Q4 2024 Halliburton Co Earnings Call
Speaker Change: Good day and thank you for standing by. Welcome to the Q4 2024 Halliburton Company Earnings Conference Call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session.
Speaker Change: To ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. I would now like to hand the conference over to your speaker today, David Coleman, Senior Director of Investor Relations.
Speaker Change: Hello and thank you for joining the Halliburton fourth quarter 2024 conference call. We will make the recording of today's webcast available for seven days on Halliburton's website after this call.
Speaker Change: Joining me today are Jeff Miller, Chairman, President and CEO, and Eric Carre, Executive Vice President and CFO.
Speaker Change: Some of today's comments may include forward-looking statements reflecting Halliburton's views about future events.
Speaker Change: These matters involve risks and uncertainties that could cause our actual results to materially differ from our forward-looking statements.
Speaker Change: We undertake no obligation to revise or publicly update any forward-looking statements for any reason.
Speaker Change: Our comments today also include non-GAAP financial measures. Additional details and reconciliation to the most directly comparable GAAP financial measures are included on our fourth 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.
2024 was a solid year for Halliburton.
Here are the full year highlights.
We delivered full year total company revenue of $22.9 billion.
Speaker Change: Our North America business declined 8% year over year, but outperformed the rig count and completion activity.
Speaker Change: Halliburton generated $3.9 billion of cash from operations and $2.6 billion of free cash flow.
Speaker Change: Finally, we repurchased $1 billion of our common stock and paid $600 million of dividends to our shareholders, representing a 60% return of free cash flow.
Before we move on...
Speaker Change: I would like to thank our employees for their extraordinary work this year, delivering record performance in both safety and service quality.
Speaker Change: You, our employees, are the ones that deliver our value proposition every day to collaborate and engineer solutions to maximize asset value for our customers.
Speaker Change: Thank you for your commitment and hard work. Let me begin with my outlook for the industry and for Halliburton.
Speaker Change: I expect energy will continue to play a critical role in economic growth and prosperity and per capita energy consumption to grow for decades to come.
Speaker Change: I believe the accessibility, affordability, and dependability of oil and gas are simply too compelling to ignore.
Speaker Change: I'm confident that as we move forward, the attitudes and approaches to hydrocarbon development will be pragmatic rather than idealistic.
Speaker Change: I believe there is no way we meet the energy demands around the world without oil and gas in large quantities for a long time. And that gives me great confidence.
This is a great environment for Halliburton.
Speaker Change: And we begin the second half of this decade in a strong position with a transformed balance sheet, leading returns, and strong free cash flow.
Speaker Change: In the years ahead, I am confident Halliburton will strengthen its competitive advantage and financial position for three fundamental reasons.
Speaker Change: First, the depth of our technology portfolio combined with our global reach make Halliburton a leader in the global services marketplace.
Speaker Change: Second, our unique value proposition aligns Halliburton with our customers to deliver leading results and maximize asset values.
Speaker Change: We see the value of this alignment demonstrated again and again in the deepening of our customer strategic alliances.
Speaker Change: Lastly, I see customer activity shifting towards drilling technology, unconventionals, well intervention, and artificial lift. All of which are areas where Halliburton excels today, and where we are uniquely positioned to outperform in the future.
Turning to our results.
Speaker Change: I'll begin with the international markets where Halliburton delivered another year of profitable growth.
Speaker Change: Our full-year international revenue grew 6% year-over-year, led by the Middle East-Asia region, which grew 8%.
Speaker Change: I am pleased with our performance and the growth of our international business.
Speaker Change: In 2025, we expect flat international revenues for Halliburton year over year, with growth in most international markets offset by activity reduction in Mexico.
Speaker Change: Absent Mexico, we expect our international franchise will grow low to mid-single digits next year.
Speaker Change: Beyond 2025, I am confident in the long-term outlook for Halliburton, in particular the next five years, based on the growth engines in our international business and the power of our customer alliances.
Speaker Change: These growth engines include Halliburton's drilling technologies, unconventionals, well intervention, and artificial lift businesses.
Speaker Change: I believe these growth engines could collectively generate an additional two and a half to three billion dollars of annual revenue in three to five years.
Speaker Change: They adopt this way of working because it has proven to consistently improve performance and create value for them. While the power of our collaborative value proposition has traction all around the world, it's most visible in Norway.
Speaker Change: Halliburton has a growing and profitable business in Norway built on strong customer alliances.
These alliances apply leading technologies and collaborative work environments.
Speaker Change: Together with our customers, we have successfully pioneered several advances that have delivered significant improvements in performance and safety.
Speaker Change: Over time, I see the rest of our international business moving in the same direction.
Speaker Change: What is clear to me, and equally so to a growing group of operators, is that the future of performance lies in deep collaboration.
Speaker Change: For the last decade, we have made strategic choices in the development of our people, processes, and technology to reinforce a culture that is highly collaborative and creates exceptional performance in these environments.
Speaker Change: I expect this change will create unique value for Halliburton and our customers.
Speaker Change: To summarize international markets, I expect our value proposition driving deep collaboration will further differentiate us and create clear value for both Halliburton and our customers.
Speaker Change: and our growth engines will contribute meaningfully to our international business in the years to come.
Speaker Change: I'm excited about these opportunities, and I believe Halliburton has a terrific platform to outperform the international services market in 2025 and beyond.
Speaker Change: In North America, our full-year revenue of $9.6 billion was an 8% decrease from 2023.
Speaker Change: Fourth quarter 2024 revenues were 7% lower than third quarter 2024 due to seasonality and customer budget exhaustion.
Speaker Change: As we look to 2025, I expect our North America revenue to decrease low to mid-single digits from 2024 levels, or approximately flat with the second half of 2024.
Speaker Change: This lower revenue for the year is driven in part by lower negotiated prices for a portion of our fleet, and we expect to see the majority of the margin impact from these price revisions in our first quarter results.
Speaker Change: Despite pricing, I am confident our financial performance will widely outpace our competition.
Speaker Change: If I step back from the numbers for a minute, I'm excited about several things Halliburton is doing in North America this year.
Speaker Change: Let me tell you what's going on under the hood that has me so excited.
Speaker Change: First, we're sold out. All of our fleets are working under committed or contracted programs.
Speaker Change: Next, Zeus. We're extending and renewing contracts for existing fleets, making new Zeus deliveries, and expect our market-leading eFleets will comprise 50% of our fleet by the end of 2025.
Speaker Change: Next, technology. Octave AutoFrac and Sensory are being widely adopted by customers and delivering value.
Speaker Change: Next, directional drilling. I-Cruise Rotary Steerables are on a pace to capture about 30% of the North America rotary steerable business by year end.
And finally...
Speaker Change: I believe the next catalyzing inflection for North America services will be up, not down.
Speaker Change: I believe the most pressing energy problem in North America today is the power shortage driven by electrification and power demand for AI. And this cannot be solved without significant amounts of natural gas.
Speaker Change: These are all very good things for Halliburton in 2025. These are the bedrock of our North America franchise as we move into the second half of the decade.
Speaker Change: When I think about the North America market through this period, several themes are crystal clear to me.
Speaker Change: First, our customers rely on our technology, innovation, and collaborative work processes to deliver leading performance and lower total well costs.
Speaker Change: I expect further adoption of these technologies as our customers fully integrate them into their workflows where they drive stable, long-term work programs for Halliburton.
Speaker Change: OctavatoFrac is a great example of this. Launched last year, it is already used on over 50% of our Zeus spreads, with more growth expected this quarter.
Our sensory fracture monitoring is another example.
Speaker Change: Customers are adopting this technology at scale to optimize well completion designs on multi-well paths. In the fourth quarter alone, Sensory was used on more than 2,500 frac stages in North America.
Speaker Change: The second trend I expect to continue is the rising importance of North America and our large customers development plans and budgets.
Speaker Change: I expect our large customers will continue the industrialization of unconventional resources and seek even greater efficiencies in productivity.
Speaker Change: I believe Halliburton is uniquely positioned to innovate and deliver these improvements at scale.
Speaker Change: A final trend I expect to see through the rest of the decade is the durability and strength of Halliburton's financial performance.
Speaker Change: While markets and margins will fluctuate, I am confident Halliburton Strategy will deliver attractive financial results over the long term.
Let me close my remarks with this.
Speaker Change: I'm excited about both the year ahead and the long term for Halliburton.
Speaker Change: We expect to execute our value proposition, deepen our technology portfolio, and deliver incremental revenue through our growth engines, drilling technology, unconventionals, well intervention, and artificial lift.
Speaker Change: Finally, we remain disciplined in our capital allocation, prioritizing cash flow and return of free cash flow to shareholders.
Speaker Change: In 2024, we returned $1.6 billion, or about 60% of free cash flow to shareholders in stock repurchases and dividends, and I expect we will return at least $1.6 billion of cash in 2025.
Speaker Change: With that, I'll now turn the call over to Eric to provide more details on our financial results. Eric.
Thank you, Jeff, and good morning.
Our Q4 reported net income per diluted share was $0.70.
Speaker Change: Total company revenue for Q4'24 was $5.6 billion, a decrease of 2% sequentially.
Operating income was $932 million and operating margin was 17%.
Now, turning to the segment's results.
Speaker Change: Beginning with our Completion and Production Division, revenue in Q4 was 3.2 billion dollars, a decrease of 4% sequentially.
Operating income was $629 million, a decrease of 6% sequentially.
Speaker Change: Operating margin was 20%, a sequential decrease of 49 basis points.
Speaker Change: Revenues were primarily driven by lower stimulation activity in North America and decreased pressure pumping services in Latin America.
Speaker Change: Partially offsetting these decreases were improved artificial lift activity in North America and increased stimulation activity in Africa and the Middle East.
Speaker Change: In our drilling and evaluation division, revenue in Q4 was $2.4 billion and operating income was $401 million, both flat sequentially.
Speaker Change: operating margin was 16%, a sequential decrease of 44 basis points.
Our Q4 international revenue increased 3% sequentially.
Speaker Change: Latin America revenue in Q4 was $953 million, a decrease of 9% sequentially.
Speaker Change: This decrease was primarily due to lower activity across multiple product lines in Mexico.
Speaker Change: Partially offsetting these decreases were higher activity across multiple product lines in Brazil.
Speaker Change: Europe-Africa revenue in Q4 was 795 million dollars, an increase of 10% sequentially.
Speaker Change: This increase was primarily due to improved drilling-related services in the North Sea as well as increased pressure pumping services and higher fluid services in Africa.
Speaker Change: Partially offsetting these increases were lower cementing activity and decreased pipeline services in the North Sea.
Speaker Change: Middle East Asia revenue in Q4 was 1.6 billion dollars, an increase of 7% sequentially.
Speaker Change: In North America, Q4 revenue was $2.2 billion, a decrease of 7% sequentially.
Speaker Change: This decline was primarily driven by lower stimulation activity across the region, partially offset by higher artificial lift activity and increased completion tool sales.
Speaker Change: Moving on to other items. In Q4, our corporate and other expense was 65 million dollars. We expect our first quarter 2025 corporate expenses to decrease slightly.
Speaker Change: In Q4, we spent $33 million, or about $0.04 per diluted share, on SAP S4 migration, which is included in our results. For Q1 2025, we expect SAP expenses to be about $25 million.
Speaker Change: For the full year 25, we expect SAP expenses to be approximately $100 million.
Speaker Change: Net interest expense for the quarter was 84 million dollars. For Q1 2025, we expect net interest expense to be about 90 million dollars.
Speaker Change: Other net expense for Q4 was $47 million, which was driven by unfavorable foreign exchange movements in multiple currencies.
Speaker Change: For Q1 2025, we expect this expense to be approximately $40 million.
Speaker Change: Our effective tax rate for Q4 was 22.6% and we expect our Q1 2025 effective tax rate to be approximately 23%.
Speaker Change: For the full year 2025, we expect our effective tax rate to be approximately 25.5%, an increase of 300 basis points over our 2024 effective tax rate.
Speaker Change: This increase is driven in equal parts by fewer anticipated discrete tax items, the implementation of Pillar 2 taxes, and the shift in geographic earnings mix. Importantly, I expect full-year cash taxes to be approximately flat with 2024.
Capital Expenditure for Q4
Speaker Change: were $426 million, which brought our full year CapEx total to $1.4 billion, or about 6% of revenue.
Speaker Change: For the full year of 2025, we expect capital expenditures to remain approximately 6% of revenue.
Speaker Change: Our Q4 cash flow from operations was $1.5 billion, driven by exceptionally strong collections during the quarter.
Speaker Change: Our free cash flow in Q4 was $1.1 billion, bringing our full year free cash flow to $2.6 billion, a 16% increase over 2023.
Speaker Change: Now let me provide you with comments on our expectations for our divisions for Q1 2025.
Speaker Change: In our Completion and Production Division, we anticipate sequential revenue to decline 3 to 5 percent and margins to decline 175 to 225 basis points.
Speaker Change: In our Drilling and Evaluation Division, we expect sequential revenue to decline 8 to 10 percent and margins to be flat to down 50 basis points.
I will now turn the call back to Jeff.
Speaker Change: Thanks, Eric. Here are the key points I would like you to take away from our discussion today.
Speaker Change: I am confident in the long-term outlook for oil and gas, and I am pleased with the shift towards a pragmatic development of hydrocarbon resources.
Speaker Change: In the international markets, we see long-term growth as a result of the broader adoption of our collaborative value proposition and our growth engines.
Speaker Change: In North America, we are sold out on our frack capacity, we see strong adoption of both our completions and drilling technologies, and I am confident our financial performance will widely outpace our competition.
Speaker Change: Finally, we had a strong year for cash returns to shareholders and expect to return at least $1.6 billion to shareholders in 2025.
And now, let's open it up for questions.
Speaker Change: 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. To withdraw your question please press star 1 1 again. One moment for questions.
Speaker Change: Our first question comes from David Anderson with Barclays. You may proceed.
Hi, good morning, Jess.
Morning, Dave.
Speaker Change: So, this past year you had North America revenue fell 8%. A bit worse than you expected. You had C&P margins held pretty flat compared to 2023.
Speaker Change: Pricing, I guess, can you maybe talk about a little bit kind of how you did that? Was it pricing, more resilient cost structure,
Speaker Change: Secondarily, you just talked about lower negotiated prices and we see C&P margins coming down this year. So what changed here? Can you talk about kind of what part of your fleet was renegotiated? Was it the Zeus pumps? Was it kind of something or was it certain customers? If you could provide a little color on that, around that, please.
Yeah, thanks, David.
2025-2024, you know, we were able to manage
Speaker Change: You know, through a market that has been falling actually for 18 months in 2024, and in 2025, you know, we expect, you know, our outlook is, you know, down slightly.
Speaker Change: I think it was the ability to introduce ZEUS, it was our efficiencies, it was where we create value in the marketplace, but to be clear, we're not immune to pricing. And so as we think about that, as I look at 25.
Speaker Change: You know, all of our fleets are contracted, which is a terrific place to be, number one. We've got great visibility, and there's no question we're at the high end of the range. We know we're at the high end of any range.
but we really don't operate in a vacuum looking forward.
Speaker Change: And so, you know, our plan is to stick with the strategy. The strategy didn't change in 23, 24, or 25. And I think what you're going to see are solid returns from our business.
1025
So
Speaker Change: One of the things, a big topic out there is completion efficiencies around the EMPs. It's continued to be kind of a story out there, and I think that topic
Speaker Change: for a lot of investors means it's deflationary to services. They basically being able to do more with less. On the other hand, Halliburton, you're enabling a lot of these efficiencies through your Zeus pumps.
Speaker Change: through AutoFRAC. The question is kind of how do you get paid for these efficiencies and is it enough to offset some of these deflationary trends? And if you could please just touch on that recent announcement you had with Cotera on AutoFRAC and would you expect more of those agreements to be announced this coming year?
Yeah, David, I mean, clearly our
Speaker Change: The efficiency, we want to be at the leading edge of that efficiency. In some ways, I would argue the opposite with you in the sense that
Speaker Change: What we are doing is at the leading edge and creating outsized value for us. So it clearly offsets
You know
The stability of pricing in 24 and quite frankly the
very muted impact of pricing in 2025.
relative to what I expect the market is.
is on the basis of driving that efficiency and creating.
War Evolutions for Halliburton and the ability to...
Speaker Change: create more value, and quite frankly it requires investment in equipment and technology.
Speaker Change: to achieve that and so Look, I'm pleased with with where we are and when I look at the market, you know Things like the Koterra announcement are a great example of what that technology does. I mean, that's precisely
Speaker Change: the type of performance and value that we're creating, not only in efficiency, but ultimately pointed towards recovery. I mean, and I think that's what I think about our technology and where we sit in the marketplace.
Speaker Change: You know, we're able to have a very different conversation with customers. Clearly, efficiency is part of that, but there's also a more important dialogue to have around the answer products.
Speaker Change: that we're able to achieve with our technology and answer products.
Speaker Change: are not typically something people talk about with respect to frack equipment. And so, this is not just frack equipment. It is, in fact, a platform delivering real answers. And so, that's what gives me confidence as I even look ahead into 2025. You know, I...
Speaker Change: Yeah, I think that, you know, C&P looks a little bit softer than 2024, but I also...
Speaker Change: You know, expect margin in the second half to firm up relative to the first half, as we see the full impact of getting back to work, and then more broadly, tool sales stabilize, and then we see growth and interventions and other things. So look, I'm really...
Speaker Change: confident in the business that we have and that this technology is driving a differential outcome for Halliburton.
Great. Thank you very much, Jeff.
Thank you.
Speaker Change: Our next question comes from Roger Reed with Wells Fargo Securities. You may proceed.
Roger Reed: Thanks. Good morning. I'd like to follow up, Jeff, if you can, on your comments about more U.S. gas needed and how we should think about
and Al Halliburton is positioned.
Roger Reed: for that meeting, as Dave was asking about, you know, productivity and efficiency trends have been impressive, but a lot of it's also been above ground, not just below ground. So, as we ultimately have to increase activity in gas areas, how do you think that works through for you and for the industry?
Roger Reed: We've seen attrition, we've talked even at Halliburton about how we have
Roger Reed: retired equipment rather than work in the spot market but that's you know broadly across the industry and so I think you'll see a lot of tightness in frack for example as we see gas activity pick up.
Roger Reed: And one of the, probably also getting kind of at the question Dave was asking about, you know, making sure you get things priced properly, you know, you get the right returns for for your company and for shareholders, what's the right way for us to think about where pricing is today versus what you would consider more equitable or even, you know, theoretically advantaged situation for Halliburton just.
Roger Reed: Obviously, you've got pricing pressure now. That's worked into the system, it's worked into expectations. But when things start to reverse, maybe another way to ask the question, where do you think margins can go?
Roger Reed: Yeah, look, I think margins can move up, and I expect that, you know, what we have been seeing, I've always thought that in the right kind of market, and the...
Roger Reed: You know that pricing would move up well above where we work
Roger Reed: even in 2024, and so I don't think it takes a lot of tightness to see that, and when I think about the catalysts of North America, I think that we are, you know, more likely to move up than down.
Roger Reed: And so, you know, the combination of gas activity and we don't talk enough about, but private operators getting back into the business is
in the fall.
Roger Reed: that we create outsized value and expect to get paid for that.
All right. Appreciate it. Turn it back.
Thank you.
Speaker Change: Our next question comes from Saurabh Plant with Bank of America. You may proceed.
Hi, good morning, Jeff, Eric.
Morning. Morning.
Speaker Change: Hey Jeff, maybe I want to touch on the four growth engines that you talked about on your call, drilling tech, unconventionals, intervention, and then artificial intelligence. It's really interesting, I think Jeff, correct me if I'm wrong, but I think I heard you talking about
Speaker Change: $2.5 to $3 billion in additional revenue over the next, I think you said three to five years. Maybe talk to that a little bit and give us a little more color on which of those four growth engines you see the most opportunity and which ones you think are going to be the most powerful over the next couple of years.
Speaker Change: Well, I think all four of them are going to have meaningful impact. Let's start with unconventionals, just internationally. We're a global leader.
Speaker Change: today, and we see that market growing, and we also see demand for the technology that we talked about in North America. That same demand for technology and better recovery is universal, and so that's certainly not limited to the U.S.
and David Coleman. Thank you.
I'd also talk about intervention.
Speaker Change: For example, we talked about riserless coil last quarter, but there's a whole suite of power mechanical tools, our overall focus on execution, and we think that's just a market where we'll see more dollars spent, and we'll probably see more of that sooner rather than later.
Speaker Change: And then Lyft, in some ways, just given our relative size internationally, we've seen growth, but we've got a lot more upside for Halliburton uniquely as we grow that business and really take the same.
Speaker Change: leadership technology that we see in North America internationally and so
and then drilling technology.
Speaker Change: There's a lot that we're doing around our drilling offering, whether it's closed-loop drilling and automation, and that's really where we see outsized growth for Halliburton.
Speaker Change: You know, again, I think there's real value to be created there, and I think they're all right in our wheelhouse to go do. We're well positioned and have a great suite of technology.
Speaker Change: Great. Now that's a very helpful context, Jeff. And then maybe one question on Mexico. Jeff, Eric, if I understood your guidance right, I think you said...
Speaker Change: Excluding Mexico, internationally you expect to be up low to mid-single digit, right, and including Mexico it's flat. If I'm doing the math right, I know I don't have all the numbers right, but if I'm doing the rough math right, that implies Mexico maybe is down like 25% year-over-year.
Speaker Change: First thing, can you maybe validate that kind of a map and then what's what's exactly the expectation for Mexico through 2025? Do you expect things to improve in the back half of the year or do we not have any visibility there?
Speaker Change: Look, I think that what we see in Mexico is a new administration, new management team for PEMEX.
and, you know, a bit of our activity reset.
Speaker Change: I say all of that, and that is our outlook today, but at the same time...
Speaker Change: You know, oil and gas is hypercritical to the economy in Mexico, and so it's hard for me to imagine that they don't find their footing as we work through the year.
Speaker Change: And we have a fantastic market position in Mexico, one of the reasons it's important to us.
Speaker Change: and we have a great team there, so I'm quite confident Halliburton.
will execute well in that market.
Speaker Change: But I think it's more a question around timing in terms of as PIMX finds it.
Speaker Change: You know, that's certainly not clear today, but I expect that it happens. It has in the past, and I expect it will again.
Speaker Change: Okay, perfect. I got that. Okay. Yes, I'll turn it back. Thank you.
Thank you.
Thank you.
Speaker Change: Our next question comes from Arun Jayaram with JP Morgan Securities. He may proceed.
Arun Jayaram: Yeah, good morning. Jeff, I have a follow-up maybe to David's question. Could you give us a sense, you know, we understand in talking to ENPs that the Octave AutoFRAC service can be deployed with different kind of configurations.
Arun Jayaram: So I was wondering if you could briefly describe how it works and if you do pair it.
Arun Jayaram: with the Sensory Fract Monitoring Service, you know, the different configurations and maybe just talk a little bit about the commercial model if you do it on a standalone basis, again, versus combining it with Sensory, because I think you mentioned it's now running on 50% of your eFleets. Yeah.
Yeah, look, I'm...
Arun Jayaram: what is designed and because of you know the ability to control the horsepower it can deliver what is designed.
Arun Jayaram: and so I think that is something that's never been done before in terms of having the confidence that precisely what is designed is in fact what is delivered.
Arun Jayaram: And then sensory, in effect, is the ability to verify where the sand is going.
Arun Jayaram: at its core. And again, that's an answer product we've never had in hydraulic fracturing since its inception.
Arun Jayaram: Where did the sand go? I think of it not too different from an MWD log in some ways. You wouldn't drill a well without an MWD log of where the bit went, where the wellbore is. And quite frankly, you know...
Arun Jayaram: Why would you not want to know, and how is that not part of the solution? Where did the sand go, since that's the only really active ingredient in, you know, creating production? And so I think we have, together, you've created sort of the...
and David Coleman. Thank you. Thank you.
Arun Jayaram: the control and the verification around where did the sand go in the wellbore and because of that
Now, when you can change design, you know that the...
Arun Jayaram: change design actually got delivered as well. I think this is something we've never been able to know or control in the frack business before.
Speaker Change: I hope that's helpful. Yep, and just maybe the commercial model on how you're pricing this kind of service.
Speaker Change: Yeah, it's priced for sure. I'm not going to get into the details here, but it's, yes, it's a, look, it's a valuable solution. It is, yes, standalone, separate from the FRAC service delivery.
And that's really all I'm going to say about that.
Speaker Change: Fair enough. Jeff, my follow-up, I was wondering if you could give us some thoughts on what you're seeing offshore. I believe about 50% of your international business is tied to offshore markets.
Speaker Change: Obviously, some white space concerns in the second half of the year, but any thoughts on how offshore revenues could trend industry-wide in 2025 and how would fare offshore in 2025?
Speaker Change: No, look, we have a strong business offshore, as you described, and I think that...
Speaker Change: You know, from our perspective, we don't see white space. What we see are, you know, rigs that move from market to market, which is not too unusual. We see quite a few FIDs sort of in the hopper as we get into...
Speaker Change: well early 25 and then even activity beginning even more so later in 25 into 26 and 27 so solid pipeline of growth internationally and part of that international growth that we see obviously will be tied to offshore and so
Speaker Change: Look, I think we'll fare well. I think that's going to be an important component of our international growth, save Mexico. And so, you know, I wouldn't over, over, over worry about the
Speaker Change: Yeah, white space, because that sort of occurs all the time, I think.
All right. Thanks a lot, Jeff.
Thank you.
Thank you.
Speaker Change: Our next question comes from Kurt Howley with Benchmark, you may proceed.
Kurt Howley: Hey, good morning everybody. Thanks for the time here this morning. I've got a question related to some of the dynamics at play, you know, with respect to the opportunity related to the power
Kurt Howley: generation, you know, sale of power in the Permian Basin, you know.
Speaker Change: Cut to the chase, right? You had one of your smaller competitors basically go out and buy some megawatts to sell power in the Permian. Is that something that's on your radar screen, Jeff? And if not specifically on your radar screen, you know, how do you think that plays out and is there an opportunity for Halliburton to participate?
Yeah, certainly it's on my radar screen and
Speaker Change: We are in that business today, you know, with VoltaGrid, and we have a front row seat. And so the exposure to that market through...
our participation, investment, and
Speaker Change: Stay tuned, but that's an area that is attractive to us and very consistent with our core competencies at Halliburton. We think we're aligned with and invested in, far and away, the largest player in that business today.
Speaker Change: Okay, that's great, appreciate that color. Now the follow-up as well, you referenced that you see an opportunity for Halliburton to generate an incremental, would you say, two and a half to maybe three billion dollars of revenue over the next couple of years predicated on, you know, three specific areas of focus. You know, can you just give us a sense as to, you know,
Speaker Change: You know, is that going to be with new products and technologies already in place and then with the adaptation or adoption of that or is it going to be continued incremental evolution of those technologies over time or some combination of both? Just looking for a little bit of incremental color on on how you see that evolving.
Yeah, fair enough, and I see that as, um...
Speaker Change: a continued drumbeat of technology development and introduction along with you know we do both on type M&A we're doing that all of the time but more targeted at these areas to create
Speaker Change: You know technology and integration of technology that I believe will
Speaker Change: be unique and continue to be unique in these spaces and so
You know it's
Speaker Change: We've talked about a few of them, we'll continue to talk about technology deliveries in this space.
Speaker Change: And we've been working at sort of the technology development for a few years, and so I think we're set up with sort of waves of technology over the next two to three years that will give us, you know, better opportunity to outgrow the market. They are businesses that we are in today, but I think we have a.
Speaker Change: We're positioned both technically and from a value proposition standpoint to, you know, deliver outsized growth.
Speaker Change: Great. Always appreciate the color, Jeff. Thank you. Oh, thank you.
Thank you.
Speaker Change: Our next question comes from Doug Becker with Capital One. You may proceed.
Thank you.
Speaker Change: The first quarter revenue declined a little bit sharper than we've seen recently.
Speaker Change: just want to get a little more color in which regions you see driving at the climb.
Speaker Change: Granted, some of those are obvious and just how you see the revenue progression.
Speaker Change: the rest of the year. It sounds like it will be a more gradual recovery over the course of the year rather than a sharp 2Q bump.
Speaker Change: So the the main drivers behind the reduction in revenue for Q1, I'll take it by division, it's probably clearer.
Speaker Change: Distinguished Ladies and Gentlemen, I will turn it over to Donovan to trade with us talk about Chipotle's food and a little bit about the Association of Cheap Foods and the shake soft drink and you will tell us a little bit about that.
Speaker Change: And then we had a particularly strong Q4 in D&E on the back of direct sales items of products. Some of it was in the Middle East, but in other regions as well. So these are the main drivers behind the revenue change, Q1 over Q4.
Speaker Change: Thank you. And maybe another one for you, Eric. Just wanted to get a little more color on the D and E operating margin outlook.
Speaker Change: Last year, up just a hair, had very strong margin improvements in 2023. We've had some product introductions that seem to be getting good traction. Is it reasonable to expect some margin improvement this year in the D&E segment versus last year?
Speaker Change: I think the way we're looking at the D&E margins for the year is basically fairly flat. So think about the D&E margins in 2025 as being in the relative same zip code as
Speaker Change: we had in 2024 overall. That's how we're looking at it now.
That makes sense. Thank you.
Speaker Change: Thank you. And as a reminder, to ask a question, please press star 11 on your telephone.
Stephen Gangaro: Our next question comes from Stephen Gangaro with CFEL. You may proceed.
Thanks, good morning everybody.
and David Coleman. Thank you.
Stephen Gangaro: Two, for me, the one, and I know Kurt brought up the power generation question, but I had a question around...
Stephen Gangaro: the cost of power to the to the frack fleets and
Speaker Change: And I know your alignment with VoltaGrid, but is there any concern around the power gen being pulled out of the oil patch in any large ways and then increasing kind of the underlying price for power to power e-fleets and how that kind of impacts the business?
You know
Speaker Change: may or may not fluctuate, but I think that, you know, operators will own that part of the business in terms of the contracting. From an availability standpoint, we're in a very good place with our current
Speaker Change: contracting in relationship with both the grids so I feel quite confident in the availability of power to us through that mechanism and so no I'm not particularly concerned about the power availability nor really the price of power I think that
The power is valuable.
Speaker Change: and I think that, you know, the value created by the entire package.
Speaker Change: is outside, so as a result, I think we're in a good place.
Speaker Change: strategically how we've gone about power as Halliburton and I think from a market standpoint, you know, if there is tightness in power, you know, I think we will be protected from that based on really decisions we made early on about how we would align around power.
Great, thanks. And my follow-up...
Speaker Change: We've heard from the folks over at Kimberlite Research that the sort of preference for frack fleets going forward is
skewed towards dual fuel over electric with kind of this
Speaker Change: Maybe 20, 25% of the respondents sort of talking about electric as sort of the go-to, which is sort of different than your mix. And I'm curious what you're hearing from customers, and this is probably related to sort of your customer mix versus others, but I'm curious what you're seeing from customers as far as preference for dual fuel versus electric and how that kind of aligns with your mix of assets.
Speaker Change: Look, we have continued deliveries for 2025, we have deliveries, I suspect we'll be planning deliveries for 2026, and we're extending the fleets that we have.
And so I am, you know, quite confident.
Thank you very much.
Speaker Change: And then the, you know, increased value creation that we see with AutoFrac and Sensory, you know, they really are, you know, becoming more and more important.
Great. Now, thanks for the call.
Speaker Change: Thank you. I would now like to turn the call back over to Jeff Miller for any closing remarks.
Speaker Change: Thank you, Josh. As we close the call today, let me wrap up with this.
Speaker Change: I'm excited about both the year ahead and the long term for Halliburton.
Speaker Change: We expect to execute our value proposition, deepen our leading and differentiated technology portfolio, and deliver incremental revenue through our growth engines. I'm committed to prioritizing cash flow, and I expect all of this results in a return of at least $1.6 billion of cash in 2025. I look forward to speaking with you next quarter. Thank you.
Speaker Change: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.
Speaker Change: There's a place I'd rather be Than be with you There's a place I'd rather be Than be with you There's a place I'd rather be Than be with you