Q3 2022 Halliburton Co Earnings Call
[music].
Okay.
Yeah.
Good day, and thank you for standing by welcome to Halliburton's third quarter 2022 earnings 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 during the session you will need to press star one on your telephone.
Please be advised that today's conference is being recorded.
I would now like to hand, the conference over to your Speaker today, David Coleman Senior director of Investor Relations. Please go ahead.
Okay.
Hello, and thank you for joining the Halliburton third quarter 2022 conference call, we will make the recording of today's webcast available on Halliburton's website. After this call.
Joining me today are Jeff Miller, Chairman, President and CEO , and Eric array EVP and CFO .
Some of today's comments may include forward looking statements, reflecting halliburton's views about future events.
These matters involve risks and uncertainties that could cause our actual results to materially differ from our forward looking statements.
These risks are discussed in halliburton's Form 10-K for the year ended December 31, 2021.
10-Q for the quarter ended June 30th 2022, recent current reports on form 8-K, and other Securities and Exchange Commission filings.
We undertake no obligation to revise or update publicly any forward looking statements for any reason.
Our comments today also include non-GAAP financial measures additional details and reconciliation to the most directly comparable GAAP financial measures are included in our third quarter earnings release and in our quarterly results and presentation section of our website.
Now I'll turn the call over to Jeff.
Thank you David and good morning, everyone.
Our outlook today is strong.
Oil and gas supply remains tight for the foreseeable future.
International market activity is accelerating in North America service capacity continues to further tightened.
As a result pricing is moving up in both markets.
Halliburton strong third quarter results demonstrate the power of our strategy.
Here are some highlights.
Total company revenue increased 6% sequentially as both North America and international activity continued to expand.
Operating income grew 18% compared to adjusted operating income from the second quarter with improved margin performance in both divisions.
Our overall operating income margin was 16% representing 45% incremental margins over last quarters adjusted operating income.
Our completion and production division revenue increased 8% over last quarter, driven by completions activity and pricing in North America and international markets.
N P delivered operating margin of 19% in the third quarter.
The drilling and evaluation division revenue grew 3%.
Operating margin of 15% increased 140 basis points sequentially and 380 basis points above the same period last year, demonstrating the earnings power and global competitiveness of heart D and E business.
North America revenue grew almost 9% sequentially as both drilling and completions activity improved throughout the third quarter.
Pricing gains and activity increases across both divisions drove these results.
International revenue grew 3% sequentially with improved activity in the middle East and Latin America that more than offset the revenue decline related to exiting our Russia business.
Importantly, during the third quarter, we generated similar incremental margins in both international and North America markets.
Finally, we generated free cash flow of $543 million and retired $600 million of debt during the quarter.
I am pleased with the third quarter results.
I want to express my appreciation to the men and women of Halliburton, whose hard work and dedication made these results possible.
Your commitment to collaboration safety and service quality everyday make halliburton successful.
Turning to our macro outlook.
Oil and gas supply remains fundamentally tight due to multiple years of underinvestment.
This tightness is apparent and historically low inventory levels production levels, well below expectations and temporary actions such as the largest ever SBR releases.
Against tight supply demand for oil and gas is strong and we believe it will remain so.
While the broader market volatility is clear what we see in our business is strong and growing demand for equipment and services.
There is no immediate solution to balance the world's demand for secure and reliable oil and gas against its limited supply.
I believe the only multiple years of increased investment in existing and new sources of production will solve the short supply.
The effective solutions in short supply as conventional and unconventional deepwater and shallow water, new and existing developments and short and long cycle barrels.
All of it.
I expect progress towards increased supply will be measured in years not months as behavior of both operators and service companies have changed.
Operators remain disciplined their commitments to investor returns require a measured approach to growth and investment.
Service companies follow the same discipline delivering on their commitments to investor returns and taking a measured approach to growth and investment.
What I think is underappreciated is how this results and more sustainable growth and returns over a longer period of time.
Let's turn now to Halliburton's performance, starting with the international markets.
Our third quarter performance demonstrates the strength of our strategy to deliver profitable international growth through improved pricing selective contract wins and the competitiveness of our technology offerings International.
Revenue in the third quarter for the CMP and D&A divisions grew year over year from a percentage standpoint in the high teens and mid Twenty's, respectively, which outpaced international rig count growth and reflects our competitiveness in all markets.
Our year over year growth and the margin expansion demonstrated by both divisions.
<unk> confidence in the earnings power of our international business.
Looking forward I see activity, increasing around the world from the smallest to the largest countries and producers.
I expect the areas of strongest growth will be the middle East led by Saudi Arabia, but with meaningful activity increases in the UAE, Qatar, Iraq and Kuwait.
Elsewhere, Brazil, Guyana, and many others have also signaled a commitment to increased activity.
Throughout these markets I am pleased with the broad adoption of our new directional drilling platforms, such as eye crews and earthstar.
Importantly, these broad based activity increases served tightened equipment availability and drive price increases in our international business.
Shifting to North America, we had a fantastic quarter.
Our solid performance demonstrates our strategy to maximize value in North America.
We achieved this through improved pricing partnering with high quality customers and differentiated technology.
Our revenue grew 9% sequentially and is up 63% over the third quarter last year.
Pricing continues to improve across all product lines and completions equipment remains extremely tight across the market.
Interest and equally as strong and customers are pleased with the superior efficiencies operational uptime and reduced carbon footprint of our market leading solution.
Looking into 2023.
<unk> continued growth.
Inbounds for calendar slots are stronger than I have ever seen at this point in the year more.
More importantly, I see increased demand for a limited set of equipment and an environment, where technology and performance are increasingly valued.
All perfectly set up for halliburton to maximize value in North America.
Market consolidation competitors that answer to public investors.
Disciplined customers and supply chain constraints.
All drive the services market that I expect to remain tight for the foreseeable future.
Halliburton will continue to outperform in this market.
Our best in class Zeus E fleets have pumped over 20000 hours for customers.
Equally customers know that they have a field proven technology, which carries the full weight of halliburton's expertise to build run and optimize this next generation equipment.
Additionally, our smart fleet intelligent fracturing system continues to gain traction and we expect an almost eight fold increase in stages completed this year.
Smart fleet gives customers unparalleled access to data about where and how they are fractures permeate the potential for frac hits on adjacent wells and their real time data necessary to improve completion designs.
And all markets Halliburton strong financial performance demonstrates its strategy in action.
Profitable international growth.
Maximizing value in North America, and improved asset velocity deliver value for our shareholders today.
These strategies equip us to outperform under any market conditions, but especially to maximize returns through this up cycle.
Execution is at the heart of Halliburton's identity, we collaborate and engineer solutions to maximize asset value for our customers.
You've seen that in action and today's results you can hear how excited I am about halliburton's future all around the world.
The structural demand for more oil and gas supply provide strong tailwind for our business and Halliburton is ideally positioned to deliver improved profitability and increased returns for shareholders.
Now I'll turn the call over to Eric to provide more details on our third quarter financial results.
Eric.
Thank you, Jeff and good morning, let me begin with a summary of our third quarter results total company revenue for the quarter was $5 $4 billion, a 6% increase over the second quarter, while operating income was $846 million an increase of 18% over.
Second quarter, adjusted operating income globally higher activity and pricing improvement supported these strong results.
<unk> margin for the company was 16% in the third quarter.
164 basis point increase over the second quarter, adjusted operating margin and 393 basis points over adjusted operating margin in the third quarter of 2021, our third quarter reported net income per diluted share was <unk> 60 cents, an increase of <unk> <unk>.
11 cents or 22% from second quarter, adjusted net income per diluted share and more than double the adjusted net income per diluted share for the same period last year.
Beginning with our completion and production division revenue in the third quarter was $3 1 billion, an 8% increase when compared to the second quarter, while operating income was $583 million, an increase of 17% when compared to the second quarter. These are.
Those were driven by increased pressure pumping services, primarily in North America land and increased completion tool sales in Middle East Asia.
In our drilling and evaluation division revenue in the third quarter was $2 $2 billion, an increase of 3% when compared to the second quarter, while operating income was $325 million, an increase of 14% when compared to the second quarter.
These results were driven by improved drilling related services in Latin America, and Middle East Asia, and increased project management and wireline services internationally.
The exit from our Russia business negatively impacted financial results for both divisions.
Moving on to geographic results.
In North America revenue into third quarter was $2 $6 billion, a 9% increase when compared to the second quarter.
This increase was primarily driven by increased pressure pumping services and drilling related services in North America land. These.
These increases were partially offset by decreased activity across multiple product service lines in the Gulf of Mexico.
Latin America revenue into third quarter was $841 million in it.
11% increase sequentially driven by increased well construction services and project management activity in Mexico.
Europe Africa revenue into the third quarter was $639 million, an 11% decrease sequentially.
Most all of this reduction was related to exiting our Russia business.
Middle East Asia revenue in the third quarter was $1 2 billion, a 6% increase sequentially, primarily resulting from increased completion tool sales in the Arabian Gulf and higher drilling services activity in Saudi Arabia, and South East Asia.
In the third quarter, our corporate and other expenses were $62 million, which was in line with expectations for the fourth quarter, we expect our corporate expense to be up slightly or roughly in line with second quarter.
Net interest expense for the quarter was $93 million, a slight decrease due to higher yields on cash balances for the fourth quarter. We expect this expense to decrease slightly due to lower debt balances.
Other net expense for the quarter was $48 million, primarily related to currency losses, driven by the strength of the U S dollar for.
For the fourth quarter, we expect this expense to remain approximately flat.
Our normalized effective tax rate for the third quarter came in at approximately 22% based on our anticipated geographic earnings mix, we expect our fourth quarter effective tax rate to increase slightly.
Capital expenditure for the third quarter were $251 million, we expect our full year capital expenditure to be in line with our target of 5% to 6% of revenue.
Turning to cash flow, we generated $753 million of cash from operations and $543 million of free cash flow during the third quarter.
We expect full year free cash flow to be in the range of last year's free cash flow.
With the latest payment of $600 million, we have now retired $2 $4 billion of debt since 2020.
We're quickly approaching our near term leverage target of two times gross debt to EBITDA.
Given our balance sheet position and strong outlook, we now have greater flexibility to increase the cash we returned to shareholders through dividends and share buybacks under our existing repurchase program.
Now, let me turn to the near term outlook.
In the completion and production Division, we expect fourth quarter revenue to grow in the low to mid single digits and margins to improve 50 to 100 basis points.
The drilling and evaluation Division, we expect fourth quarter revenue to grow in the low to mid single digits and margins to improve 75 to 125 basis points I will now turn the call back to Jeff.
Thanks, Eric.
Let me summarize our discussion today.
Halliburton's third quarter financial performance shows our strategy in action delivering value for our shareholders.
Oil and gas supply remains tight requiring multiple years of investment.
Demand for Halliburton services is strong.
We will continue to execute on our strategic priorities that drive free cash flow and returns for our shareholders.
And now let's open it up for questions.
Thank you.
As a reminder to ask a question at this time. Please press star one one on your telephone.
Please stand by while we compile the Q&A roster.
Our first question comes from Dave Anderson with Barclays. Your line is now open hey.
Good morning, Jeff.
Good morning, Dave.
So first question on U S land. So we often hear about budget exhaustion. This time of year, but you actually saying you.
Youre, saying youre seeing stronger inbound and ever going into year end I am curious as to how those inbounds of changed are the inbounds more from public e&ps versus privates.
And I'm also wondering are these customers looking for term now with such limited of equipment available and does that get a premium.
Yes look I mean, we are.
Certainly not saying budget exhaustion.
We remain sold out through the end of the year and into next year. So the.
Yes.
Market is strong and activity remain strong and so as we look at what kind of inbounds are we're getting I'd say, it's a mix, but it may be a little stronger towards larger companies lets just say it that way.
Just given they want to be certain I am equipment for 2023, I expect that.
North America. The more you work the more you produce the more we have to work at that.
I think we're seeing that play out.
Term.
I would say that.
People would like term.
We view that as.
We have term, but at the same time flexibility around pricing just because.
I really believe and I think it's pretty clear to us that 2023 remains extremely tight both from an equipment standpoint.
Repair parts standpoint, so very encouraged about the outlook for 'twenty three in North America.
Okay that makes sense you don't walk in term right here.
Shifting over to the Middle East you talked about increased project management the middle East.
I don't know there is a little tricky to do I was just curious if you could just think about all those projects collectively.
Where are we on the overall kind of ramp up are you kind of halfway there or are you kind of did.
Are you <unk>.
Sort of fully ramped up I guess secondarily once you do get ramped up on these project management is there another leg of growth out there in terms of more tenders or is it more likely to be follow on potentially some up selling of these contracts. It's been a while since we've seen an up market and project management and Middle East.
Look I think that really hasn't even begun in my view I think we are just getting underway in terms of some of the bigger projects.
It's great work starting.
But I think we've got a long way to run internationally and in the middle East in particular.
And this is all consistent with sort of I earlier look on the macro in terms of.
We didn't get here overnight, we got to where we are from a supply stand that point over.
Eight to 10 years and Thats, the kind of timeframe that it takes to solve for and I think the middle East broadly takes a long view of this business and as a result.
Theyre getting traction now.
It's not a knee jerk reaction it has a methodical march towards.
Reserve extensions, and adding reserves, which takes time and money and so I'm Super encouraged about the outlook in the middle East.
Thanks, Jeff.
Thank you.
Thank you.
Our next question comes from the line of James West with Evercore ISI. Your line is now open.
Hey, good morning, Jeff and Eric.
Good morning, James.
So Jeff I wanted to dig in a little more on the international business. Obviously this quarter had some mis.
Mixed.
<unk> results, just given Russia coming out but.
Halliburton is the company is at least I understand that.
And certainly you can you can elaborate on this but it's simple as the better part of the last three decades really building now.
Our superior International franchise.
And one that should be.
Competitive with what's your major.
Here's a bit your major competitor here is there any reason that we should think that you would.
Underperform or that you would outperform over the next several years in the international Arena given the outlook.
It is as strong as youre alluding to and certainly what we see.
In the market.
We start with the Middle East if you want but there's also many other regions that are going to be showing substantial growth I'm, just curious kind of how.
Halliburton is set up for that.
Thanks, James look we are extremely well setup for international expansion and.
I have outgrown many quarters in the past and expect to continue to do so and of the future based on our technology portfolio and our footprint internationally.
Just for some context Halliburton grew 21% internationally year on year, while exiting Russia. This quarter and of course. This is the quarter in Russia, where we typically see the pretty winter sort of step up in the 15% range. So that wasn't there.
But yes, we're seeing strong growth and expect to continue to see that internationally.
I think also important to recall I mentioned in my comments was the strong international Incrementals, which were.
Basically on par with North America, which you know.
Continues to demonstrate not only growth but margin expansion internationally.
If I look ahead internationally, we're only halfway through our <unk> deployment.
At all of that left to do so I feel like I said really good our production business as new and on plan.
And so I expect to continue growing revenue internationally and expanding margins. So I feel really good about our international outlook actually better than I ever have.
Okay.
Very strong statement.
Perhaps to follow up on that on the D&A side, which is.
International bias, you're kind of hitting margin targets that we were anticipating for next year.
Can you kind of already already there.
Do you think.
As you see the outlook and I know you may not want to get bogged down in specific.
Numbers, but how do you see that progression as we go.
Even this year and into 'twenty three.
Look I expect to continue to see improvement.
We're in the right markets, we've got extremely competitive portfolio all service lines are contributing to that.
I think the.
When I look out I've always said about our D&A business that we were making meaningful investments in that business, probably started saying that four years ago and that every year or do you wanted to stack better margins on better margins full year margins, and obviously theres cyclicality throughout a year and weather.
And other stuff, but ultimately the plan was to continue this march of stacking on better margins and Thats, what youre, saying and as I've already said, if we're only halfway through the deployment of what I think the flagship technology as a DNA.
We should continue I expect to continue stacking those better margins up.
Perfect got it okay. Thanks, Jeff Alright, thank you.
Thank you.
Our next question comes from the line of our own John with Jpmorgan. Your line is open.
Yes, good morning, Jeff.
Wanted to talk a little bit about the portfolio I know one of your long term ambition is to grow how has the leverage to the production phase of the oil and gas lifecycle versus just pure D&C. So I was wondering if you could comment where do you think you are on where youre at in terms of that journey and how you think about your potential to grow your share.
Things like lift and chemicals.
I feel good about that I mean, it's all marching along as planned.
And we continue to grow.
We're still in the very early innings of that international expansion so call it the <unk>.
Second inning, so but it's a.
Doing exactly what we would hope we continue to grow the footprint in the middle East with Lyft and with chemicals Kemet.
Chemicals is.
We put our first full <unk>.
Scale production lot through the plant. This month, that's an important first step.
And I have a lot of work to do but again the infrastructures in place.
And we're getting.
Access to market and I'm, making sales.
Lift.
Yes.
Bottom line.
Fantastic business in North America.
Same technology that we apply internationally and so those guys are.
Dead focused on profitable market entries and growth and we're seeing that Latin America and in the Middle East.
Great and maybe just a follow up for Eric Eric highlighted.
Your leverage target of two times.
A number of your peers have announced some return of capital.
Smets Liberty Helmerich <unk> Payne.
Was wondering if you could maybe give us a little bit more thoughts on how you think about.
Return of capital after reaching your.
Deleveraging target.
And how are you thinking about.
Future dividend growth versus buybacks.
So.
Thanks, Ron So what we've said for the last couple of years is that a pricing number one was really to get our balance sheet in order. So.
With the $600 million that we have retired in Q3 that puts us at about $2 4 billion retired since $2021 2 billion retired this year alone. So if you combine that with our improved business performance for all practical purposes, we are at our target.
And considering as well our positive outlook.
We see no reason for that to change so really big.
Big picture, we are starting to turn our attention now to returning more cash to shareholders.
So we're working through scenarios, we are engaging our board so more details to come.
Great. Thanks, a lot.
Thank you.
Our next question comes from the line of Chase Mulvehill with Bank of America. Your line is now open.
Hey, good morning, everybody.
So I guess first I kind of want to hit on margins and if we can.
Look at How's your pre shell margins, so call it 2011, and leaving going all the way back to kind of 2006 and 2008 timeframe you did mid to high 20% EBITDA margins today.
Today, you sit in the low twenties.
Jeff could you just kind of walk us through what would need to happen to get back to these type of margins and whether you. Even think that this is possible to kind of get back to those type of margin levels the cycle.
Look I think.
The key thing about the cycle as its duration and it's the right kind of cycle from a duration standpoint.
That I think we grow and have better margins as we continue forward. So I'm not going to try to put a date or a time, but my expectation is.
The duration of the market sort of the behavior that I described above the operators and service companies, which is absolutely rash.
Rational in terms of returning cash to shareholders, which is what Eric just talked about.
This is the kind of cycle, where we're able to do that and I think setting up for margin improvement. The EBITDA strengthening all of those are the things that create the free cash flow.
And I think that you know historically, you actually I really haven't seen a cycle setup for we've got short supply the way that we do and that sort of runway that I see in front of us and all of the right sort of motivation by the industry I think energy is a fantastic industry and I think what youre going to see.
The demonstration from the entire industry of what returning cash to shareholders in generating meaningful returns look like over.
A good cycle long cycle.
Alright perfect.
To follow up on international markets could you just talk about how tight the markets are today, what kind of pricing momentum that youre seeing in.
You think about idled or spare capacity across international markets at least for Halliburton.
Do you see an opportunity to continue to kind of mobilize the tighter markets or do you have a lot less spare capacity and what could that mean for capex for next year on the international side.
Well from a Capex standpoint, we've already described that we're in the 5% to 6% range of revenues on Capex. So what we do is deploy capital to the best opportunities.
Which offer which international markets demonstrate an important opportunity. So we would direct capital that way as opposed to others.
But I think what.
Important about the market as we are just seeing customer urgency return.
NSS that quality matters equipment matters.
Is it tied guess, it's tight I don't think Theres a lot of spare capacity anywhere in the world If I go back to our strategic.
Tenants.
Profitable growth internationally and asset velocity and I think what you see is that asset velocity being baked into.
Just the way that we work.
It is creating the ability to do a lot more with less than we ever have in the past and that's one of the key.
Key reasons, we're confident at our capital spend levels.
Is because of the type of equipment, we're putting in the market its ability to be moved around work longer repair faster.
When we do all of those things.
Yes, just makes us.
Better effective business internationally.
Okay, Alright, I appreciate the color I'll turn it back over thanks, Jeff.
Thanks.
Thank you.
Our next question comes from Neil Mehta.
Goldman Sachs. Your line is now open.
Yes. Good morning team. The first question was around North America, you mentioned that you continue to see revenue growth in North America.
Increased demand.
For a limited set of equipment can.
Can you talk about what the moving pieces are there what kind of tip Clinton type types of equipment or are we talking about and how do you think about adding frac capacity is there demand for it.
As you look out in the market into 'twenty three.
Well the activity, we really say is this.
Describe it is service intensity, which is increasing and thats.
More reps on equipment more sand through equipment, we're also saying our drilling activity.
In the U S as well so all services related to DNA.
But principally.
Frac and so.
Is it works harder.
It may not generate more value for us.
And so that's probably the principal thing when I think about capacity.
Yeah.
We're maximizing value in North America, and we're growing profitably internationally and that automatically balances, where we spend our money and how we approach markets.
North America.
From a capacity standpoint for us really we look at a fleet.
And it's not really capacity I view it as replacement.
Different time horizons.
The conversations for example that we're having about eight fleets are not anything really immediate it's all around late 'twenty three 'twenty four 'twenty five in terms of a fleet additions.
So.
That will likely wind up replacing equipment over time.
Yeah. So I think we're really encouraged about where the market goes it's extremely tight it's tight for repair parts. It's tight for just everything and we've all talked about sort of bottlenecks in the supply chain. None of that's really going to rectify itself over any sort of short horizon. So I think that.
<unk>.
Under all conditions North America side, I don't think capacity can be added in a meaningful way even if it was desired.
Yes, that's great perspective, and then just some early thoughts on 'twenty three in terms of what Youre hearing from customers in terms of activity in <unk>.
Any early thoughts around what you expect spending increases to be both in the U S and internationally as a percentage.
And how much.
Do you think inflation will be as a component of that that that increased.
Look I think we've got strong growth as we look into next year.
Really we haven't even seen budgets from customers.
But expect that growth to be strong.
Clearly we're going to be.
Up from here I guess is how I would describe next year up from where we are today.
And obviously, that's really strong growth that we've seen over the last year. So.
I think that the.
North America demand continues to increase.
And internationally, we've already talked to quite a bit about that but I expect that we'll see growth.
Really everywhere in the sense that customers can be busy they will be busy I think the traction in the middle East is just getting underway and I think that yeah, we'll continue to see tightening.
I continue to view this as a margin cycle as opposed to necessarily it's not a bill cycle its margin cycle.
I think that we're going to be the real beneficiaries of that at Halliburton.
Thank you Sir.
Yes.
Thank you.
Our next question comes from the line of Scott Gruber with Citi. Your line is now open.
Yes, good morning, Scott.
The smaller pumper here domestically have discussed, replacing but 10% of their fleet annually.
With with E frac conditions.
We think about Halliburton is that a rough guide for you all assuming returns stay positive or.
A different framework.
How do you think about that kind of multi year replacement cycle.
Yeah look what we're seeing.
We have a healthy fleet today, and we have a healthy fleet because we've always reinvested in our fleet through thick and thin.
If the worst of the market the best of the market, we're always maintaining.
Replacement cycle for equipment, and we get the benefit of that all of the time.
When I look at the market I had feedback from a customer recently that you know a lot of equipment out there looks just dead on its feet don't know how to get it replaced fast enough.
I think that.
The pace at which we're working what comes with the service intensity I described.
For Frac equipment is just more evolutions and you can't meet physics, and so I think that when we look at replacement cycle, we view it as an electric replacement cycle and so we.
<unk> focused on that we've got leading technology.
And we're seeing strong pull from our customers for that technology and so what we're doing is.
As we.
Yes.
Demand in pole translates into contracts have duration that return on capital and cost and.
Margin and capital actual return on capital all happened inside the same contract and that demonstrates for me.
The strength of the technology and also what that looks like.
But it's not something we rushed to do something we do is as the poll is adequate to sign that equipment up and it's going to be over a period of time.
Okay.
Got it.
Alright.
I appreciate the color.
And then turning to back to the international markets you had impressive growth internationally, even without Russia. This quarter as you highlighted.
A few inbounds, Doug this morning.
To ascertain exactly what the international growth was year on year, excluding Russia I apologize. If you mentioned that that number earlier I may have missed it but are you able to share with us.
Yes, it's 21% year on year international growth.
Was that.
Inclusive of the of Russia, Excluding Russia ethics code it well.
Russia, while we had Russia, and excluding Russia for the last quarter, with Russia, and H, one and without Russia in Q3.
Did you have the number outside of Russia, how quickly you guys group.
Year on year.
Got it out now, but it would have been substantially it would've been more.
Okay I can follow up okay. Thank you.
Alright, Thanks Scott.
Thank you. Our next question comes from the line of Stephen <unk> with Stifel. Your line is now open.
Thanks, Good morning, gentlemen, good morning.
Two things for me one just from North American.
Oregon perspective.
How are the conversations with customers about price I mean, obviously pricing has been improving for a while now is there a pushback.
How does the conversation go as far as 2023 pricing for Frac ing.
How do you think that plays out as you go forward.
Look I'm, absolutely not going to get into details around price discussions with customers.
Look I think that bar.
<unk> already said I view that pricing strengthens we're still below pre pandemic levels in terms of pricing so there's room to improve there.
Service quality and technology are both driving premiums have talked about sort of pull on E fleets or just general performance and maintenance of the fleet at a.
Pricing is always going to be iterative, it's not giant steps into what I talked about like throughout the year that gets us to where we are today.
But I think theres a lot of power in having a structurally advantaged low emissions fleet, which is what we have out there today.
Yes.
The.
Things that was left out of the conversation of securing capacity for 2023 reliable capacity, obviously ala burden weight.
We are the execution company, we do what we say.
And so we're very reliable in terms of delivery and.
Yes, I think securing that kind of capacity for 23 is a high priority for our customers.
And just as a follow up do you see is there is there a gap and how much is it conversations as sort of cost of diesel relative to the lower cost of running E fleets play into the either the gap in price.
<unk> is about price.
Again.
Okay.
<unk> price the conversation around the fleet is really that its a better mousetrap.
Over the long run.
More efficient to operate and yes. It is it should.
They create value from a price standpoint, but it also creates value from an effectiveness standpoint, the ability to pump.
Yeah.
If rates are extremely reliable and we took one out of the box in a pump.
500 hours first month I mean, that's the type of reliability, we are seeing out of the equipment. So.
I think all of that Conspires to make it.
Sought after in the marketplace. So that's why we say the polls as cost component and it probably is I'm sure. It is for our clients. It always is but I think.
<unk>.
Wrong to ignore the the other components of value there.
Great. Okay. Thank you thank.
Thank you.
Thank you.
Our next question comes from the line of Roger read with Wells Fargo. Your line is now open.
Yes. Thank you good morning.
I guess I'd like to ask the question a little bit differently on the capacity versus investment in Titan.
New equipment spare parts and everything as you said, Jeff but.
If we were to look at.
Maybe work you've turned down in North America or contracts that you either.
Don't want to bid on internationally or maybe less aggressively has there been any change in that as we look across the course of 'twenty, two and maybe what youre seeing for the early parts of 'twenty three.
It would be we're turning now more not less.
In terms of.
That's part of how we improve the margins on the overall portfolio and returns.
But.
We've been really consistent about our strategy and maximizing value North America growing profitably internationally and that is one of the key levers that we have to do both of those things.
So yes, we've done both of those.
Yeah, but I guess I'm just wondering I mean, you are turning down more or less is it a material amount at this point or is it still pretty much just on the margin you see a project thats not.
Interesting or enticing.
I think that it's.
Clearly, it's I don't know how to describe that is that at the margin, it's probably at the margin.
But it is going to grow as the market continues to get tighter.
We are building.
As I've already described our Capex and so we will be adding we've been able to grow with the capex levels that we've had I'd say meaningfully over the last year and expect that we will continue to grow.
Because of the way that we're building equipment. So it's not we're turning everything down by any means but I think it's an important.
Point that we are.
Much more I mean that the contracts that we pursue and win are accretive to what we're doing and if they're not then they probably fall out of the list just because we want to even the new capital that we would add whether it's drilling equipment or anything else its going to go towards things that are of higher value.
Yes, it makes sense so glad to hear there is better selectivity out there and then my other question was the follow up you mentioned tight for kind of everything in terms of new equipment spare parts et cetera, I know youre very integrated on the pressure pumping side in terms of manufacturing, but as you work with.
Contractors.
Are you trying to do anything different in terms of helping them increase capacity or are we just.
The system is tight and there's not really much prospect for changed in terms of.
I'm, just saying in the supply chain all the way down on the types of equipment, where you want to.
Expand or where there's a relatively high maintenance component.
Well it will get fixed over time.
But in most of these cases, there's not a lot that can be done to accelerate.
Their supply chain when its far reaching.
Clearly we plan ahead, and we've been planning AD for over a year, we've got great visibility.
But that market will just being tied for spare parts and equipment.
Alright, I appreciate that thank you alright. Thank you.
Thank you.
Our next question comes from the line of Marc Bianchi with Cowen. Your line is now open.
Marc Bianchi with Cowen Your line is now open.
Alright.
Yeah.
Please check your mute button.
Yes.
Thank you and I'm currently showing no further questions at this time I'd like to turn the call back over to Jeff Miller for closing remarks.
Thank you Shannon and thank you all for participating in today's call.
Summarize with a few key points.
Halliburton strong third quarter performance shows our strategy is delivering value for our shareholders oil and gas supply.
Shortness.
Constraints and shortages I think today create strong and growing demand for halliburton's equipment and services in support of this multiyear up cycle.
That Halliburton will continue to execute on our strategic priorities to drive free cash flow and returns for our shareholders. So I look forward to speaking with you again next quarter.
Please close out the call.
Thank you. This concludes today's conference call. Thank you for your participation you may now disconnect.
The conference will begin shortly to raise your hand during Q&A you can dial one one.
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