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 September 30, 2025, the results of our operations for the three and nine months ended

September 30, 2025 and 2024, and our cash flows for thenine months ended September 30, 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 and nine months ended September 30, 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 and nine months ended

September 30, 2025 and 2024, which are reflected within “Impairments and other charges” on ourcondensed consolidated

statements of operations.

During thethree months ended September 30, 2025 and 2024, we rationalized global headcount to align with activity

levels and recorded severance expense of$169 million and$63 million, respectively. Additionally, we recognized an

impairment of assets held for sale of$96 million and$49 million, respectively, associated with a strategic decision to market

for sale a portion of our chemical business.

During thethree months ended September 30, 2025, we wrote off various fixed and other assets, primarily related to

our North America Land operations, for a total of$115 million.

Offsetting these charges during thethree months ended September 30, 2025, were a release of accruals related to a

cybersecurity incident from the third quarter of 2024 for$10 million and a gain of$6 million related to an equity investment.

The charges for the nine months ended September 30, 2025, included$276 million of severance costs,$200 million of

an impairment of assets held for sale related to our chemical business, fixed and other asset write-offs of$115 million, a $53

million impairment associated with facility closures and lease terminations, and$120 million of other charges, primarily related

to legacy environmental remediation cost estimate increases. The charges for the nine months ended September 30, 2024,

included$63 million of severance costs, a$49 million impairment of assets held for sale,$35 million in expenses related to a

cybersecurity incident, and$12 million classified as other, and were partially offset by a$43 million gain related to a fair value

adjustment on an equity investment.

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

41% ofour consolidated revenue was from the United States for thenine months ended September 30, 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 September 30, 2025,32% of our net trade receivables were from customers in the United States and 12% were

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 11% and 8% of our total receivables as of September 30, 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 September 30, 2025 of$750 million, compared to an aggregate notional amount outstanding

as of December 31, 2024 of$739 million, 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 12 for further information on these CDSs. No countries other than the United States and Mexico, andno

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 $276 million as of September 30, 2025, and$317 million as of December 31, 2024, and are included in

accounts payable on thecondensed consolidated balance sheets.

Note 7. Debt

On August 18, 2025, we entered into a new$3.5 billion five‑year revolving credit facility, which replaced our $3.5

billion revolving credit facility established in April 2022. Therevolving credit facility is for general working capital purposes

and expires on August 16, 2030. The full amount of the revolving credit facility was available as of September 30, 2025.

Note 8. Income Taxes

During thethree months ended September 30, 2025, we recorded a total income taxprovision of$199 million on a

pre-tax income of$219 million, resulting in an effective tax rate of 90.9% for the quarter. The effective tax rate for this period

was primarily impacted by the additional valuation allowance recognized in the amount of$125 million on our deferred tax

assets, along with the pre-tax$392 million of impairments and other charges, and the$23 million impairment of an investment

in Argentina. During the three months ended September 30, 2024, we recorded a total income taxprovision of$154 million,

which included a partial release of a valuation allowance on our deferred tax assets in the amount of$41 million, on a pre-tax

income of$734 million, resulting in an effective tax rate of 21.0% for the quarter.

During thenine months ended September 30, 2025, we recorded a total income taxprovision of $433 million on a pre-

tax income of$1.1 billion, resulting in an effective tax rate of 38.1% for the period. The effective tax rate for this period was

primarily impacted by the additional valuation allowance recognized in the amount of $125 million on our deferred tax assets,

along with the pre-tax$748 million of impairments and other charges, andthe$23 million impairment of an investment in

Argentina. During thenine months ended September 30, 2024, we recorded a total income taxprovision of$539 million, which

included a partial release of a valuation allowance on our deferred tax assets in the amount of$41 million on a pre-tax income

of$2.4 billion, resulting in an effective tax rate of 22.1% for the period.

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. As of

September 30, 2025, 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 September 30, 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 and has implemented custom reporting processes and

internal workflows to support the new disclosure requirements. The adoption of ASU 2023-09 is not expected to have a

material impact on our consolidated financial statements.

On July 4, 2025, President Donald Trump signed into law the “One Big Beautiful Bill Act,” which includes federal tax

law revisions that may affect the Company’s ability to utilize Foreign Tax Credits (FTC). Companies are required to recognize

the effects of changes in tax laws in the period in which the new legislation is enacted. As of September 30, 2025, the Company

reassessed the realizability of its FTC carryforwards. Based on updated forecasts of future taxable income, tax planning

strategies, and changes to tax law that impact FTC utilization, the Company determined that it is more likely than not that a

portion of its FTC carryforwards would not be realized. As a result, the Company recorded an additional valuation allowance of

$125 million against its FTC deferred tax assets during the three months ended September 30, 2025.

Note 9. Shareholders' Equity

The following tables summarize our shareholders’ equity activity for thethree and nine months ended September 30,

2025 and September 30, 2024, respectively:

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

11.3 million shares of our common stock under the program during thethree months ended September 30, 2025 for $252

million. Approximately$2.3 billion remained authorized for repurchases under the program as of September 30, 2025. From

the inception of this program in February of 2006 through September 30, 2025, we repurchased 317 million shares of our

common stock for a total cost of approximately$11.8 billion. We repurchased 6.2 million shares of our common stock under

the program during the three months ended September 30, 2024 forapproximately$198 million.

Accumulated other comprehensive loss consisted of the following:

Note 10. Commitments and Contingencies

The Company is subject to various other legal or governmental proceedings, claims orinvestigations, 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

$2.9 billion of letters of credit, bank guarantees, or surety bonds were outstanding as of September 30, 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 arrangementshas, nor is likely to have, a material effect on our consolidated financial statements.

Note 11. 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 12. 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:

In the first nine months of 2025, the total fair value of ourdebt increased 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 September 30, 2025 of$750 million, compared to an aggregate notional amount outstanding as of December 31, 2024 of

$739 million, 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$550

million of the outstanding amount of the CDSs reduces monthly over its remaining 12-month term and$107 million reduces

monthly over its remaining 9-month term. The remaining$93 million outstanding amount reduces monthly over its remaining

5-month term.

The fair value of the derivative liabilities was not material to our financial condition as of September 30, 2025.

Note 13. New Accounting Pronouncements

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

Expenses”, 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 continue to evaluate the effect that adoption of ASU

2024-03 will have on our disclosures.