HALLIBURTON CO

Organization

We are one of the world’s largest providers of products and services to the energy industry. We help our customers maximize asset value throughout the lifecycle of the reservoir from locating hydrocarbons and managing geological data, to drilling and formation evaluation, well construction and completion, and optimizing production throughout the life of the asset. Activity levels within our operations are significantly impacted by spending on upstream exploration, development, and production programs by major, national, and independent oil and natural gas companies. We report our results under two segments, the Completion and Production segment and the Drilling and Evaluation segment.

•Completion and Production delivers cementing, stimulation, specialty chemicals, intervention, pressure control, artificial lift, and completion products and services. The segment consists of Artificial Lift, Cementing, Completion Tools, Multi-Chem, Pipeline and Process Services, Production Enhancement, and Production Solutions. During the third quarter of 2024, we made a strategic decision to market for sale a portion of our chemical business.

•Drilling and Evaluation provides field and reservoir modeling, drilling, fluids, evaluation, and precise wellbore placement solutions that enable customers to model, measure, drill, and optimize their well construction activities. The segment consists of Baroid, Drill Bits and Services, Halliburton Project Management, Landmark Software and Services, Sperry Drilling, Testing and Subsea, and Wireline and Perforating.

The business operations of our segments are organized around four primary geographic regions: North America, Latin America, Europe/Africa/CIS, and Middle East/Asia. We have manufacturing operations in various locations, the most significant of which are in the United States, Malaysia, Singapore, and the United Kingdom. With over 48,000 employees, we operate in more than 70 countries around the world, and our corporate headquarters is in Houston, Texas.

Our value proposition is to collaborate and engineer solutions to maximize asset value for our customers. We work to achieve strong cash flows and returns for our shareholders by delivering technology and services that improve efficiency, increase recovery, and maximize production for our customers. Our strategic priorities are to:

• International: Allocate our capital to the highest return opportunities and increase our international growth in both onshore and offshore markets.

-North America: Maximize value by, among other things, utilizing our premium low-emissions Zeus electric fracturing systems, as well as automated and intelligent fracturing technologies, to drive higher margins through better pricing and increased efficiency.

-Digital: Continue to drive differentiation and efficiencies through the deployment and integration of digital and automation technologies, both internally and for our customers.

-Capital efficiency: Maintain our capital expenditures at approximately 6% of revenue while focusing on technological advancements and process changes that reduce our manufacturing and maintenance costs and improve how we move equipment and respond to market opportunities.

-Shareholder returns: Return over 50% of annual free cash flow to shareholders through dividends and share repurchases.

• Sustainability and energy mix transition: Continue to:

• Leverage the participants in Halliburton Labs to gain insight into developing value chains in the energy mix transition;

• Develop and deploy solutions to help lower the carbon intensity of our customers' businesses;

• Develop technologies and solutions to lower our emissions; and

• Participate in carbon capture, utilization, and storage, hydrogen, and geothermal projects globally.

The following charts depict the revenue split between our two operating segments and our four primary geographic regions for the three months ended September 30, 2024.

Market conditions

Oil prices declined in the third quarter of 2024 from the second quarter of 2024 as a result of demand concerns coupled with increased supply. While easing inflationary pressure has reduced macroeconomic uncertainty, risks associated with trade tensions and geopolitical unrest in the Middle East and the Russia-Ukraine conflict continue to be major sources of volatility for the oil and natural gas markets.

During the third quarter of 2024, the U.S. active rig count declined to its lowest level since the first quarter of 2022 as both oil and gas basins saw declines. The international rig count continued to decline in the third quarter of 2024 from the second quarter of 2024 driven by Asia-Pacific, Latin America, and Europe.

Globally, we continue to be impacted by extended supply chain lead times for the supply of select raw materials. We monitor market trends and work to mitigate cost impacts through economies of scale in global procurement, technology modifications, and efficient sourcing practices. Also, while we have been impacted by inflationary cost increases, primarily related to chemicals, cement, and logistics costs, we generally try to pass much of those increases on to our customers and we believe we have effective solutions to minimize their operational impact.

Financial results

The following graph illustrates our revenue and operating margins for each operating segment for the third quarter of 2023 and 2024.

During the third quarter of 2024, we generated total company revenue of $5.7 billion, a 2% decrease as compared to the third quarter of 2023. We reported operating income of $871 million, including impairments and other charges of $116 million, in the third quarter of 2024, a decrease of 16% when compared to the third quarter of 2023.

Our Completion and Production segment revenue decreased 5% in the third quarter of 2024 as compared to the third quarter of 2023. The decrease in revenue was largely driven by decreased stimulation activity in the Western Hemisphere and lower completion tool sales in the Gulf of Mexico, the Caspian Area and the North Sea. Partially offsetting these decreases were increased pressure pumping services in Canada, the Gulf of Mexico, and the Middle East, improved cementing activity in Latin America and Europe, and higher completion tool sales in Saudi Arabia.

Our Drilling and Evaluation segment revenue increased 3% in the third quarter of 2024 as compared to the third quarter of 2023, primarily due to increased drilling services in the Western Hemisphere and Middle East/Asia, improved project management activity in Ecuador, Mexico and Kuwait, and higher testing services in Middle East/Asia and Latin America. Partially offsetting these improvements were decreased fluid services in the Gulf of Mexico and Eastern Hemisphere, and lower wireline activity in the Gulf of Mexico and Africa.

Our North America revenue decreased 9% in the third quarter of 2024, as compared to the third quarter of 2023. This decline was primarily driven by lower pressure pumping services and decreased well intervention services in U.S. land. Additionally, there was decreased activity across multiple product services lines in the Gulf of Mexico partly due to the impacts from hurricanes. Partially offsetting these declines were improved pressure pumping services in Canada and the Gulf of Mexico, along with increased drilling services in the region.

Internationally, revenue increased 4% in the third quarter of 2024, as compared to the third quarter of 2023, largely driven by increased activity across multiple product service lines in Kuwait, improved well construction activity in Mexico and United Arab Emirates, and higher pressure pumping services and completion tool sales in the Middle East. Partially offsetting these improvements were decreased completion tool sales and lower stimulation activity in Latin America.

Our operating performance and liquidity are described in more detail in “Liquidity and Capital Resources” and “Business Environment and Results of Operations.”

Sustainability and Energy Mix Transition

In 2021, we announced our target to achieve a 40% reduction in our Scope 1 and 2 emissions by 2035 from the 2018 baseline. At the same time, we support our customers in their emissions reduction efforts by continuously developing and deploying goods and services that are accretive to their goals as well as ours. As the energy mix transition unfolds, we seek to apply our expertise and resources in growth sectors adjacent to our traditional oilfield services space, including carbon capture, utilization, and storage, hydrogen, and geothermal. Finally, we will continue to focus on accelerating the success of clean tech start-ups via Halliburton Labs, which also allows us to participate in the energy mix transition at relatively low risk by investing our expertise, resources, and team without a significant outlay of capital while we learn where we can strategically engage new markets. As of September 30, 2024, Halliburton Labs had 33 participating companies and alumni.

Cybersecurity Incident

On August 21, 2024, we became aware that an unauthorized third party gained access to certain of our systems, as previously disclosed in our Form 8-Ks filed with the Securities and Exchange Commission on August 23, 2024 and September 3, 2024. The incident caused disruptions and limitation of access to portions of our business applications supporting aspects of our operations and corporate functions. As we previously disclosed, we know the unauthorized third party exfiltrated information from our systems. We will continue to incur certain expenses related to our response to and resolution of this incident. We believe the incident has not had, and is not reasonably likely to have, a material impact on the Company’s financial condition or results of operations.