Q1 2023 Halliburton Co Earnings Call
His presentation there'll be a question and answer session to ask a question. During the session you will need to press star one on your telephone you will then hear an automated message advising you. Your hand is raised to withdraw your question. Please press star one one again please.
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.
<unk> relations. Please go ahead.
Hello, and thank you for joining the Halliburton first quarter 2023 conference call we.
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 Chief Executive Officer, and Eric <unk>, Executive Vice President and Chief Financial Officer.
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 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.
Additional details and reconciliation to the most directly comparable GAAP financial measures are included in our first quarter earnings release and in the quarterly results and presentation section of our website.
Now I'll turn the call over to Jeff.
Thank you David and good morning, everyone.
Halliburton performance in the first quarter again demonstrated the earnings power of our strategy strong competitive position and execution for our customers.
Here are some highlights from the first quarter.
Total company revenue increased 33% compared to the first quarter of 2022 with strong activity in both North America and international markets.
Operating income grew 91% year over year.
Operating margin was 17% a strong start to the year and 530 basis points over the first quarter of last year.
International revenue grew 23% year over year with strong activity in all markets.
North America revenue grew 44% year over year with growth across every basin.
The completion and production division posted 20% margins, an increase of nearly 700 basis points year over year.
The drilling and evaluation division grew revenue, 17% year on year, while margins expanded more than 100 basis points.
Before we continue I'd like to recognize the employees of Halliburton for their outstanding execution on every dimension of our business safety service quality and financial results. The work you do each day matters to our customers and shareholders. Thank you.
I'll start with a few comments on the macro ever.
Everything I see today validates the strength and duration of this multiyear upcycle.
The world requires more energy from all sources, including oil and gas driven by population growth and economic development.
Multiple years of structural Underinvestment in oil and gas supply can only be addressed by strong activity over the next several years.
The commodity price volatility experienced in the first quarter does not change our view of customer demand and a tight services market.
Our customers around the world recognize this and we expect their spending to grow in 2023 and beyond.
Further we expect much of this investment will be directed towards development activity, which is great for halliburton as it drives outsized demand for our products and services.
My view of this up cycle as confirmed by what I hear from our customers and see in the world's oil and gas markets. The Halliburton outlook for both the current year and the long term is strong.
Now, let's start with our performance in the international markets. Our revenue in the first quarter grew 23% compared to the same period of last year, reflecting strong activity in all regions.
Halliburton executed its strategy to deliver profitable international growth through leading technology offerings improved pricing and disciplined capital allocation.
I expect international spending to grow high teens for the year 2023.
With most new activity coming from the Middle East Asia, and Latin America.
I am confident in this outlook because we have a strong pipeline of awards that will commence later this year and beyond.
Our completion tool order book grew 40% year on year in the first quarter, which generally represents work delivered within the current year.
And finally pricing continues to trend up for all product lines in all regions IMAX.
Im excited about all segments of our international business today, I would like to provide more color on our offshore business.
We generated nearly 45% of our international revenue in the first quarter from our offshore business here are a few examples of differentiated technologies that drive a higher level of performance service quality and reliability for our customers.
Halliburton's intelligent drilling and logging while drilling platforms I cruise and <unk> in combination with <unk>, our automation platform delivered the longest reservoir section in a single run for a customer offshore Norway.
Our latest wireline imaging technology strata examiner delivered high resolution borehole imaging data, allowing a customer to increase reserve estimates during a recent exploration campaign in the Mediterranean Sea.
Halliburton's digital solutions allow our customers to reduce cost per barrel and increase efficiencies.
Hess Repsol and Petrobras all recently selected Halliburton landmarks decisions based 365 applications powered by AI energy cloud.
Our trusted science and machine learning algorithms enabled customers to optimize subsurface well construction and production related decisions.
Cognitive halliburton's offshore automated submitting system deliver cement jobs remotely with minimal human direction and intervention.
More than 30 cement jobs were completed this quarter in the North Sea alone.
Finally, I am excited about the progress of our Technip FMC Alliance on all electric completions.
I believe this technology will over time substantially changed the cost and performance of deepwater completions and subsea infrastructure.
As I look at 2023 and beyond I am excited about our international business. Our customers are clearly motivated to produce more oil and gas service capacity is tight and pricing is increasing.
Our differentiated technologies, and our execution drive margin improvements and growth across our international business.
Turning to North America as I expected Halliburton achieved strong results despite volatile commodity prices we.
We delivered on our strategic priority to maximize value in North America through capital efficiency differentiated technology and alignment with high quality customers.
I know what's on your minds. So let me briefly discuss the natural gas markets.
I firmly believe that the gas market softness will be solved the 6 billion cubic feet per day of additional LNG export capacity comes online in the next 24 months.
<unk> and.
In response to market conditions, we are moving three fleets from gas basins to oil basins to satisfy specific customer demands.
Finally, we retired one tier two diesel fleet, which will reduce our near term maintenance cost and accelerate halliburton's transitioned to <unk> fleets.
These actions reduced our gas market exposure by about 30% and maintain financial returns.
I reiterate my expectation that North America customer spending will grow at least 15% in 2023.
At today's oil prices I believe that our customers will execute their activity plans and the market for highly efficient equipment and quality services will remain tight.
Our strategy is to maximize value in North America.
Let me be crystal clear about what that looks like.
First we improve the performance and utilization of our existing fleet and we align with high quality customers, who value our operational efficiency and consistent execution.
Here's what the customers are telling me.
Palo Verde performance is different not only better than your competitors, but even better than your own past performance.
Our step change in performance safety and operational efficiency comes from our investments in new technologies crew training and process improvements.
As a result today, we see a 60% improvement in pumping utilization across our entire North America land fleet since 2019.
Second we only deploy service capacity to attractive return opportunities, we're always finding ways to improve average fleet returns.
Finally, we invest in differentiated products and services that improve margins and asset velocity.
Our patented Zeus equally and smart fleet are examples they maximize asset values for our customers and structurally improved returns for Halliburton.
Our Z fleets continue to outperform for our customers and smart fleet adoption is accelerating.
We delivered about six times more smart fleet stages in the first quarter than a year ago.
Halliburton's position and outlook in North America is strengthened by the uptake and contract duration of our E fleets.
Our contracting structure for E fleets, which we only deploy on multi year contracts and our technology roadmap for the future.
Structural strength in Halliburton's, North America business.
Halliburton's <unk> technology has proven to deliver better performance lower total cost of ownership and increased operating efficiency.
For customers with the mandate to produce barrels over the long term and maximize the value of their investment dollars the attraction to easily to self evident.
To summarize I believe halliburton is uniquely positioned to deliver financial outperformance.
Our strong execution culture differentiated technology portfolio and collaborative approach with customers give us a strong competitive advantage.
Speaker 1: and outlook in North America is strengthened by the uptake and contract duration of our e-flates.
Speaker 1: The contracting structure for e-fleets, which we only deploy on multi-year contracts and our technology roadmap for the future, creates structural strength in Halliburton's North America business.
I am confident that we will execute our strategic priorities and deliver shareholder returns by maximizing value in North America, delivering profitable international growth.
Speaker 1: Halliburton's e-Fleek technology is proven to deliver better performance, lower total cost of ownership, and increased operating efficiency.
And driving capital efficiency.
Before I turn it over to Eric I'd like to leave you with two financial points.
Speaker 1: For customers with the mandate to produce barrels over the long term and maximize the value of their investment dollars, the attraction to e- fleets is self-evident.
First given my outlook I expect the execution of our strategy will deliver significant and growing free cash flow.
Second while our previously announced capital return framework provides a minimum of 50% free cash flow back to shareholders and it also gives us the flexibility to return more cash to shareholders in the form of share buybacks.
Speaker 1: To summarize, I believe Halliburton is uniquely positioned to deliver financial outperformance.
Speaker 1: our strong execution culture, differentiated technology portfolio, and collaborative approach with customers give us a strong competitive advantage.
Everything I see today points towards more cash to shareholders.
Speaker 1: I am confident that we will execute our strategic priorities and deliver shareholder returns by maximizing value in North America, delivering profitable international growth, and improvingthinkfulness for an investor.
Now I'll turn the call over to Eric to provide more details on our financial results.
Eric.
Thank you, Jeff and good morning.
Let me begin with a summary of our first quarter results.
Speaker 1: and driving capital efficiency.
Speaker 1: Before I turn it over to Eric, I'd like to leave you with two financial points.
Total company revenue for the quarter was $5 7 billion.
Speaker 1: First, given my outlook, I expect the execution of our strategy will deliver significant and growing free cash flow.
A 33% increase over the first quarter of last year, while operating income was $977 million, an increase of 91% year over year.
Speaker 1: Second, while our previously announced capital return framework provides a minimum of 50% free cash flow back to shareholders, it also gives us the flexibility to return more cash to shareholders in the form of share buybacks.
Operating margin for the company was 17, 2% in the first quarter, which is an increase of 530 basis points over the first quarter of 2022.
Speaker 1: Everything I see today points towards more cash to shareholders.
These results were primarily driven by increased global activity improved pricing and strong seasonal product and software sales. Our first quarter reported net income per diluted share was <unk> 72.
Speaker 1: Now, I'll turn the call over to Eric to provide more details on our financial results.
Speaker 2: Eric.
Speaker 3: Thank you, Jeff, and good morning.
Speaker 3: Let me begin with a summary of our first quarter results.
Which more than doubled from the same period last year.
Speaker 3: Total company revenue for the quarter was $5.7 billion, a 33% increase over the first quarter of last year, while operating income was $977 million, an increase of 91% year over year.
Beginning with our completion and production division revenue in the first quarter was $3 $4 billion.
A 45% increase when compared to the first quarter of 2022, while operating income was $666 million, an increase of 125% when compared to the first quarter of 2022.
Speaker 3: Operating margin for the company was 17.2% in the first quarter, which is an increase of 530 basis points over the first quarter of 2022.
<unk> delivered an operating income margin of 20% driven by increased activity improved pricing and service efficiency in North America.
Speaker 3: These results were primarily driven by increased global activity, improved pricing and strong seasonal product and software sales.
In our drilling and evaluation division revenue in the first quarter was $2 3 billion, an increase of 17% when compared to the first quarter of 2022, while operating income was $369 million, an increase of 26% when compared to the <unk>.
Speaker 3: Our first quarter reported net income per diluted share was 72 cents, which more than doubled from the same period last year.
Speaker 3: Beginning with our Completion and Production Division, revenue in the first quarter was $3.4 billion, a 45% increase when compared to the first quarter of 2022.
First quarter of 2022.
<unk> delivered an operating income margins of 16%.
Speaker 3: while operating income was $666 million, an increase of 125% when compared to the first quarter of 2022.
Driven by strong wireline testing and drilling related services globally, and an uptick in international activity.
Speaker 3: C&P delivered an operating income margin of 20%, driven by increased activity, improved pricing and service efficiency in North America.
Now, let's move onto geographic results.
Our first quarter international revenue increased 23% year over year due to solid product sales activity increases and pricing gains across multiple product lines.
Speaker 3: In our Drilling and Evaluation Division, revenue in the first quarter was $2.3 billion, an increase of 17% when compared to the first quarter of 2022, while operating income was $369 million, an increase of 26%.
In North America revenue in the first quarter was $2 8 billion, a 44% increase when compared to the first quarter of 2022.
This increase was primarily driven by increased stimulation activity inefficiencies higher activity across our well construction product lines in North America land as well as higher activity across multiple product lines in the Gulf of Mexico.
Speaker 3: when compared to the first quarter of 2022.
Speaker 3: DNE delivered an operating income margin of 16% driven by strong Y-line testing and drilling-related services globally and an uptick in international activity.
Latin America revenue in the first quarter was $915 million, a 40% increase when compared to the first quarter of 2022 due to increased well construction services and stimulation activity in Mexico, and Argentina and higher completion.
Speaker 3: Now, let's move on to geographic results.
Speaker 3: Our first quarter international revenue increased 23% year over year due to solid product sales, activity increases and pricing gains across multiple product lines.
Speaker 3: In North America, revenue in the first quarter was $2.8 billion, a 44% increase when compared to the first quarter of 2022.
<unk> sales across the region.
Europe Africa revenue in the first quarter was $662 million.
Speaker 3: This increase was primarily driven by increased stimulation activity and efficiencies, higher activity across our well-construction product lines in North America land, as well as higher activity across multiple product lines in the Gulf of Mexico.
A 2% decrease when compared to the first quarter of 2022 as a result of the sale of our Russian operations, along with decreased activity across multiple product service lines in Norway.
This decrease was partially offset by increased well construction services and stimulation activity throughout Africa.
Speaker 3: Latin America revenue in the first quarter was $915 million, a 40% increase when compared to the first quarter of 2022 due to increased well construction services and stimulation activity in Mexico and Argentina.
Middle East Asia revenue into first quarter was $1 3 billion, a 30% increase when compared to the first quarter of 2022, primarily due to improved activity across multiple product service line in Saudi Arabia higher completion tool sales improved.
Speaker 3: and higher completion tool sales across the region.
Speaker 3: Europe-Africa revenue in the first quarter was $662 million.
Well construction services and increased project management activity across the region.
Speaker 3: a 2% decrease when compared to the first quarter of 2022 as a result of the sale of Russian operations, along with decreased activity across multiple product service lines in Norway.
Now I'd like to cover some additional financial items in.
In the first quarter, our corporate and other expenses was $58 million for the second quarter, we expect our corporate expenses to be up about $5 million.
Speaker 3: This decrease was partially offset by increased well construction services and stimulation activities throughout Africa.
Net interest expense for the quarter was $79 million.
Speaker 3: Middle East Asia revenue in the first quarter was $1.3 billion, a 30% increase when compared to the first quarter of 2022.
For the second quarter, we expect this expense to be about flat.
Other net expense for the quarter was $69 million, primarily related to unfavorable foreign exchange movements for the second quarter. We expect this expense to decline approximately $15 million.
Speaker 3: primarily due to improved activity across multiple product service lines in Saudi Arabia, higher completion tool sales, improved well construction services, and increased project management activity across the region.
Our effective tax rate for the first quarter came in at approximately 21%.
Speaker 3: Now I'd like to cover some additional financial items.
Speaker 3: In the first quarter, our corporate and other expenses was $58 million.
<unk> on our anticipated geographic earnings mix, we expect our second quarter effective tax rate to increase about 50 basis points.
Speaker 3: For the second quarter, we expect our corporate expenses to be up about $5 million.
Capital expenditure for the first quarter were $268 million, we anticipate that our remaining capital expenditures will increase quarter over quarter and through the end of the year and total capital expenditures to be approximately 6% of our revenue for the full year.
Speaker 3: Net interest expense for the quarter was 79 million dollars.
Speaker 3: For the second quarter, we expect this expense to be about flat.
Speaker 3: Other, net expense for the quarter was $69 million primarily related to unfavorable foreign exchange movements.
Speaker 3: For the second quarter, we expect this expense to decline approximately $15 million.
Our first quarter cash flow from operations was $122 million and free cash flow was a use of $105 million.
Speaker 3: Our effective tax rate for the first quarter came in at approximately 21%.
These results were primarily driven by seasonal investments in working capital as.
Speaker 3: Based on our anticipated geographic earnings mix, we expect our second quarter effective tax rate to increase about 50 basis points.
As its typical for our business, we anticipate our cash flow will be backend loaded for the year, we expect to generate strong free cash flow for the rest of 2023 is a step toward achieving halliburton's capital return policy of returning at least 50% of annual free cash flow to shareholders.
Speaker 3: Capital expenditure for the first quarter were 268 million dollars.
Speaker 3: We anticipate that our remaining capital expenditures will increase quarter over quarter into the end of the year and total capital expenditures to be approximately 6% of our revenue for the full year.
We repurchased approximately $100 million of common stock during the first quarter.
Finally, turning to our near term operational outlook, let me provide you with some comments on how we see the second quarter unfolding.
Speaker 3: Our first quarter cash flow from operations was $122 million and free cash flow was a use of $105 million.
In our drilling and evaluation division, we expect the seasonal revenue decline in software sales to be partially offset by further improvements in global drilling activity.
Speaker 3: These results were primarily driven by seasonal investments in working capital.
Speaker 3: As is typical for our business, we anticipate our cash flow will be back-end loaded for the year. We expect to generate strong free cash flow for the rest of 2023. As a step toward achieving Halliburton's capital return policy of returning at least 50% of annual free cash flow to shareholders.
As a result, we anticipate sequential revenue to increase low to mid single digits and margins to decline 50 to 100 basis points into completion and production Division, we anticipate sequential revenue to increase low to mid single digit and margins to improve.
Speaker 3: we repurchased approximately $100 million of common stock during the first quarter.
25% to 75 basis points.
I will now turn the call back to Jeff.
Speaker 3: Finally, turning to our near-term operational outlook, let me provide you with some comments on how we see the second quarter unfolding.
Thanks, Eric.
Let me summarize our discussion today.
Halliburton's performance in the first quarter demonstrated the earnings power of our strategy.
Speaker 3: In our drilling and evaluation division, we expect the seasonal revenue decline in software sales to be partially offset by further improvements in global drilling activity. As a result, we anticipate sequential DNE revenue to increase low to mid single digits, and increase the number of new and new
My outlook for Halliburton is strong I expect international year on year growth in the high teens in North America growth in excess of 15%.
And finally, everything I see today points towards more cash to shareholders.
And now let's open it up for questions.
Speaker 3: margins the decline 50 to 100 basis points.
Speaker 3: In the Completion and Production division, we anticipate sequential revenue to increase low to mid single digits and margins to improve 25 to 75 basis points.
Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.
Speaker 3: In the recreation and production division, we anticipate sequential revenue to increase low to mid single digit and margins to improve 25 to 75 basis points. I'll turn the call back to Jeff.
Please limit yourself to one question and one follow up to withdraw your question Press Star One again please.
Speaker 1: Thanks, Eric.
Please standby, while we compile the Q&A roster.
Speaker 1: Let me summarize our discussion today.
Speaker 1: Halliburton's performance in the first quarter demonstrated the earnings power of our strategy.
Okay.
Speaker 1: My outlook for Halliburton is strong. I expect international year-on-year growth in the high teens and North America growth in excess of 15 percent.
Our first question comes from Dave Anderson with Barclays. Your line is open.
Great. Thanks, Good morning, Jeff how are you good morning, Dave.
Speaker 1: And finally, everything I see today points towards more cash to shareholders.
So, let's just get right into it.
Quite strong numbers, you put up in North America, this quarter and the guide for second quarter, which looks flu shot kind of firmed up everything the bear case has been.
Speaker 4: And now let's open it up for questions. Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. Please limit yourself to one question and one follow up. To withdraw your question, press star 1 1 again.
Heating up during the quarter the rig count is softening a bit.
A&P, suggesting pricing is poised to come down on the other hand, we're hearing from other service companies that you don't see the slowdown in fact prices continued to rise.
Wonder if you can help kind of help us sort of the disconnect here does the difference lies in the customer mix I know you highlighted the gas market, particularly weak.
Speaker 4: Please stand by while we compile the Q&A roster.
<unk> share of equipment, just a lot of rhetoric heat up during the quarter I'm just wondering how we should be thinking about your U S land activity and the pricing trends in the second half.
Speaker 4: Our first question comes from Dave Anderson with Barclays. Your line is open.
Speaker 5: Great, thanks. Good morning, Jeff. How are you? Good morning, Dave.
Yes, Thanks, Dave look prices arent moving down.
Speaker 5: So, let's just get right into it. Despite the strong numbers you put up in North America this quarter and the guide for the second quarter, which kind of firmed up everything, the bear case has been heating up during the quarter with the recount softening a bit. EMP suggesting pricing is poised to come down. On the other hand, we're hearing from you, other service companies that you don't see this slow down. In fact, prices continue to rise.
And I think from our comments I've told you what we have.
Done and what we plan to do.
Overall margin improvement comes from.
Structurally bifurcated market as you described.
<unk> for high quality services are very much in demand and hard to deliver.
And quite frankly, the cost of Frac Hasnt changed.
They are moving up.
Speaker 5: So, I wonder if you help us sort out the disconnect here. Does the difference lie in the customer mix? I know you highlighted the gas market, particularly the differentiation of equipment. Just a lot of rhetoric heat up during the quarter. I'm just wondering how we should be thinking about your U.S. land activity and the pricing trends in the second half. Thanks. Yeah, well, thanks, Dave. Look, prices aren't moving down.
Still inherent inflation in the Frac business today.
So there is not a connection there.
And so.
As I look out at the rest of the year, we continued to improve.
Earnings power of our fleet through bifurcation delivery of the fleet's retirement of equipment that needs to be retired be clear not stack, but retired.
Speaker 1: I think from our comments, I've told you what we've done and what we plan to do. Overall margin improvement comes from structurally bifurcated market, as you described. And for high quality services are very much in demand and hard to deliver.
And then finally efficiency and.
Sort of repositioning around better pricing.
But pricing in your mind continues to move higher and I would assume that pricing from last year is still continuing to roll through your fleets.
Speaker 1: Quite frankly, the cost of the FRAC hasn't changed. The engines are moving up. There's still inherent inflation in the FRAC business today. There's not a connection there.
I would say on average.
Yes.
And if I could just shift gears over.
International side, your Middle East business doesn't get a ton of credit on the street, despite actually being Justin.
Speaker 1: As I look out at the rest of the year, we continue to improve the earnings power of our fleet through bifurcation, delivery of e-fleets, retirement of equipment that needs to be retired. It will be clear not stacked, but retired.
Kind of one of your bigger peers on a relative sense.
Wondering if you could talk about how you see the pace of activity progressing this year in the Middle East are you still ramping up on contracts that you had kind of alluded to that in your prepared remarks, but what is also what is your outlook on tenders in the middle East This year and I guess finally should we expect to see a lift in <unk>.
Speaker 1: And then finally efficiency and sort of repositioning around better pricing.
<unk> margin next year based upon what youre seeing in pricing activity level this year and the middle East.
Speaker 5: But pricing in your mind continues to move higher. And I would assume that pricing from last year still continue to roll through your fleets.
Speaker 5: But pricing in your mind continues to move higher. And I would assume that pricing from last year is still continuing to roll through your fleets? I would say on average.
Speaker 5: your mind continues to move higher. And I would assume that pricing from last year still continue to roll through your fleets? I would say on average, yes.
Yes look pricing is improving and so I would expect Danny margins to improve along with that.
I would still argue early innings.
Speaker 5: And if I could just shift gears over on the international side, your Middle East business doesn't get a ton of credit on the street, despite actually being just as big as one of your bigger peers, on a relative sense.
<unk> increase in the middle East and so I'm pleased with our growth. So thank you for pointing that out.
But I see this continuing.
Rig counts are necessarily at near peak and I think we've got a lot of opportunity.
Speaker 5: I was wondering if you could talk about how you see the pace of activity progressing this year in the Middle East. Are you still ramping up on contracts? I think you had kind of alluded to that in your prepared remarks, but what is your outlook on tenders in the Middle East this year? I guess finally should we expect to see a lift in...
They continue.
Ron.
And then broadly international.
Beyond the middle East.
With the growth that we saw in the first quarter.
And just a reminder.
Speaker 1: D&E margins next year based upon what you're seeing in pricing activity levels this year in the Middle East? Yeah, look pricing is improving and so I would expect D&E margins to improve along with that. I would still argue early innings of activity increase in the Middle East.
Two.
To everyone that in Q1 of 'twenty to Russia was 2% of our business and so thats really.
Pretty strong growth.
Absolutely Okay. Thank you Jeff Thank you.
Thank you one moment for our next question.
Speaker 1: So I'm pleased with our growth, so thank you for pointing that out. I see this continuing.
We have a question from Arun Joe Robert.
J P Morgan.
Yeah, Good morning, Jeff.
Speaker 1: You know, rig counts aren't necessarily at near peak. I think we've got a lot of opportunity to continue to run. And then broadly international, it's beyond the Middle East. Pleased with the growth that we saw in the first quarter. And just a reminder, you know, to everyone that in Q1 of 22, Russia was 2% of our business. And so that's really... Yeah. Let's go there!
Just digesting.
<unk> prints outlooks less far we are seeing or observing more resilient conditions in U S frac versus drilling.
I wanted to get your thoughts on why do you think this is the case and how do you see things playing out in terms of your drilling related segments at Sperry in North America over the balance of the year.
Yes look I think wells drilled in North America really a function of DUC count so as the doctors get drawn down more wells have to be drilled.
Speaker 1: Pretty strong growth.
Speaker 4: Absolutely. Okay. Thank you, Jay. Thank you. Thank you. One moment for our next question.
And so I think fluctuation in drilling and it's interesting that you see fluctuation in drilling, but a very steady March in terms of Frac and I think some of that is.
Speaker 4: We have a question from Arun Jharamam, a JP Morgan.
It will be.
Managing costs at the margin.
But the fact is they don't produce more without fracking wells and so.
Speaker 6: Good morning Jeff. Just digesting you know service prints and outlooks thus far, we are seeing or observing more resilient conditions in US frac versus drilling.
I'm not surprised to see that I think our D&A business in North America remains strong.
Confident in what we're seeing there we continue to sort of make gains in the drilling part of the business and I would say the other service lines are.
Speaker 6: I want to get your thoughts on why do you think this is the case and how do you see things playing out in terms of your drilling related segments at Sperry in North America over the balance of the year?
Very strong.
Great great.
Speaker 1: I think wells drilled in North America are really a function of duct count. As the ducts get drawn down, more wells have to be drilled. I think fluctuation in drilling, it's interesting that you see fluctuation in drilling, but a very steady march in terms of frac. I think some of that is.
And just my follow up Jeff you mentioned that you.
You have some sort of relationship with STI on the electric side I'm wondering if you could maybe give us some more details on that partnership.
Yes look this is an opportunity to mind, what the two companies really do well.
Speaker 1: managing cost at the margin, but the fact is they don't produce more without fracking wells. And so I'm not surprised to see that. I think our D&E business in North America remains strong.
And they are.
Clearly areas, where we overlap and we're taking advantage of that we've been working on.
A series of things and one of which is all electric completions.
For about five years is that and we just signed up for another five years.
Speaker 6: and confident in what we're seeing there. We continue to sort of make gains in the drilling part of the business, and I would say the other service lines are very strong. Great, great. And just my follow-up, Jeff, you mentioned that you have some sort of relationship with FTS.
With TSMC so great partner in this area, what we've delivered ultimately will be I think a revolutionary all electric solution that really only it takes the two of us to solve for.
It's not the bulk of either one of our businesses.
But the fact is in this narrow space, we bring some really unique synergies and opportunities to develop technology and so very pleased with the relationship and the progress that we're making up to and including we are jointly marketing and selling some solutions today.
Speaker 1: areas where we overlap and we're taking advantage of that, we've been working on a series of things and one of which is all electric completions for about five years and we just signed up for another five years with TFMC.
Great. Thanks, a lot.
Yeah.
Okay.
Thank you. Our next question comes from James West with Evercore ISI. Your line is open.
Speaker 1: Great partner in this area. What we've delivered ultimately will be I think a revolutionary all-electric solution They're really only it takes the two of us to solve for It's not the bulk of either one of our businesses But the fact is in this narrow space we bring some really unique synergies and opportunity to develop technology
Hey, good morning, Jeff Good morning, James.
So Jeff I know you spin guys, probably 60 plus percent of your time on the road soon customers and a lot of that absorbed that internationally could you maybe describe the customer conversations at this point where they are in.
With their sense of urgency, where the pushback is if any with pricing or is there more concerned about availability.
Is kind of how we're thinking about the cycle as it takes us from here and just curious to hear what you're hearing on the ground.
Yes, Thanks James.
Speaker 4: Thank you. Our next question comes from James West with Evercore ISI. Your line is open.
The discussion is more around availability than anything else.
Whether it's services that we provide capital.
Speaker 1: Hey, good morning, Jeff. Good morning, James.
Speaker 1: So Jeff, I know you spend, gosh, probably 60 plus percent of your time on the road seeing customers and a lot of that, the majority of that internationally. Could you maybe describe the customer conversations at this point, where they are in...
More importantly availability of tools and people.
And a lot of the planet, we're even doing planning today deep planning today for 'twenty for activity that we expect to ramp up.
And so there is enough concern around availability and 24 that significant resources are committing committed now.
Speaker 1: with their sense of urgency, where the pushback is, if any with pricing or is there more concern about availability? It's kind of how we're thinking about the cycle as it takes off from here and just curious to hear what you're hearing on the ground.
To solving for that so I have got a lot of a lot of confidence in the runway internationally and the amount of work that we've won.
Okay. That's great. That's good to hear and then on North America, the 15% plus growth that you are.
Speaker 1: Thanks, James. The discussion is more around availability than anything else.
And forecasting for this year.
you know, whether it's services that we provide, capital.
Is there how much I guess could you describe how much of that you think is just this is kind of a pure inflation in the market, whether it's rig rates or frac spread cost that kind of stuff versus.
More importantly, availability of tools and people. And a lot of the planning, we're even doing planning today, I mean deep planning today for 24 activities that we expect to ramp up. And so there's enough concern around availability in 24 that
Rig count or activity led growth.
Yes James.
Yes, I think it's a combination of the two and certainly the more activity you have the more.
significant resources are committed now to solving for that. So I've got a lot of confidence in the runway internationally and the amount of work that we've won. Okay, that's great to hear. And then on North America, the 15% plus growth that you're into.
<unk>.
But if I just sort of look back to look forward.
If I take last year, a 5% production growth last year.
Year on year translated into about 50% revenue growth for us.
I know in brining three the outlook for let's say, 3%.
Production growth and I think published estimates at least today around operator, capex or 17% or so.
I think it says a couple of things number one producing oil doesn't get easier.
activity led growth.
And that means more of our services.
Yeah, James, I think it's a combination of the two. The more activity you have, the more sort of inflation type you see. But if I just look back to look forward, if I take last year, a 5% production growth last year...
And higher quality services, and so I am confident that.
We're going to maximize value in North America, and I think that that combination of activity and and prices what delivers the north of 15%.
Okay got it thanks, Jeff Thank you.
year-on-year translated into about 50% revenue growth for us. I know in 2013 the outlooks for, let's say, 3% production growth, and I think published estimates, at least today, are around operator capex or 17% or so. I think it says a couple of things. Number one, producing oil doesn't get easy.
Our next question comes from Roger read with Wells Fargo. Your line is open.
Yeah. Thanks, good morning, and congrats on the quarter there.
Just a couple of things to follow up on Jeff.
Comment in the opening about 45% of your international coming from offshore it obviously talking a little bit about planning for 'twenty, four which greater visibility on offshore a lot of times than others and I was just curious how you see that potentially changing.
Increase as a percentage of mix and how should we think about that in terms of.
Okay, got it. Thanks, Jeff. Thank you.
Enhanced visibility topline growth and maybe margin expansion.
Our next question comes from Roger Reed with Wells Fargo. Your line is open.
Yes. Thanks.
I'm pleased with the growth percentage basis of our position in offshore or the amount of offshore work that we're doing.
Look I think it continues to grow.
Yeah, thanks. Good morning and congrats on the quarter there. Just a couple things to follow up on, Jeff. Your comment in the opening about 45% of your international coming from offshore and obviously talking a little bit about planning for 24 which...
And I expect our position as we continue to bring out the types of technologies I talked about continued to help drive our growth and.
Offshore offshore work.
And so we are a lever heavily to offshore and this is all service lines are levered to offshore.
greater visibility on offshore a lot of times than others. I was just curious how you see that potentially changing. Does it increase as a percentage of mix, and how should we think about that in terms of enhanced visibility, top-line growth, and maybe margin expansion?
And I think that as we can see that.
Business grow I expect yes, it does translate into top line growth and margin growth.
And I think what's clear, though also is higher service intensity, but it also requires more equipment to do offshore work. So it has a bit of a double effect in terms of growing revenues and margins, but it also tightens up the rest of the business by virtue of consuming backup tools and additional shifts with people.
Thanks. I'm pleased with the growth on a percentage basis of our position at offshore, the amount of offshore work that we're doing. I think it continues to grow. I expect our position as we continue to bring out the types of technologies I talked about now, even when we just have fewer tasks to walk through, in addition to the ways that
And so as offshore grows that has.
Tightening effect really on everything.
continue to help drive our growth in.
<unk> helps to drive better margins and better growth.
offshore work. And so we are levered heavily to offshore. And this is all service lines are levered to offshore.
Okay, and then monro.
<unk> related follow up on that you mentioned the smart Frac had picked up quite a bit in the U S and it was up six times roughly versus a year ago.
I think that as we see that business grow, I expect yes, it does translate into top line growth and margin growth. I think that what's clear, though, also is that tire service intensity, but it also requires more equipment to do offshore work. It has a bit of a double effect in terms of growing revenues and margins, but it also tightens up.
Any thoughts for what that growth rate is going forward and should we anticipate.
Sort of any any change in terms of margins as that goes forward positive negative or or or.
<unk>.
Yes look I think that that growth continues at sort of that pace. This is one of those solutions that is.
the rest of the business by virtue of consuming backup tools and additional shifts of people. And so as offshore grows, that has a tightening effect really on everything, which again helps to drive better margins and better growth.
Very affordable and scalable and provides important data to operators.
Yes.
Particularly as the focus becomes productivity per foot and so this is really.
Okay, and then mine related follow up on that. You mentioned the SmartFrac had picked up quite a bit in the US. I think it was up six times or roughly versus a year ago. Any thoughts for what that growth rate is going forward and should we anticipate any change in terms of margins as that goes forward, positive, negative or?
The best way may be the only way to meaningfully measure where the sand goes and as a result of that.
That's the building block of what produces more what's better complexity, whereas the sand what's the most efficient solution and so I expect that continues to grow at a very fast pace.
And we've continued to Andrew's introduce more technology around that solution so that.
or unchanged.
I think that growth continues at that pace. This is one of those solutions that is very affordable and scalable and provides important data to operators.
Easier to deploy and ultimately.
This is one of those things that our target is to be the most efficient solution in the marketplace and as it scales it becomes more valuable.
Particularly as the focus becomes productivity per foot. So this is really.
And in my view, it's a very sticky solution because it's one of those things that once you have that data and it becomes part of a working process then it becomes a.
The best way may be the only way to meaningfully measure where the sand goes, and as a result of that, that's the building block of what produces more oil. What's better complexity? Where is the sand? What's the most efficient solution? I expect that continues to grow at a very fast pace, and we've continued to introduce more technology around that.
Very sticky overtime.
Understood. Thank you thank.
Thank you. Thank you.
One moment.
Our next question comes from Neil Mehta with Goldman Sachs. Your line is open.
Good morning, Jeff Moore and his team.
First question is about the comments about moving three frac fleets from gas to oil basins can you talk.
About whether you see more potential for this.
And what are some of the switching costs associated with that and.
Is this the beginning of a greater trend.
and it becomes part of a working process, then it becomes very sticky over time.
Well look I think what we demonstrated is that's what we're going to do.
Understood. Thank you. Thank you.
Clearly gas economics are challenged today.
And I don't think its something that service prices saw.
Thank you.
One moment.
So.
I think gas is incredibly important.
Our next question comes from Neil Meyda with Goldman Sachs. Your line is open. You still have a few more minutes left, can we say that 3 seconds to be pools up towards here? Last question is for you, I know.
That it continues but.
And even get stronger as we build into.
Good morning, Jeff, good morning, the team. First question is about the comments about moving three frack fleets from gas to oil basins. Can you talk?
The LNG capacity that gets built here in the U S.
But along the way.
We see opportunities for unmet demand in oil and we've made the lives. We described we also want to accelerate our.
about whether you see more potential for this to happen, what are some of the switching costs associated with that, and is this the beginning of a greater trend?
Equally as a percentage of our overall fleet, which requires that we.
Well, look, I think what we demonstrated is that's what we're going to do.
Retire fleets, along the way and so.
Our perspective that is the path that we take.
Clearly, gas economics are challenged today, and I don't think it's something that service prices solve. I think gas is incredibly important, and I expect that it continues and even gets stronger as we build into the future.
So I think it's gas operators are continuing to operate and they are working.
And.
Really to that and actually just placed.
<unk> fleet into a gas basin with an with an operator, so there's clearly an outlook that gas recovers.
the LNG capacity that gets built here in the U.S. But along the way, we see opportunities for unmet demand in oil, and we've made the moves we described. We also want to accelerate our e-fleet as a percentage of our overall fleet, which requires absolutely no amount of supply
And then can you talk about the return of capital comments, you had mentioned you could see a scenario where you go in excess of 50% of free cash flow back to shareholders. So talk about how youre thinking about using the buyback as a tool to create value.
Well as I described our outlook is strong.
We generate a lot of free cash flow.
And yes, I believe that as we do that we'll be able to return more cash to shareholders.
And so we.
And really to that end, actually just placed an e-fleet into a gas basin with an operator. So there's clearly an outlook that gas recovers.
We took a step in Q1, but obviously the ability to.
<unk>, there is going to be with share buybacks.
Jeff, then can you talk about the return of capital comments you had mentioned? You could see a scenario where you go in excess of the 50% of free cash flow back to shareholders. So talk about how you're thinking about using the buyback as a tool to create value.
Okay.
Thanks, Jeff.
One moment.
Okay.
We have a question from Scott Gruber from Citi. Your line is open.
Well, as I described, our outlook is strong. We expect we generate a lot of free cash flow.
As I described, our outlook is strong. Expect we generate a lot of free cash flow.
Yes, good morning.
This will stay on that same line of inquiry.
Given the uptick to go above the 50% threshold, Jeff is there any appetite to.
And yes, I believe that as we do that, we'll be able to return more cash to shareholders.
We will pursue buybacks with bigger here near term.
And so we took a step in Q1, but obviously the ability to flex there is going to be with a share of Ibacks.
The stock is.
On attractively priced or do you wait until the cash flows.
Later, this year and are responding at higher prices and fundamentals through quite a UPC.
Thanks, Jeff.
Thanks, Jeff.
Yes got it.
It's Eric So generally speaking how we think about cash returns today is.
One moment. We have a quick question from.
I mean, obviously, which has raised the dividend we intend to continue to do.
Small bolt on acquisition technology, driven tap acquisition continue to chip had the debt as well as we go along with clearly today.
Bias is towards increasing a buyback because we go through the year. So yes, directionally that's correct.
Scott Gruber from Citi, your line is open. Yes, good morning. Just want to stay on that same line of inquiry. You're giving the appetite to go above the 60% threshold. Jeff, is there an appetite to pursue buybacks with vigor here near term? You know, when the stock is...
Got it.
And then unrelated follow up just looking at your year over year Incrementals.
And they appear quite strong.
I would guess yes.
is quite attractively priced or do you wait until the cash flows show up later this year and risk buying at a higher price if the fundamentals stay tight as you foresee? Yes, Scott. It's Eric. So generally speaking how we think about cash returns today is I mean obviously which has raised the dividend we intend to keep.
Largely driven by operating leverage and mix around offshore and technologies as well.
In previous calls.
Tommy.
Commentary.
And I would guess pricing is less impactful today at this juncture with potentially more of a price contribution in the years ahead as we've got a full assessment was pricing having a significant impact here already in <unk>. If you look year on year at Dnb margins.
continue to do small bolt-on acquisition, technology-driven tap acquisition, continue to chip at the debt as well as we go along. But clearly today, the bias is towards increasing buyback as we go through the year. So yes, directionally, that's correct. Got it.
Well pricing certainly has improved.
Year on year, but I think more importantly is.
The.
The depth of the technology that we're introducing and sort of the duration and I don't want to get away from that.
And then an unrelated follow-up, I'm just looking at your year-on-year incrementals in D&E and they appear quite strong. And I would guess this is largely driven by operating leverage and mix around offshore and technology, just given previous commentary.
It's not a point in time I think we've got.
Pricing improving but at the same time, we've got substantial capital efficiency happening also in terms of the technology. So the.
<unk> been pretty clear about the technology that we are investing in.
<unk> is.
Driving capital efficiency, which means that we capture more of the value and cash flow over time, and so I would expect to see.
And I would guess pricing is less impactful today at this juncture with potentially more of a price contribution in the years ahead. Is that a fair assessment or is pricing having a significant impact here already in 2Q if you look year on year at DME margins?
The margin improvement that you saw this quarter year on year.
To continue in terms of Incrementals and I say it that way I've always said that arc <unk>.
Expectation is that we stack improvement each quarter in terms of margins and DNA and.
pricing certainly has improved year on year, but I think more importantly is the depth of the technology that we're introducing and the duration. I don't want to get away from that. It's not a point in time. I think we've got pricing improving, but at the same time, we've got substantial...
We expect that to continue to happen, obviously theres some intra year cyclicality, but I think the key is if we look at each year by quarter, then we ought to be stacking improvements quarter on quarter and I think we've got a long runway ahead of us and DNA.
But it sounds like it's more of the.
The kind of structural investments you made around technology and driving your asset turns and mix more than pricing today is that fair yes.
Yes, I think that is reasonable to say yes.
Okay got it thank you.
Thanks, Thank you.
margin improvement that you saw this quarter year on year to continue in terms of incrementals. I say it that way. I've always said that our expectation is that we stack improvement each quarter in terms of margins in D&E and expect that to continue to happen. Obviously, there's some.
One moment.
We have a question from Chase Mulvehill with Bank of America Merrill Lynch. Your line is open.
Hey, good morning, everyone.
Alright.
I guess, maybe if we can kind of hit on free cash flow.
But I think the key is if we look at each year by quarter, then we ought to be stacking improvements quarter on quarter. And I think we've got a long runway ahead of us in DNE.
If we if we think about your outlook.
Youre North America outlook was maintained.
It looks like you've kind of bumped up your international outlook.
So I'm guessing that it would probably.
It does sound like it's more of the kind of structural investments you made around technology and driving your asset turns and mix more than pricing today. Is that fair to you? Yeah, I think that is reasonable to say.
Bump to your to your free cash flow outlook I think last quarter, you said free cash flow should grow at least 20% would seem conservative when you gave it.
So a better international outlook and still maintain North America.
Okay, got it. Thank you. Thanks. Thank you.
Thank you. Thanks. Thank you. One moment. One moment.
Updates on how we should be thinking about 23 free cash flow.
Yes, Jason it's Eric so.
Directionally as you said, we're very confident in the outlook of the business.
We have a question from Chase Mulhill with Bank of America Merrill Lynch. Your line is open.
We have a question from Chase Mulhill with Bank of America Merrill Lynch. Your line is open. Good morning everyone.
Profile of free cash flow.
Typically we're going to start generating meaningful free cash flow in Q2 and in H two as we're done with the buildup of working capital we did in Q1 and Directionally.
I guess maybe if we can kind of hit on free cash flow you know if we if we think about your outlook you know your North America outlook was maintained and it looks like you kind of bumped up your international outlook so I'm guessing that it would probably you know
You're right our outlook right now is more north of 30% then it was 20% in Q1. So yes, we are revising our projections up.
Okay also.
And then unrelated follow up.
and plow a bump to your free cash flow outlook. I think last quarter you said free cash flow should grow at least 20% which seemed conservative when you gave it. So with a better international outlook and still maintain North America, any updates on how we should be thinking about 23 free cash flow? Yes, Chief Ziterk. So,
Delighted a lot of digital wins in your press release and also in your prepared remarks today.
So question around this and you all are you starting to see more digital adoption by your customers and if so whats been the catalyst for accelerated adoption and I'm going to give this one to try and any chance that you could speak to how material digital revenues are today for Halliburton.
directionally, as you said, we're very confident in the outlook of the business, the kind of profile of free cash flow. Typically, we're going to start generating meaningful free cash flow in Q2 and in H2 as we're done with the buildup of working capital we did in Q1 and directionally
Yes, I think the.
Adoption is going to always be around business cases, and what creates value for customers and.
I think the idea that.
We're just going to go digital has started and stopped because it was proven unsuccessful and so.
So what we see is now more meaningful adoption around real solutions software solutions and automation solutions.
You're right, our outlook right now is more north of 30% than it was 20% in Q1. So yes, we're revising our projections up.
It is a big business, but it's not one it's one that sort of spread throughout the business as well and so.
Okay, awesome. And then unrelated follow-up, you know, you highlighted a lot of digital wins in your press release and also in your prepared remarks today. So, question around this, you know, are you starting to see, you know, more digital adoption by your customers? And if so, what's been the catalyst for accelerated adoption? And I'm going to give this one a try and any chance that you could speak to how material digital revenues are today for Halliburton.
I think that the.
We tend to think about it in two buckets, we tend to think about it as software is one activity.
And automation is another and both are generated.
From the same technical capacity.
By that I mean, the capacity to do software at scale, a lot of that resident and landmark.
Yeah, I think the adoption is going to always be around business cases and what creates value for customers. I think the idea that we're just going to go digital has started and stopped because it was proven unsuccessful. What we see is now more meaningful adoption around real solutions, software solutions.
The software business sort of being one thing.
And then the automation, which is many of the same tools and maybe buy differently throughout the rest of the business and.
It has a meaningful effect on our performance our margin outlook is going to have I will continue to do that.
Even in there.
Offshore in the drilling business in terms of automation of what the drilling tools can do.
And probably equally onshore North America in terms of what we can do with Frac fleets from a.
Maintenance and performance standpoint, it's not something we necessarily advertise but it's very inherent in that type of performance and efficiency that we see today.
and automation as another. And both are generated sort of from the same technical capacity. By that I mean the capacity to do software at scale, a lot of that resident in Landmark. The software business sort of being one thing. And then the automation, which is many of the same tools, maybe five differently.
Okay perfect I appreciate the answers I'll turn it back over.
Yes. Thank you thanks, Jason.
Our next question comes from loop.
<unk> with Piper Sandler Your line is open.
Hey, good morning, Jeff and Eric.
Hey, Luke.
Just you reached your international growth outlook. This year from mid school at least mid teens to high teens.
England path is a little bit maybe just talk about what's changed what's accelerating and once you have more confidence in.
Yes, I think I have more confidence in.
Number one really three things one the.
Indicators that we're looking at things like completion tool.
terms of what we can do with Frac-Plates from a maintenance and performance standpoint. It's not something we necessarily advertise, but it's very inherent in the type of performance and efficiency that we see today.
Order book, which has grown meaningfully and that all.
Focuses on this year.
I would say pricing sort of improvement that we're seeing pricing and tightness around equipment.
Okay, perfect. Appreciate the answers. I'll turn it back over.
Appreciate the answers. I'll turn it back over. Yep, thank you. Thanks, Jay. Thank you.
Around the world internationally is another meaningful one and then finally, just the way we're winning awards and we're growing we're selective about the awards, we're winning again.
Our next question comes from Luke Lemone with Piper Sandler. Your line is open. Your line is open.
Our strategy is profitable international growth.
Hey, good morning Jeff. Eric.
Hey, good morning Jeff Eric. Hey, Luke.
Emphasizing the profit part of that statement.
Hey, Jeff, you raised your international growth outlook this year from mid, well, at least mid-teens to high teens.
But at the same time, we are seeing success and we're seeing success in a lot of different markets and so because of that.
Can you unpack this a little bit and maybe just talk about what's changed, what's accelerating, and what you have more confidence in?
Yes, we see a path to sort of high teens.
unpack this a little bit and maybe just talk about what's changed, what's accelerating, and what you have more confidence in.
Got it good deal and then maybe on the Geo markets you touched on the Middle East earlier could you expand on what Youre seeing in Asia, and Latin America for the balance of the year.
Well, really three things. One, the indicators that we're looking at, things like completion tool, order book, which has grown meaningfully and that all.
Yes, I am seeing.
Asia again pick a.
focuses on this year. I would say pricing sort of improvement that we're seeing, pricing and tightness around equipment around the world internationally is another meaningful one. And then finally, just we're winning awards and we're growing. We're selective about the awards we're winning. So, our strategy is profitable international growth.
Particularly in terms of development type work.
Yeah.
Which is.
Obviously.
Right there in our wheelhouse and then also in Latin America.
Clearly, we see activity growth in.
In Brazil.
But really throughout the region, we see the imperative to produce more oil and gas and clearly oil and gases.
emphasizing the profits part of that statement. But at the same time we are seeing success and we're seeing success in a lot of different markets and so because of that we see a path to sort of high teens.
And part of the economies of Latin America.
And so there's a lot of motivation to be more effective and to deliver more oil and gas.
Uh huh.
Partly for.
For for economic reasons and protect revenues.
Got it, good deal. And then maybe on the geo market, you touched on the Middle East growth earlier, but could you expand on what you're seeing in Asia and Latin America for the balance of the year?
But I think I'm really encouraged by what we see.
Alright, great. Thanks, Jeff.
Okay.
Yeah, I'm seeing Asia again pick up, particularly in terms of development type work.
One moment our next question.
We have a question from Steven Zingaro with Stifel. Your line is open.
which is obviously right there in our wheelhouse. And then also in Latin America. Um
Hi, Thanks, good morning, everybody.
Thanks Steven.
So I'm curious.
Clearly, we see activity growth in Brazil. But really, throughout the region, we see the imperative to produce more oil and gas. And clearly, oil and gas is an important part of the economies of Latin America. And so there's a lot of motivation to be more effective and to deliver more oil and gas.
When we look at U S pressure pumping world.
A lot of the.
Competitors have expanded services at the well I'll say it I'm going through all things from vertical integration.
Well site integration.
How are you seeing from your eyes as far as how it impacts how how it impacts pricing and your profitability.
In the business at the well site.
partly for economic reasons and for tax revenues. But I think I'm really encouraged by what we see.
Well, we view all of this very strategically in a sense.
We're looking.
Looking at returns long term returns and where we create value in terms of competitive advantage and so.
All right, great. Thanks Jeff.
One moment for our next question.
You know we don't a.
Vertical integration for the sake of vertical integration in my view.
We have a question from Steven Jangaro with Steveo your line is open.
As.
Not necessarily creating more value.
What we're doing in the Frac space and really in every business that we're in is focus on where do we create technical.
Thanks. Good morning, everybody.
Good morning, Stephen.
So curious, when we look at US pressure pumping world, a lot of the competitors have expanded services at the well site. I've been going through all things from vertical integration to well site integration. How are you seeing it from your eyes as far as how it impacts how, how it impacts.
Differentiation, so what our creates a competitive advantage for halliburton and so when I think about what we've done with electric fleets, what we've done with smart fleet.
Really meaningful things.
The inputs to the business are the inputs to the business and those are maybe good businesses for others.
But there are places, where we create competitive advantage so for that reason.
pricing and your profitability in the business at the Wellstate? Well, we view all of this very strategically in the sense of, you know, we're looking at returns, long-term returns, and where we create value in terms of competitive advantage. And so, you know, we don't, vertical integration for the sake of vertical integration in my view,
It's not just how much volume Kimberly capture around the Wellbore, it's really where can we capture volume and create competitive advantage and so I like where we are in our approach to it.
Thanks, and then just as a quick follow up are you seeing tightness in sand and is that a is that a profit center for you.
And any any material movements in that over the last couple of quarters.
No not a lot of movement in the last few quarters and.
Again, I view, it like all inputs to our business.
It's going to fluctuate at different times different levels.
when I think about what we've done with electric fleets, what we've done with smart fleets, really meaningful things. The inputs to the business are the inputs to the business, and those are maybe good businesses for others, but there are places where we create competitive advantage. So for that reason,
Yes, there is a lot of sand in the world and it's.
Yes.
Quite available so.
Don't view that as a long term impediment to anything that we're trying to do.
Just given the availability and really how to go about producing it.
It's not just how much volume can we capture around the wellbore. It's really where can we capture volume and create competitive advantage. I like where we are in our approach to it.
Excellent. Thank you for the color.
Thank you.
Okay.
Thank you and that's all the time, we have for questions I would like to turn the call back to Mr. Jeff Miller for any closing remarks.
Thanks, and then just as a quick follow-up, are you seeing tightness in sand? Is that a profit center for you? Any material movements in that over the last couple of quarters? No, not a lot of movement in the last few quarters.
Yes. Thank you.
You all for participating in today's call let.
Let me close out the call with just a couple of comments.
<unk> performance in the first quarter demonstrated the earnings power of our strategy and then secondly, my outlook for Halliburton is strong and everything I see today points towards more cash to shareholders.
And again, I view it like all inputs to our business. It's going to fluctuate at different times, different levels.
I'll look forward to speaking with you next quarter, let's close out the call. Thank you.
you know, there's a lot of sand in the world and it's
sand in the world and it's, you know...
This concludes today's conference call. Thank you for participating you may now disconnect.
quite available, so I don't view that as a long-term impediment to anything that we're trying to do. Just given the availability and really how to go about producing it. Excellent. Thank you for the color. Thank you.
Thank you and that's all the time we have for questions. I'd like to turn the call back to Mr. Jeff Miller for any closing remarks.
Yes, thank you. Thank you all for participating in today's call. Let me close out the call with just a couple of comments. First, Halliburton's performance in the first quarter demonstrated the earnings power of our strategy. And then secondly, my outlook for Halliburton is strong and everything I see today points towards more cash to shareholders.
I look forward to speaking with you next quarter. Let's close out the call. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.