HALLIBURTON CO

Note 1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements were prepared using United States

generally accepted accounting principles (U.S. GAAP) for interim financial information and the instructions to Form 10-Q and

Regulation S-X. Accordingly, these financial statements do not include all information or notes required by U.S. GAAP for

annual financial statements and should be read together with our 2024 Annual Report on Form 10-K.

Our accounting policies are in accordance with U.S. GAAP. The preparation of financial statements in conformity with

these accounting principles requires us to make estimates and assumptions that affect:

•the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the

financial statements; and

•the reported amounts of revenue and expenses during the reporting period.

Ultimate results could differ from our estimates.

In our opinion, thecondensed consolidated financial statements included herein contain all adjustments necessary to

present fairly our financial position as of March 31, 2025, the results of our operations for the three months ended March 31,

2025 and 2024, and our cash flows for thethree months ended March 31, 2025 and 2024. Such adjustments are of a normal

recurring nature. In addition, certain reclassifications of prior period balances have been made to conform to the current period

presentation.

The results of our operations for thethree months ended March 31, 2025 may not be indicative of results for the full

year.

Note 2. Impairments and Other Charges

The following table presents various pre-tax charges we recorded during thethree months ended March 31, 2025,

which are reflected within “Impairments and other charges” on ourcondensed consolidated statements of operations.

Of the $356 million pre-tax charges recorded during thethree months ended March 31, 2025,$201 million was

attributable to our Completion and Production segment,$85 million was attributable to our Drilling and Evaluation segment,

and$70 million was attributable to Corporate and other.

During thefirst quarter of 2025, we recorded$107 million in severance expense as we rationalized global headcount to

align with activity levels and$104 million of additional impairment associated with a strategic decision to market for sale a

portion of our chemical business. Additionally, we recognized a$53 million impairment related to facility closures and lease

terminations. Other charges of$92 million is primarily related to legacy environmental remediation cost estimate increases.

During thethree months ended March 31, 2024, there wereno amounts recorded in impairments and other charges.

Note 3. Business Segment Information

We operate undertwo divisions, which form the basis for thetwo operating segments we report: the Completion and

Production segment and the Drilling and Evaluation segment. Our equity in earnings and losses of unconsolidated affiliates that

are accounted for using the equity method of accounting are included within cost of services and cost of sales on our statements

of operations, which is part of operating income of the applicable segment.

Our company’s chief operating decision maker (CODM) is Jeffrey Miller, Chairman of the Board, President and Chief

Executive Officer. Our CODM assesses the performance of thetwo divisions and makes resource allocation decisions based on

divisional revenue and operating income.

The following table presents information on our business segments.

The following table presents significant segment expenses, which represent the difference between segment revenue

and segment operating income and are regularly reviewed by our CODM.

Other segment operating expenses primarily consist of maintenance, overhead allocations, facilities cost, and other

miscellaneous costs.

The following table presents total assets by segment.

Note 4. Revenue

Revenue is recognized based on the transfer of control or our customers’ ability to benefit from our services and

products in an amount that reflects the consideration we expect to receive in exchange for those services and products. Mostof

our service and product contracts are short-term in nature. In recognizing revenue for our services and products, we determine

the transaction price of purchase orders or contracts with our customers, which may consist of fixed and variable consideration.

We also assess our customers’ ability and intention to pay, which is based on a variety offactors, including our historical

payment experience with, and the financial condition of, our customers. Payment terms and conditions vary by contract type,

although terms generally include a requirement of payment within 20 to 60 days. Other judgments involved in recognizing

revenue include an assessment of progress towards completion of performance obligations for certain long-term contracts,

which involve estimating total costs to determine our progress towards contract completion and calculating the corresponding

amount of revenue to recognize.

Disaggregation of revenue

We disaggregate revenue from contracts with customers into types of services or products, consistent with ourtwo

reportable segments, in addition to geographical area. Based on the location of services provided and products sold, 39% and

42% ofour consolidated revenue was from the United States for thethree months ended March 31, 2025 and 2024,

respectively. No other country accounted for more than 10% of our revenue for those periods.

The following table presents information on our disaggregated revenue.

Contract balances

We perform our obligations under contracts with our customers by transferring services and products in exchange for

consideration. The timing of our performance often differs from the timing of our customers’ payment, which results in the

recognition of receivables and deferred revenue. Deferred revenue represents advance consideration received from customers

for contracts where revenue is recognized on future performance of service. Deferred revenue, as well as revenue recognized

during the period relating to amounts included as deferred revenue at the beginning of the period, was not material to our

condensed consolidated financial statements.

Transaction price allocated to remaining performance obligations

Remaining performance obligations represent firm contracts for which work has not been performed and future

revenue recognition is expected. We have elected the practical expedient permitting the exclusion of disclosing remaining

performance obligations for contracts that have an original expected duration ofone year or less. We have some long-term

contracts related to software and integrated project management services such as lump sum turnkey contracts. For software

contracts, revenue is generally recognized over the duration of the contract period when the software is considered to be a right

to access our intellectual property. For lump sum turnkey projects, we recognize revenue over time using an input method,

which requires us to exercise judgment. Revenue allocated to remaining performance obligations for these long-term contracts

is not material.

Receivables

As of March 31, 2025,33% of our net trade receivables were from customers in the United States and 9% was from

customers in Mexico. As of December 31, 2024,30% of our net trade receivables were from customers in the United States and

11% were from customers in Mexico. Receivables from our primary customer in Mexico accounted for approximately 7% and

8% of our total receivables as of March 31, 2025 and December 31, 2024, respectively. While we have experienced payment

delays from our primary customer in Mexico, the amounts are not in dispute and we have not historically had, and we do not

expect any material write-offs due to collectability of receivables from this customer. Furthermore, we have entered into credit

default swaps (CDSs) with third-party financial institutions that have an aggregate notional amount outstanding as of March 31,

2025 of$1.0 billion related to borrowings provided by the financial institutions to one of our primary customers in Mexico, of

which, portions of the proceeds were utilized by this customer to pay certain of our outstanding receivables. See Note 11 for

further information on these CDSs. No country other than the United States and no single customer accounted for more than

10% of our net trade receivables at those dates.

We have risk of delayed customer payments and payment defaults associated with customer liquidity issues. We

routinely monitor the financial stability of our customers and employ an extensive process to evaluate the collectability of

outstanding receivables. This process, which involves judgment and estimates, includes analysis of our customers’ historical

time to pay, financial condition and various financial metrics, debt structure, credit ratings, and production profile, as well as

political and economic factors in countries of operations and other customer-specific factors.

Note 5. Inventories

Inventories consisted of the following:

Note 6. Accounts Payable

We havean agreement with a third party that allows our participating suppliers to finance payment obligations from us

with designated third-party financial institutions who act as our paying agent. We have generally extended our payment terms

with suppliers to 90 days. A participating supplier may request a participating financial institution to finance one or more of our

payment obligations to such supplier prior to the scheduled due date thereof at a discounted price. We are not required to

provide collateral to the financial institutions.

Our obligations to participating suppliers, including amounts due and scheduled payment dates, are not impacted by

thesuppliers’ decisions to finance amounts due under these financing arrangements. Ouroutstanding payment obligations under

these agreements were $292 million as of March 31, 2025, and$317 million as of December 31, 2024, and are included in

accounts payable on thecondensed consolidated balance sheets.

Note 7. Income Taxes

During thethree months ended March 31, 2025, we recorded a total income taxprovision of $103 million on a pre-tax

income of$306 million, resulting in an effective tax rate of 33.7% for the quarter. The effective tax rate for this period was

primarily impacted by the additional valuation allowance recognized on our deferred tax assets, which resulted from the pre-tax

$356 million of impairments and other charges. During thethree months ended March 31, 2024, we recorded a total income tax

provision of$178 million on a pre-tax income of$787 million, resulting in an effective tax rate of 22.6% for the quarter.

Our tax returns are subject to review by the taxing authorities in the jurisdictions where we file tax returns. In most

cases we are no longer subject to examination by tax authorities for years before 2013. The only significant operating

jurisdiction that has tax filings under review or subject to examination by the tax authorities is the United States. The United

States federal income tax filings fortax years 2016 through 2023 are currently under review or remain open for review by the

Internal Revenue Service (the IRS).

As of March 31, 2025, the primary unresolved issue for the IRS audit for 2016 relates to the classification of the

$3.5 billion ordinary deduction that we claimed for the termination fee we paid to Baker Hughes in the second quarter of 2016

for which we received a Notice of Proposed Adjustment (NOPA) from the IRS on September 28,2023. We regularly assess the

likelihood of adverse outcomes resulting from tax examinations to determine the adequacy of our tax reserves, and we believe

our income tax reserves are appropriately provided for all open tax years. We do not expect a final resolution of this issue in the

next twelve months.

Based on the information currently available, we do not anticipate a significant increase or decrease to our tax

contingencies within the next twelve months.

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU)

2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires greater disaggregation of

income tax disclosures. The new standard requires additional information to be disclosed with respect to the income tax rate

reconciliation and income taxes paid disaggregated by jurisdiction. This ASU should be applied prospectively for fiscal years

beginning after December 15, 2024, with retrospective application permitted. The Company will adopt this standard for the

Form 10-K for the year ending December 31, 2025, on a prospective basis. The Company is currently evaluating these new

disclosure requirements and does not expect the adoption to have a material impact.

Note 8. Shareholders' Equity

The following tables summarize our shareholders’ equity activity for thethree months ended March 31, 2025 and

March 31, 2024, respectively:

Our Board of Directors has authorized a program to repurchase our common stock from time to time. We repurchased

9.6 million shares of our common stock under the program during thethree months ended March 31, 2025 for$250 million.

Approximately$2.8 billion remained authorized for repurchases under the program as of March 31, 2025. From the inception

of this program in February of 2006 through March 31, 2025, we repurchased 293 million shares of our common stock for a

total cost of approximately$11.3 billion. We repurchased 7.0 million shares of our common stock under the program during the

three months ended March 31, 2024 for approximately$250 million.

Accumulated other comprehensive loss consisted of the following:

Note 9. Commitments and Contingencies

The Company is subject to various legal or governmental proceedings, claims or investigations, including personal

injury, property damage, environmental, intellectual property, commercial, tax, and other matters arising in the ordinary course

of business, the resolution of which, in the opinion of management, will not have a material adverse effect on our consolidated

results of operations or consolidated financial position. There is inherent risk in any legal or governmental proceeding, claim or

investigation, and no assurance can be given as to the outcome of these proceedings.

Guarantee arrangements

In the normal course of business, we have in place agreements with financial institutions under which approximately

$2.7 billion of letters of credit, bank guarantees, or surety bonds were outstanding as of March 31, 2025. Some of the

outstanding letters of credit have triggering events that would entitle a bank to require cash collateralization. None of these off-

balance sheet arrangements has, nor is any likely to have, a material effect on our consolidated financial statements.

Note 10. Income per Share

Basic income or loss per share is based on the weighted average number of common shares outstanding during the

period. Diluted income per share includes additional common shares that would have been outstanding if potential common

shares with a dilutive effect had been issued. Antidilutive securities represent potentially dilutive securities which are excluded

from the computation of diluted income or loss per share as their impact was antidilutive.

A reconciliation of the number of shares used for the basic and diluted income per share computations is as follows:

Note 11. Fair Value of Financial Instruments

The carrying amount of cash and equivalents, receivables, and accounts payable, as reflected in thecondensed

consolidated balance sheets, approximates fair value due to the short maturities of these instruments.

The carrying amount and fair value of our total debt is as follows:

The total fair value of our debt increased during 2025 primarily as a result oflower yields.

Our debt categorized within level 1 on the fair value hierarchy is calculated using quoted prices in active markets for

identical liabilities with transactions occurring on the lasttwo days of period-end. Our debt categorized within level 2 on the

fair value hierarchy is calculated using significant observable inputs for similar liabilities where estimated values are

determined from observable data points on our other bonds and on other similarly rated corporate debt or from observable data

points of transactions occurring prior totwo days from period-end and adjusting for changes in market conditions. Differences

between the periods presented in our level 1 and level 2 classification of our long-term debt relate to the timing of when third-

party market transactions on our debt are executed. We haveno debt categorized within level 3 on the fair value hierarchy.

Credit risk

We have entered into CDSs with third-party financial institutions that had an aggregate notional amount outstanding as

of March 31, 2025 of$1.0 billion related to borrowings provided by the financial institutions to one of our primary customers in

Mexico, of which a portion of the proceeds were then utilized by this customer to pay certain of our outstanding receivables.

Approximately$155 million of the outstanding amount of the CDSs reduces monthly over its remaining 11-month term and

$171 million reduces monthly over its remaining 15-month term. The remaining$717 million outstanding amount reduces

monthly over its remaining 18-month term.

The fair value of the derivative liabilities was not material to our financial condition as of March 31, 2025.

Note 12. New Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03 (Subtopic 220-40), “Disaggregation of Income Statement

Expenses” (DISE), which requires additional disclosure of certain expense captions presented on the face of the Company’s

income statement as well as disclosures about selling expenses. ASU 2024-03 is effective for the Company’s annual reporting

periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, and should be

applied on a prospective or retrospective basis, with early adoption permitted. We are currently evaluating the effect that

adoption of ASU 2024-03 will have on our disclosures.