Halliburton Company

10/24/2025 | Press release | Distributed by Public on 10/24/2025 10:14

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in
conjunction with the condensed consolidatedfinancial statements included in "Item 1. Financial Statements" contained herein.
EXECUTIVE OVERVIEW
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 approximately 47,000
employees,we operate in more than 70countries 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: Increase international growth in our directional drilling, unconventionals, well intervention, and
artificial lift businesses.
- North America: Maximize value by, among other things, increasing the utilization by our customers of our Zeus
electric fracturing platform and our iCruise rotary steerable systems, and incorporating automation technologies in
certain of our processes.
- Digital: Continue to drive differentiation and efficiencies through the deployment of digital and automation
technologies, both internally and for our customers.
- Capital efficiency: Maintain our capital expenditures at approximately 6% of revenue while utilizing technology and
targeted process improvements to enhance the effectiveness and efficiency of our utilization of capital.
- Shareholder returns: Return over 50% of annual free cash flow to shareholders through dividends and share
repurchases.
-Advance a Sustainable Energy Future: Continue to develop technologies and solutions to help lower our customers'
and our emissions intensity, participate in carbon capture, utilization, and storage, and geothermal projects globally,
and support Halliburton Labs early-stage company participants.
HAL Q3 2025FORM 10-Q| 17
Part I. Item 2| Executive Overview
The following chartsdepict the revenue split between our two operating segments and our four primary geographic
regions for the three months ended September 30, 2025.
Market conditions
Oil prices declined further in the third quarter of 2025 compared to the second quarter of 2025, as ongoing supply
additions from OPEC+ and non-OPEC producers weighed on the markets. While geopolitical unrest in the Middle East and the
Russia-Ukraine conflict remain persistent sources of volatility, the more pronounced influence this quarter came from weaker
global economic activity and cautious consumer spending, which tempered expectation for near-term demand.
In the United States, the active rig count declined modestly in the third quarter of 2025 compared to the second
quarter of 2025, with activity in oil basins continuing to soften while gas basins remained relatively stable. However, despite
the rig count decline, United States total liquidsproduction, as reported by the Energy Information Administration,reached an
all-time high in the third quarter of 2025. Internationally, rig count increased modestly in the third quarter of 2025, as declines
in Saudi Arabia were offset by rig additions elsewhere in the Middle East.
Since the end of the third quarter of 2025, the macro environment for oil and natural gas has remained volatile. Trade
tensions and tariffs continue to negatively impact the demand outlook, while the pace of supply growth has outstripped
expectations.
We continue to monitor and assess the impact of tariffs on goods being imported into the United States. Our global
supply chain organization continuously monitors market trends and works to mitigate those and other cost increases through
economies of scale in global procurement, technology modifications, and efficient sourcing practices. Globally, we continue to
be impacted by extended supply chain lead times for the supply of select raw materials. Also, while we have been impacted by
inflationary cost increases, 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.
HAL Q3 2025FORM 10-Q| 18
Part I. Item 2| Executive Overview
Financial results
The following graph illustrates our revenue and operating margins for each operating segment for the thirdquarter of
2024and 2025.
During the thirdquarter of 2025, we generated total company revenue of $5.6 billion, a 2% decreaseas compared to
the thirdquarter of 2024. We reported operating income of $356 million, including impairments and other charges of $392
million, in the thirdquarter of 2025, ascomparedto operating income of $871 millionin the thirdquarter of 2024, including
impairments and other charges of $116 million. The tariff impact on operating income for the thirdquarter of 2025 was
approximately $31 million and resulted primarily from tariffs imposed by the United States.
Our Completion and Production segment revenue decreased 2%in the thirdquarter of 2025as compared to the third
quarter of 2024. These results were largely driven by lower pressure pumping services in North America and reduced
completion tool sales in Latin America and the Middle East. Partially offsetting these decreases were increased stimulation
activity in Latin America and higher completion tool sales in Norway. Operating income was further adversely impacted by
lower activity and reduced pricing for stimulation activity in US Land.
Our Drilling and Evaluation segment revenue was relatively flatin the thirdquarter of 2025as compared to the third
quarter of 2024.Decreased drilling-related services in Latin America and lower activity across multiple product service lines in
Saudi Arabia were offset by increased drilling-related services in Europe. Operating income was further adversely impacted by
activity mix and mobilization costs in drilling-related services.
Our North America revenue was relatively flatin the thirdquarter of 2025as compared to the thirdquarter of 2024.
Lower pressure pumping services, decreased fluid services, and reduced artificial lift activity in US Land were offset by higher
completion tool sales and increased fluid services in the Gulf of America and higher drilling activity in US Land.
Internationally, revenue decreased 2%in the thirdquarter of 2025as compared to the thirdquarter of 2024, largely
driven by lower activity across multiple product service lines in Mexico and Saudi Arabia. Partially offsetting these decreases
were higher activity across multiple product service lines in Norway, improved fluid services in the Middle East and Argentina,
and higher pipeline services in Middle East/Asia.
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 MixTransition
In 2021, we announced our target to achieve a 40% reduction in our Scope 1 and 2 emissions by 2035 from the 2018
baseline. Wecontinueto execute our priorities to drive down our emissions intensity.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, 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 in new markets.As of September 30, 2025,
Halliburton Labs had 40 participating companies and alumni.
HAL Q3 2025FORM 10-Q| 19
Part I. Item 2| Liquidity and Capital Resources
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2025, we had $2.0 billionof cash and equivalents, compared to $2.6 billionof cash and
equivalents at December 31, 2024.
Significant sources and uses of cash during the first nine months of 2025
Sources of cash:
•Cash flows from operating activities were $1.8 billion. Working capital, which consists of receivables, inventories,
and accounts payable, had a negativeimpact of $111 million.
•We received $120 millionon the sale of an equity investment.
•We received $228 millionon the sale of investment securities.
Uses of cash:
•Capital expenditureswere $917 million.
•We repurchased 32.9 millionshares of our common stock for $757 million, which includes excise tax payment due
on 2024 share repurchases.
•We paid $436 millionof dividends to our shareholders.
•We paid $343 millionrelated to a purchase of an equity investment.
•We paid $175 millionto acquire businesses.
•We paid $128 millionon the purchase of investment securities.
Future sources and uses of cash
We manufacture most of our own equipment, which provides us with some flexibility to increase or decrease our
capital expenditures based on market conditions. We currently expect capital spending for 2025to be approximately6%of
revenue. However, we intend to reduce our capital expenditures in 2026 by 30%, to approximately $1.0 billion, in response to
the market conditions we expect to encounter. Despite this reduction, we believe this level of spending will enable continued
investment in our core strategic technologies and businesses, including the international expansion of our artificial lift, well
intervention, unconventionals, and drilling technologies.
While we maintain focus on liquidity and debt reduction, we are also focused on providing cash returns to our
shareholders. Our quarterly dividend rate is $0.17per common share, or approximately $144 million. In 2023, our Board
approved a capital return framework with a goal of returning at least 50% of our annual free cash flow to shareholders through
dividends and share repurchases and we expect our returns to shareholders will be in line with our capital return framework for
2025.
Wemay utilize share repurchases as part of our capital return framework. Our Board of Directors has authorized a
program to repurchase our common stock from time to time. We repurchased 11.3 millionshares of common stock during the
third quarter of 2025under this program. Approximately $2.3 billionremained authorized for repurchases as of September 30,
2025and may be used for open market and other share purchases.
During 2023, we began our migration to SAP S4 which we expect to complete in thefourth quarter of 2026. During
the nine months ended September 30, 2025, we incurred $112 millionin expense on our SAP S4 migration. Due to the
extension of the project, we currently expect the estimated total cost will be approximately $40 million per quarter going
forward. We believe the new system will provide important efficiency benefits, cost savings, enhanced visibility to our
operations, and advanced analytics that will benefit us and our customers.
Other factors affecting liquidity
Financialcondition in current market.As of September 30, 2025, we had $2.0 billionof cash and equivalents and $3.5
billionof available committed bank credit under a new revolving credit facilityexecuted on August 18, 2025, with an
expiration date of August 16, 2030. We believe we have a manageable debt maturity profile, with approximately $472 million
coming due beginning in 2025through 2027, with the majority due in 2025. Furthermore, we have no financial covenants or
material adverse change provisionsin our bank agreements, and our debt maturities extend over a long period of time. We
believe our cash on hand, cash flows generated from operations, and our available credit facility will provide sufficient liquidity
to address the challenges and opportunities of the current market and our expected global cash needs, including capital
expenditures, working capital investments, shareholder returns, if any, debt repurchases, if any, and scheduled interest and
principal payments.
HAL Q3 2025FORM 10-Q| 20
Part I. Item 2| Liquidity and Capital Resources
Guarantee agreements.In the normal course of business, we have 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;
however, none of these triggering events have occurred. As of September 30, 2025, we had no material off-balance sheet
liabilities and were not required to make any material cash distributions to our unconsolidated subsidiaries.
We have entered into CDSs with third-party financial institutions that have an aggregate notional amount outstanding
as of September 30, 2025of $750 million, compared to an aggregate notional amount outstanding as of December 31, 2024of
$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. Approximately $550
millionof the outstanding amount of the CDSs reduces monthly over its remaining 12-month term and $107 millionreduces
monthly over its remaining 9-month term. The remaining $93 million outstanding amount reduces monthly over its remaining
5-month term.
Credit ratings.Our credit ratings with Standard & Poor's remain BBB+ for our long-term debt and A-2 for our short-
term debt, with a stable outlook. Our credit ratings with Moody's Investors Service remain A3 for our long-term debt and P-2
for our short-term debt, with a stable outlook.
Customer receivables.In line with industry practice, we bill our customers for our services in arrears and are,
therefore, subject to our customers delaying or failing to pay our invoices. In weak economic environments, we may experience
increased delays and failures to pay our invoices due to, among other reasons, a reduction in our customers' cash flow from
operations and their access to the credit markets, as well as unsettled political conditions.
Receivables from our primary customer in Mexico accounted for approximately 11% of our total receivables as of
September 30, 2025. 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.
HAL Q3 2025FORM 10-Q| 21
Part I. Item 2| Business Environment and Results of Operations
BUSINESS ENVIRONMENT AND RESULTS OF OPERATIONS
We operate in more than 70countriesthroughout the world to provide a comprehensive range of services and products
to the energy industry. Our revenue is generated from the sale of services and products to major, national, and independent oil
and natural gas companies worldwide. The industry we serve is highly competitive with many substantial competitors in each
segment of our business. During the first ninemonths of 2025, based on the location of the services provided and products sold,
39%of our consolidated revenue was from the United States, compared to 41%of our consolidated revenue from the United
States in the first ninemonths of 2024. No other country accounted for more than 10% of our revenuefor those periods.
Activity within our business segments is significantly impacted by spending on upstream exploration, development, and
production programs by our customers. Also impacting our activity is the status of the global economy, which impacts oil and
natural gas consumption.
Some of the more significant determinants of current and future spending levels of our customers are oil and natural
gas prices, our customers' expectations about future prices, global oil supply and demand, the impact on natural gas supply and
demand in North America of electrification and data centers power requirements, completions intensity, the world economy, the
availability of capital, government regulation, and global stability, which together drive worldwide drilling and completions
activity. We expect that many of our customers in North America will continue their strategy of operating within their cash
flows and generating returns rather than prioritizing production growth. Lower oil and natural gas prices usually translate into
lower exploration and production budgets and lower rig count, while the opposite is usually true for higher oil and natural gas
prices. Our financial performance is therefore significantly affected by oil and natural gas prices and worldwide rig activity,
which are summarized in the tables below.
The table below shows the average prices for West Texas Intermediate (WTI) crude oil, United Kingdom Brent crude
oil, and Henry Hub natural gas.
Three Months Ended
Year Ended
September 30,
December 31,
2025
2024
2024
Oil Price - WTI (1)
$65.74
$76.24
$76.55
Oil Price - Brent (1)
68.97
79.84
80.53
Natural Gas Price - Henry Hub (2)
3.03
2.11
2.19
(1)
Oil prices measured in dollars per barrel.
(2)
Natural gas price measured in dollars per million British thermal units (Btu), or MMBtu.
The historical average rig counts based on the weekly Baker Hughes rig count data were as follows:
Three Months Ended
Nine Months Ended
Year Ended
September 30,
September 30,
December 31,
2025
2024
2025
2024
2024
US Land
US Offshore
Canada
North America
International (1)
1,080
1,150
1,086
1,171
1,162
Worldwide Total
1,798
1,946
1,826
1,959
1,948
(1)
Historical average rig counts shown are based on data provided by Baker Hughes, which included retroactive
changes to international rig counts previously reported.
HAL Q3 2025FORM 10-Q| 22
Part I. Item 2| Business Environment and Results of Operations
Business outlook
Geopolitical tensions in the Middle East and the Russia-Ukraine conflict continue to cause high volatility in oil
markets. Additionally, the unwinding of OPEC+ supply cuts and tempered demand growth expectations due to trade tensions
contributed to decreases in the average WTI and United Kingdom Brent crude oil prices. As of October 21, 2025, WTI crude oil
prices had decreased by approximately 12% since the end of the second quarter of 2025. In response to these factors, we have
seen customers reduce their expected spend on oil and gas exploration and production activities and engage in other cost-cutting
activities, which has caused us to lower our expectations of activity over the short to medium term.
We expect our full year 2025 international revenue to decrease year over year primarily driven by further activity
reductions in Saudi Arabia and Mexico. We continue to expect revenue growth in Brazil and Norway, as well as offshore
frontier basins, to partially offset these reductions. We also expect North America full year 2025 revenue to decline year over
year driven by lower drilling and completion activity and pricing pressure. While increases in gas activity are likely to absorb
some service capacity in North America this year, it is unlikely to offset the decreases in oil-directed activity. To address the
softness in the market, in the third quarter of 2025, we reduced our variable and fixed cash costs to size our business
accordingly, which we expect will save us approximately $100 million per quarter going forward. Furthermore, we will
continue to idle, relocate, or retire equipment that does not meet our return thresholds and will remain focused on generating
free cash flow and returns, and capital discipline.
Despite the softening market described above, we believe the combination of long-cycle international investment and
emerging structural demand for natural gas driven by data centers, electrification, and power reliability, positions our business
for durable growth over the medium and long term. Additionally, we believe increased investment in existing and new sources
of oil and natural gas production is needed to address future demand. This will necessitate production from conventional and
unconventional, deep-water and shallow-water, and short and long-cycle projects. We expect that increased oil and natural gas
production requirements will in turn create demand for our products and services.
HAL Q3 2025FORM 10-Q| 23
Part I. Item 2| Results of Operations in 2025compared to 2024(QTD)
RESULTS OF OPERATIONS IN 2025COMPARED TO 2024
Three Months Ended September 30, 2025Compared with Three Months Ended September 30, 2024
Three Months Ended
September 30,
Favorable
Percentage
Millions of dollars
2025
2024
(Unfavorable)
Change
Revenue:
By operating segment:
Completion and Production
$3,223
$3,299
$(76)
(2)%
Drilling and Evaluation
2,377
2,398
(21)
(1)
Total revenue
$5,600
$5,697
$(97)
(2)%
By geographic region:
North America
$2,364
$2,386
$(22)
(1)%
Latin America
1,053
(57)
(5)
Europe/Africa/CIS
Middle East/Asia
1,412
1,536
(124)
(8)
Total revenue
$5,600
$5,697
$(97)
(2)%
Operating income:
By operating segment:
Completion and Production
$514
$669
$(155)
(23)%
Drilling and Evaluation
(58)
(14)
Total operations
1,075
(213)
(20)
Corporate and other
(64)
(60)
(4)
(7)
SAP S4 upgrade expense
(50)
(28)
(22)
(79)
Impairments and other charges
(392)
(116)
(276)
n/m
Total operating income
$356
$871
$(515)
(59)%
n/m = not meaningful
Operating Segments
Completion and Production
Completion and Production revenue in the thirdquarter of 2025was $3.2 billion, a decreaseof $76 million, or 2%,
when compared to the thirdquarter of 2024. Operating income in the thirdquarter of 2025was $514 million, a decreaseof $155
million, or 23%, when compared to the thirdquarter of 2024. These results were largely driven by lower pressure pumping
services in North America and reduced completion tool sales in Latin America and the Middle East. Partially offsetting these
decreases wereincreased stimulation activity in Latin America and higher completion tool salesin Norway. Operating income
was further adversely impacted by lower activity and reduced pricing for stimulation activity in US Land.
Drilling and Evaluation
Drilling and Evaluation revenue in the thirdquarter of 2025was $2.4 billion, a decreaseof $21 million, or relatively
flat, when compared to the thirdquarter of 2024. Operating income in the thirdquarter of 2025was $348 million, a decreaseof
$58 million, or 14%, when compared to the thirdquarter of 2024. Decreaseddrilling-relatedservices in Latin America and
lower activity across multiple product service lines in Saudi Arabia were offset by increased drilling-related services in Europe.
Operating income was furtheradversely impactedby activity mix and mobilization costs in drilling-related services.
Geographic Regions
North America
North America revenue in the thirdquarter of 2025was $2.4 billion, relatively flat,as compared to the thirdquarter of
2024. Lower pressure pumping services, decreased fluid services, and reduced artificial lift activity in US Land were offset by
higher completion tool sales and increased fluid services in the Gulf of America and higher drilling activity in US Land.
HAL Q3 2025FORM 10-Q| 24
Part I. Item 2| Results of Operations in 2025Compared to 2024 (QTD)
Latin America
Latin America revenue in the thirdquarter of 2025was $996 million,a 5% decreasecompared to the thirdquarter of
2024. This decrease was largely due to decreased activity across multiple product service lines in Mexico and lower completion
tool sales in Brazil. Partially offsetting these decreases werehigher stimulationand improved drilling-related services in
Argentina and increased activity across multiple product service lines in Brazil.
Europe/Africa/CIS
Europe/Africa/CIS revenue in the thirdquarter of 2025was $828 million, a 15% increasecompared to the thirdquarter
of 2024. This increase was primarily driven by higher completion tool sales and improved drilling-related servicesin the North
Sea along with increased well construction activity in Namibia. Partially offsetting these increases was lower activity across
multiple product service lines in Senegal and Italy.
Middle East/Asia
Middle East/Asia revenue in the thirdquarter of 2025was $1.4 billion, an 8% decreasecompared to the thirdquarter
of 2024. This decrease was largely due to decreased activity across multiple product service lines in Saudi Arabia and Malaysia.
Partially offsetting these decreases were increased stimulation activity in Asia, improved fluid services in Saudi Arabiaand
higher artificial lift activity in Kuwait.
Other Operating Items
SAP S4 Upgrade Expense. As previously mentioned, during 2023, we began our migration to SAP S4, which we
expect to complete in the fourth quarterof 2026. During the thirdquarter of 2025, we recognized $50 millionof expense on our
SAP S4 migration. During the thirdquarter of 2024, we recognized $28 millionof expense on our SAP S4 migration.
Impairmentsand Other Charges. During the three months ended September 30, 2025, there were pre-tax charges of
$392 millionrecorded in impairments and other charges due to severance costs, fixed and other assets write-offs, an impairment
of assets held for sale, a reserve release related to a cybersecurity incident, a gain on an equity investment and other items.
During the three months ended September 30, 2024,we took a pre-tax charge of $116 millionprimarily related to severance
costs, an impairment of assets held for sale, expenses related to a cybersecurity incident, a gain on a fair value adjustment of an
equity investment, and other items. See Notes to Condensed ConsolidatedFinancial Statements, Note 2. Impairments and Other
Charges for further discussion of these charges.
Nonoperating Items
Argentina Impairment on Investment. In years 2022, 2023 and 2024, we executed a series of loans to a third party and
received notes that are to be repaid in U.S. dollars upon maturity or earlier if certain conditions are met. During the three
months ended September 30, 2025, we recorded a loss of $23 million resulting from the deterioration in the outlook of the
debtor's liquidity and financial projections. This is included in "Other, net" on the consolidated statements of operations.
Income Tax Provision. During the three months ended September 30, 2025, we recorded a total income tax provision
of $199 millionon a pre-tax income of $219 million, resulting in an effective tax rate of 90.9% for the quarter. The effective tax
rate for the quarter was primarily impacted by the additional $125 million valuation allowance recorded against our deferred tax
assets, which resulted from the impact on the realizability of our FTC carryforward due to the "One Big Beautiful Bill Act",the
pre-tax $392 millionof 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 tax provision of $154 millionon a pre-tax income of
$734 million, resulting in an effective tax rate of 21.0%for the quarter. We recorded a tax benefit of $41 million during the
three months ended September 30, 2024, due to a partial release of a valuation allowance on our deferred tax assets based on
market conditions.
Pillar Two. The Organization for Economic Co-operation and Development enacted model rules for a new global
minimum tax framework, also known as Pillar Two, and certain governments globally have enacted, or are in the process of
enacting, legislation considering these model rules. These rules did not have a material impact on our taxes for the three months
ended September 30, 2025and 2024.
HAL Q3 2025FORM 10-Q| 25
Part I. Item 2| Results of Operations in 2025Compared to 2024 (QTD)
Internal Revenue Service Notice of Proposed Adjustment. We are subject to taxes in the United States and in numerous
jurisdictions where we operate or where our subsidiaries are organized. Our tax returns are routinely subject to examination 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. Our United States federal income tax filings for tax years 2016 through
2023, including carry back of 2016 net operating losses to 2014, are currently under review or remain open for review by the
IRS.
On September 28, 2023, we received a NOPA from the IRS covering our 2016 U.S. tax return. The NOPA proposed
an adjustment to reclassify approximately 95% of the $3.5 billion termination fee paid to Baker Hughes in 2016 from an
ordinary expense deduction to a capital loss. The termination fee was paid to Baker Hughes under the merger agreement after
antitrust regulators in multiple jurisdictions failed to approve our proposed merger. It is common commercial practice to include
a termination fee in a merger agreement to compensate the target for damages incurred when the acquisition does not go
forward. The IRS's long-understood position at the time of the payment had been to treat such payments as an ordinary and
necessary business expense. We strongly disagree with the proposed adjustment on both a factual and legal basis, and we plan
to vigorously contest it.
We expect that resolving this dispute will take substantial time. In 2023, we initiated the IRS administrative appeals
process, which is ongoing. Failing a resolution through that process, the matter would ultimately be resolved by the United
States federal courts.
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 cannot assure
you that the matter will be determined in our favor or against us, and if the matter is ultimately determined unfavorably to us, it
could have a material adverse impact on our results of operations and cash flows. Based on tax attributes currently available, we
estimate that, should the IRS's position prevail through its appellate process and subsequent litigation, the proposed adjustment
could result in cash taxes due of approximately $640 million (plus interest thereon in the case of amounts due for previous tax
years). Our estimates are calculated under current tax law and on the bases of our assumptions regarding taxable income and
loss and other tax attributes over the relevant period, which law could change and which assumptions could and likely will
differ materially from actual results. In any event, no payment of any additional tax is currently required, nor do we anticipate
that the proposed adjustment would materially and adversely impact our ability to meet our expected uses of cash, including
future capital expenditures, working capital investments, and scheduled debt repayments, or our ability to return cash to
shareholders, even if a final determination of the matter is reached that is adverse to us.
HAL Q3 2025FORM 10-Q| 26
Part I. Item 2| Results of Operations in 2025Compared to 2024 (YTD)
Nine Months Ended September 30, 2025Compared with Nine Months Ended September 30, 2024
Nine Months Ended
September 30,
Favorable
Percentage
Millions of dollars
2025
2024
(Unfavorable)
Change
Revenue:
By operating segment:
Completion and Production
$9,514
$10,073
$(559)
(6)%
Drilling and Evaluation
7,013
7,261
(248)
(3)
Total revenue
$16,527
$17,334
$(807)
(5)%
By geographic region:
North America
$6,859
$7,413
$(554)
(7)%
Latin America
2,869
3,258
(389)
(12)
Europe/Africa/CIS
2,423
2,208
Middle East/Asia
4,376
4,455
(79)
(2)
Total revenue
$16,527
$17,334
$(807)
(5)%
Operating income:
By operating segment:
Completion and Production
$1,558
$2,080
$(522)
(25)%
Drilling and Evaluation
1,012
1,207
(195)
(16)
Total operations
2,570
3,287
(717)
(22)
Corporate and other
(196)
(190)
(6)
(3)
SAP S4 upgrade expense
(112)
(91)
(21)
(23)
Impairments and other charges
(748)
(116)
(632)
n/m
Total operating income
$1,514
$2,890
$(1,376)
(48)%
n/m = not meaningful
Operating Segments
Completion and Production
Completion and Production revenue in the first nine months of 2025was $9.5 billion, a decreaseof $559 million, or
6%, compared to the first nine months of 2024. Operating income for the segment in the first nine months of 2025was $1.6
billion, a decreaseof $522 million, or 25%, compared to the first nine months of 2024. These results were largely driven by
decreased pressure pumping services in the Western Hemisphere and lower completion tool sales in the Western Hemisphere
and Africa. Partially offsetting these declines were increased completion tool sales in Europe and Canada.
Drilling and Evaluation
Drilling and Evaluation revenue in the first nine months of 2025was $7.0 billion, a decreaseof $248 million, or 3%,
compared to the first nine months of 2024. Operating income for the segment in the first nine months of 2025was $1.0 billion,
a decreaseof $195 million, or 16%, compared to the first nine months of 2024. These results were primarily driven by
decreased activity across multiple product service lines in Mexico and Saudi Arabia, as well asdecreased testing services and
lower wireline activity internationally. Partially offsetting these decreases were improved drilling services in Europe, and higher
fluid services in Latin America and the Middle East.
Geographic Regions
North America
North America revenue in the first nine months of 2025was $6.9 billion, a 7% decreasecompared to the first nine
months of 2024, largely driven by decreased pressure pumping services in US Land and lower completion tool sales in the Gulf
of America and US Land. Partially offsetting these decreases were improved stimulation activity in the Gulf of America and
higher completion tool sales in Canada.
HAL Q3 2025FORM 10-Q| 27
Part I. Item 2| Results of Operations in 2025Compared to 2024 (YTD)
Latin America
Latin America revenue in the first nine months of 2025was $2.9 billion, a 12% decreasecompared to the first nine
months of 2024, resulting from lower activity across multiple product service lines in Mexico and decreased completion tool
sales across the region. Partially offsetting these decreases were higher drilling-related services in Argentina, Brazil and
Caribbean.
Europe/Africa/CIS
Europe/Africa/CIS revenue in the first nine months of 2025was $2.4 billion, a 10% increasecompared to the first nine
months of 2024, resulting from improved activity across multiple product service lines in Norway and Romania, higher well
construction activity in Namibia and improved completion tool sales in the Caspian Area. Partially offsetting these increases
were decreased activity across multiple product service lines in Senegal and Italy, and lower completion tool sales and
decreased pressure pumping services in Angola.
Middle East/Asia
Middle East/Asia revenue in the first nine months of 2025was $4.4 billion, a 2% decreasecompared to the first nine
months of 2024, resulting primarily from decreased activities across multiple product service lines in Saudi Arabia and
Malaysia and lower project management activity and decreased testing services in the region. Partially offsetting these
decreases were increased activity across multiple product service lines in Kuwait, improved fluid services in the United Arab
Emirates and higher pressure pumping services in India.
Other Operating Items
SAP S4 Upgrade Expense.As previously mentioned, during 2023 we began our migration to SAP S4, which we expect
to complete in the fourth quarterof 2026. During the nine months ended September 30, 2025, we recognized $112 millionof
expense on our SAP S4 migration. During the nine months ended September 30, 2024, we recognized $91 millionof expense
on our SAP S4 migration.
Impairmentsand Other Charges. During the nine months ended September 30, 2025, we recognized a pre-tax charge
of $748 million primarily related to severance costs, fixed and other assets write-offs, an impairment of assets held for sale, an
impairment of facility closures and lease terminations, a reserve release related to a cybersecurity incident, a gain on an equity
investment and other items, primarily related to legacy environmental remediation cost estimate increases. During the nine
months ended September 30, 2024, we recognized a pre-tax charge of $116 million, primarily related to severance costs, an
impairment of assets held for sale, expenses related to a cybersecurity incident, a gain on a fair value adjustment of an equity
investment, and other items. See Notes to Condensed ConsolidatedFinancial Statements, Note 2. Impairments and Other
Chargesfor further discussion of these charges.
Nonoperating Items
Argentina Impairment on Investment. In years 2022, 2023 and 2024, we executed a series of loans to a third party and
received notes that are to be repaid in U.S. dollars upon maturity or earlier if certain conditions are met. During the nine months
ended September 30, 2025and 2024, we recorded a loss of $23 million and $38 million, respectively,resulting from the
deterioration in the outlook of the debtor's liquidity and financial projections.This is included in "Other, net" on the
consolidated statements of operations.
Egypt Currency Impact. In the first quarter of 2024, the Egyptian pound devalued by approximately 35% relative to
the U.S. dollar. Consequently, we incurred a loss of $38 millionduringthe nine months ended September 30, 2024, due to the
devaluation of the currency in Egypt. This is included in "Other, net" on the consolidated statements of operations.
Income Tax Provision. During the nine months ended September 30, 2025, we recorded a total income tax provision of
$433 millionon a pre-tax income of $1.1 billion, resulting in an effective tax rate of 38.1%. 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, which resulted from the impact on the realizability of our FTC carryforward due to the "One Big Beautiful Bill Act",
the pre-tax $748 millionof impairments and other charges, and the $23million impairment of an investment in Argentina.
During the nine months ended September 30, 2024, we recorded a total income tax provision of $539 millionon pre-tax income
of $2.4 billion, resulting in an effective tax rate of 22.1%. We recorded a tax benefit of $41 million during the nine months
ended September 30, 2024, due to a partial release of a valuation allowance on our deferred tax assets based on market
conditions.
Pillar Two. As previously mentioned, The Organization for Economic Co-operation and Development enacted model
rules for a new global minimum tax framework, also known as Pillar Two, and certain governments globally have enacted, or
are in the process of enacting, legislation considering these model rules. These rules did not have a material impact on our taxes
for the nine months ended September 30, 2025and 2024.
HAL Q3 2025FORM 10-Q| 28
Part I. Item 2| Forward-Looking Information
FORWARD-LOOKING INFORMATION
The Private Securities Litigation Reform Act of 1995 provides safe harbor provisions for forward-looking information.
Forward-looking information is based on projections and estimates, not historical information. Some statements in this Form
10-Qare forward-looking and use words like "may," "may not," "believe," "do not believe," "plan," "estimate," "intend,"
"expect," "do not expect," "anticipate," "do not anticipate," "should," "likely," and other expressions. We may also provide oral
or written forward-looking information in our statements and other materials we release to the public. Forward-looking
information involves risks and uncertainties and reflects our best judgment based on current information. Our results of
operations can be affected by inaccurate assumptions we make or by known or unknown risks and uncertainties. In addition,
other factors may affect the accuracy of our forward-looking information. As a result, no forward-looking information can be
guaranteed. Actual events and the results of our operations may vary materially.
We do not assume any responsibility to publicly update any of our forward-looking statements regardless of whether
factors change as a result of new information, future events, or for any other reason. You should review any additional
disclosures we make in our press releases and Forms 10-K, 10-Q, and 8-K filed with or furnished to the Securities and
Exchange Commission. We also suggest that you listen to our quarterly earnings release conference calls with financial
analysts.
Halliburton Company published this content on October 24, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on October 24, 2025 at 16:14 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]