrementals aren't inconsistent at all with my expectations.

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?

Yes. I think so. It's always possible.

It's always possible. It's 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. It's a bit of an odd mix right now in terms of Middle East slower, North America improving. Yeah, some mobilization going on.

Okay. Appreciate the color, Jeff. Thank you. Thank you. Thank you.

Our next question or comment comes from the line of Marc Bianchi from TD Cowen. Mr. Bianchi, your line is now open.

Hey, thank you. I was curious if you could share the impact of the Middle East on the business in the second quarter.

It pretty much landed where we thought it would land. 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. In terms of how we were thinking the quarter would evolve and the results that the Middle East delivered, it was pretty much where we thought it would be, broadly speaking.

Okay. Thank you, Eric. On the comment that the international business ex-Middle East will grow low double digits, I'm curious, what do you think the broader market is doing? Where I'm going with this is can we maybe infer some sort of growth above whatever the broader market's doing because of all these contracts that you've announced here in the last few quarters?

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, they are outgrowing the broader market, I believe that we are outgrowing the broader market. I look forward to as these things feather in over the next little bit, the growth in our position in deep water continues to strengthen. A lot of that's outside the U.S., also our strength in the Middle East, as we just described. Those are meaningful step forwards. Most are on the back of our technology and value propositions. I'm comfortable those are differentiated.

Jeff, would you say that the broader market, without this benefit, would be up something like mid-single digits?

Could be. It's tough to call the entire broader market, I do believe we're going to be at the very high end of that.

Yep. All right. Thanks very much. I'll turn it back. Thank you.

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.

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.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day.