Q4 2025 Earnings Call Transcript

Good day, ladies and gentlemen. And thank you for standing by. Welcome to the Fourth Quarter 2025 Halliburton Company Earnings Conference Call. At this time, participants are in a listen-only mode.

After the speakers' presentation, there will be a question and answer session. To ask a question, simply press star 11 on your telephone keypad. As a reminder, this conference call is being recorded. At this time, I would like to turn the conference over to Mr.

David Coleman, Senior Vice President of Investor Relations. Sir, please begin. Hello.

And thank you for joining the Halliburton Fourth Quarter 2025 Conference Call. We will make a recording of today's webcast available for seven days on Halliburton's website. Joining me today are Jeff Miller, chairman, president, and CEO, and Eric Carre, executive vice president and CFO. Some of today's comments may include forward-looking statements that reflect Halliburton's views about future events.

These matters involve risks and uncertainties that could cause our actual results to materially differ from our forward-looking statements. These risks are discussed in Halliburton's Form 10-Ks for the year ended 12/31/2024, Form 10-Q for the quarter ended 09/30/2025, recent current reports on Form 8-K, and other Securities and Exchange Commission filings. We undertake no obligation to revise or update publicly any forward-looking statements for any reason except as required by law. Our comments today also include non-GAAP financial measures.

Additional details and reconciliation to the most directly comparable GAAP financial measures are included in our fourth quarter earnings release and in the quarterly results and presentation section of our website. Now I'll turn the call over to Jeff.

Thank you, David, and good morning, everyone. I am pleased with Halliburton's fourth quarter performance and the way we closed out 2025. We outperformed our expectations with stronger than anticipated activity and solid execution in both our North America and international completion and production businesses. It is clear that Halliburton's strategy and value proposition deliver differentiated results. Here are some of the highlights from 2025. We delivered total company revenue of $22.2 billion and adjusted operating margin of 14%.

International revenue was $13.1 billion, down 2% year over year. North America revenue was $9.1 billion, a decrease of 6% year over year. During the year, we generated $2.9 billion of cash flow from operations, $1.9 billion of free cash flow, and repurchased $1 billion of our common stock. Finally, we returned 85% of our free cash flow to shareholders, reducing our share count to its lowest levels in ten years.

These results reflect hard work and dedication by the men and women of Halliburton all around the world. I want to thank each Halliburton employee for your dedication to safety and our value proposition, maximizing value for our customers and delivering returns for our shareholders. Now let's turn to our macro outlook for 2026. We believe 2026 will be a year of rebalancing. The return of OPEC spare capacity and higher non-OPEC production have created a market with abundant supply.

We expect supply increases to moderate this year as demand continues to rise. Near term, absent geopolitical disruptions, we expect commodity prices are unlikely to rise. We anticipate moderate softness in some key markets, particularly North America. We expect international activity to be stable year over year.

Medium term, we believe supply and demand will rebalance, expect the combination of steeper decline rates, diminishing reservoir quality, and limited exploration success to create favorable tailwinds for oilfield services. I expect the next cycle to begin where it always has, in North America, followed by a global push to meet the growing demand. Let me close our macro outlook with this. I am confident in the future of oilfield services and excited about Halliburton's opportunities now and in the years ahead.

Let's turn to our international business. Halliburton delivered another solid quarter under the strength of our global franchise and the resilience of our strategy. For the full year, international revenue was $13.1 billion, a decrease of 2% year over year, outperforming a 7% decline in rig count. While we experienced notable declines during the year in Saudi Arabia and Mexico, the remainder of our international business demonstrated strong growth of about 7%.

Looking ahead to 2026, we expect total international revenue to be flat to up modestly. I am confident in the outlook for our international business. First, our collaborative value proposition is winning. What began as alliances with independents has expanded to include IOCs and NOCs across all of our regions.

Today, this collaborative approach consistently drives outperformance for Halliburton and our customers. Deep collaboration is in our DNA and we believe it is the future of oilfield services. I am confident Halliburton is uniquely positioned to lead and thrive through this collaborative strategy. Second, our drilling information evaluation technology is now a differentiator for Halliburton in all markets.

The depth of our drilling portfolio allows us to compete and win in the most technically demanding integrated projects worldwide. Finally, I believe the market's structure is evolving in a way that differentially favors Halliburton. We see consistent international growth in unconventional development drilling, and intervention, all of which are directly aligned with Halliburton's strengths. Let's take a closer look at our international growth engines.

Unconventionals, drilling, production services, and artificial lift. Where we have a clear line of sight to outperform the overall market. We continue to make great progress. In unconventionals, Halliburton uniquely brings North America technology to the international market.

Today, we operate in seven countries, and see growing adoption of simulfrac and continuous pumping operations along with our auto frac and sensory technology. In drilling, we completed the first fully autonomous geosteering run for a customer in The Caribbean. Where we maximized reservoir contact and delivered outstanding performance for the customer. Finally, artificial lift delivered record international quarterly revenue and is now active in 15 countries.

Turning to our international power business. Our strategic collaboration with Voltigrid continues to gain momentum. I am pleased with our progress so far. Customers recognize that Halliburton's global footprint and for execution are a strong complement to VoltaGrid's distributed power platform.

The opportunity pipeline is expanding rapidly across the Eastern Hemisphere with several projects already in engineering review. During the quarter, Halliburton and VoltaGrid secured manufacturing capacity for 400 megawatts of modular power systems. I am convinced more than ever that these opportunities will manifest and provide a significant avenue for future growth. To summarize, Halliburton's international business is strong, Our collaborative value proposition is winning, Our technology is delivering, and our growth engines are aligned with the evolution of the market.

I am confident that Halliburton will outperform in 2026. Before we leave international, here are a few of my views on Venezuela. I've always believed that oil and gas is the key to Venezuela's economic recovery. I'm excited about the tremendous opportunity for Halliburton in Venezuela. Halliburton entered Venezuela in 1938 and only exited in 2019 because we are an American company in compliance with US sanctions.

Halliburton knows this market well. And we will grow our business there as soon as commercial and legal terms are resolved, including payment certainty. The early steps are already well underway. Now moving on to North America.

Halliburton delivered a strong fourth quarter supported by less than anticipated white space and solid execution. For the full year, revenue was $9.1 billion, down 6% year over year. As we look towards 2026, we expect North America revenue to decline high single digits compared to 2025. This outlook reflects the full year impact of reduced customer activity in land operations, our decision to stack uneconomic fleets, and the timing of customer programs in the Gulf Of America. Here are three observations on North America that shape our view and strategy.

First, attrition is accelerating at a time when new capital investment is falling. Equipment is working harder than it ever has, due to widespread adoption of continuous pumping and simul frac. This is why I believe a small increase in demand will tighten the market quickly. Second, the largest opportunity for the industry is to increase recovery and I believe that this is only possible with technology adoption.

This is why I am so excited about Zeus IQ. Third, the commodity outlook improves, we believe North America will be the first to recover. We have seen this countless times in the past, and the same drivers are in place today. Our strategy in North America is to maximize value.

This means that we prioritize returns over market share and we develop technology that addresses customers' most critical opportunities. Improving recovery and drilling longer, faster, more precise wells. Let's look at how we do that. First, with respect to return, as we have done in the past, we will continue to stack equipment that is uneconomic.

Prudent stacking of equipment preserves it for the recovery in North America and becomes an avenue to feed our growing international unconventionals business. With respect to technology, our differentiated Zoosk platform is driving value through automation and subsurface measurement. Only Halliburton's ZEUS platform directly measures and automates the control of sand placement which I believe are critical building blocks for improving recovery. This quarter, customer adoption of Zoos IQ, sensory, and auto frac increased by 8%.

Which tells me it is working. We are also differentiated with our iCruise rotary steerable and Logix automation. Which deliver precision and reliability in long laterals. No trend in unconventionals is more clear than the growth of lateral lengths along with complex geometries such as horseshoe wells.

We see this trend in every major basin. The impact of iCruise has been dramatic on our North America drilling services business. Which grew meaningfully this year despite a 6% decline in rig count. The high performance of iCruise and Logix and the secular trend towards rotary steerable drilling in North America give me great confidence in the continued success of our drilling services business.

To summarize North America, our priority is clear. We will maximize value, We have consistently executed this strategy and delivered differentiated results. I am confident this strategy will deliver value for our customers Halliburton, and our shareholders. Before I turn the call over to Eric, let me close with this.

I've never been more excited about the future of Halliburton, and here's why. Oil and gas have a critical and recognized role to play in the energy mix of the future. The shift from idealism to pragmatism is refreshing, and consistent with the reality that there will be growing demand for oilfield services for decades to come. Our value proposition is clear.

We collaborate and engineer solutions to maximize asset value for our customers. The proven outperformance of our strategy and the ongoing shift towards collaborative work means Halliburton is squarely where the market is headed. And finally, our differentiated technology delivers exceptional value for our customers and for Halliburton. I am confident Halliburton will deliver leading returns and capitalize on future growth opportunities.

Finally, I'm also pleased to announce an important leadership update. Shannon Slocum has been promoted to chief operating officer effective January 1. Shannon's COO role will be important to our success as we our strategy and I look forward to him joining us on future earnings calls. With that, I'll turn the call over to Eric to provide more details on our financial results.

Thank you, Jeff, and good morning. Our Q4 reported net income per diluted share was 70¢. Adjusted net income per diluted share was 69¢. Total company revenue for Q4 2025 was $5.7 billion, flat when compared to Q3 2025. Adjusted operating income was $829 million and adjusted operating margin was 15%.

Our Q4 cash flow from operations was $1.2 billion and free cash flow was $875 million. During Q4, we repurchased $250 million of our common stock. For the full year, we repurchased approximately 42 million shares at an average price of $23.8 per share. Now turning to the segment results.

Beginning with our Completion and Production division, revenue in Q4 was $3.3 billion, flat when compared to Q3 2025. Operating income was $570 million, an increase of 11% compared to Q3 2025, and operating income margin was 17%. Revenue improvements were primarily driven by higher year-end completion tool sales globally, and offset by lower stimulation activity in the Western Hemisphere. Operating income increased due to activity mix improvements from completion tool sales. In our Drilling and Evaluation division, revenue in Q4 was $2.4 billion, flat when compared to Q3 2025. Operating income was $367 million, an increase of 5% sequentially and operating income margin was 15%.

Revenue improvements driven by higher wireline activity in the Eastern Hemisphere and increased year-end software sales were offset by lower fluid services in North America. Operating income increased due to better activity mix from our wireline business in the Eastern Hemisphere, and the year-end software sales. Now let's move on to geographic results. Our Q4 international revenue increased 7% when compared to Q3 2025. Europe Africa revenue in Q4 was $928 million, an increase of 12% sequentially.

This increase was primarily driven by higher completion tool sales in the North Sea and improved activity across multiple product service lines in Africa. Middle East Asia revenue in Q4 was $1.5 billion, an increase of 3% sequentially. This improvement was primarily driven by increased well intervention services and higher stimulation activity in the Middle East, and improved activity across multiple product service lines in Asia. Latin America revenue in Q4 was $1.1 billion, a 7% increase sequentially.

This increase was primarily driven by higher completion tool sales in Brazil and The Caribbean, and higher software sales in Mexico. In North America, Q4 revenue was $2.2 billion, a 7% decrease sequentially. This decline was primarily driven by lower stimulation activity in US land and Canada, decreased fluid services in the Gulf Of America, and lower well intervention services in US land. Moving on to other items.

In Q4, our corporate and other expense was $66 million. We expect our Q1 corporate expenses to increase about $5 million. In Q4, we spent $42 million on SAP Sfour migration, which is included in our results. For Q1, we expect SAP expenses to be about $45 million.

Net interest expense for the quarter was $86 million. For Q1, we expect net interest expense to increase about $5 million. Other, net expense in Q4 was $25 million. We expect Q1 expense to be about $35 million.

Our normalized effective tax rate for Q4 was 19.8%. Based on our anticipated geographic earnings mix, we expect our Q1 and full year 2026 effective tax rate to be approximately 21%. Capital expenditures for Q4 were $337 million, which is $100 million lower than expected due to late equipment deliveries. For the full year 2026, we expect capital expenditures to be about $1.1 billion, consistent with our prior guidance adjusted for the timing impact of late deliveries.

This guidance excludes any capital spending necessary for a potential reentry into Venezuela. Now let me provide you with comments on our expectation for Q1 2026. In our Completion and Production division, in Q1, we anticipate a higher than normal roll-off of year-end completion tool sales and lower international activity. As a result, we anticipate sequential revenue to decrease 7% to 9% and margins to decline about 300 basis points. In our Drilling and Evaluation division, we expect sequential revenue to decline 2% to 4% and margins to decline 25 to 75 basis points.

I will now turn the call back to Jeff.

Thanks, Eric. Let me summarize the key takeaways from today's discussion. Halliburton delivered solid Q4 results and closed 2025 with strong execution. Despite the market environment.

Oil and gas have a critical role to play in the energy mix of the future. I expect 2026 to be a rebalancing year which I am confident is followed by a period of sustained strong growth. Halliburton's international business is strong, Our collaborative value proposition is winning, our technology is delivering, and our growth engines are aligned with the evolution of the market. In North America, we will maximize value, meaning we will stack fleets that do not make adequate return and focus our investments on differentiated technologies that solve for our customers' greatest opportunities.

I expect that as macro fundamentals improve, North America will be the first to respond. I am confident in the outlook for our business. And Halliburton's ability to deliver leading returns and capitalize on future growth opportunities. And now let's open it up for questions.

Ladies and gentlemen, if you have a question or comment at this time, please press 11 on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, simply press the pound key. Again, if you have a question or comment at this time, please press 11 on your telephone keypad. Our first question or comment comes from the line of Saurabh Pant from Bank of America.

Mr. Pant, your line is open.

Good morning, Jeff and Eric.

Good morning.

Hey, Jeff, maybe I want to start with the topic which everybody has been bombarding us for the past two weeks, which is Venezuela, if you do not mind. I noted that you said that you said in your prepared remarks, right, that I know it's early days. Right? But you talked about early steps are well underway.

Right? So my question is, maybe just help us think about how quickly can Halliburton, your customers, move into the country. What do you need to see to start doing that? And then secondly, ultimately, I know this is not certain.

Right? But what is the potential size of the opportunity and how quickly can you scale up in Venezuela?

Yeah. Thanks, Saurabh. Look, I think we could scale up fairly quickly. Yeah.

We're working through the mechanics around license and things that we're certain will get in place. But as far as returning to the country, we move equipment around all over the world. So we can move equipment quite quickly. We still have a footprint there in Venezuela in terms of bases and whatnot.

And so, you know, getting equipment there to work is fairly straightforward. There are operators in Venezuela today, and so I think there are opportunities for us sooner rather than later to get back to work. And so we're assessing what we would do and where we would start. My phone is ringing off the hook in terms of interest in Halliburton being there.

And so confident that we could move fairly quickly in Venezuela. And excited about that. You know, as far as the size of the market, you know, small market today relative to what it was a decade ago. A decade ago, it was probably a half $1 billion business for us.

Pretty consistently. Now, you know, as time dragged on, that market started to shrink and it got smaller. But I, you know, quite optimistic about longer term being a much bigger business. And I think in the near term, getting back to work and contributing to our business at Halliburton.

Right. No. That's a good update, Jeff. I think we need to keep we need to stay in tune on what's going on, but that sounds like a good opportunity.

Just a very different pivot going back to 2026. Jeff. I know you gave some color on your expectations. For activity for revenue, which frankly, is in line to a little better than, I think, several people were thinking. So that's a good place to start.

But on the margin side of things, Jeff, as we think about the pluses and minuses, pricing is part of it and not just NAAM, but international pricing, operating leverage, cost is part of it. And then, Eric, maybe a little color on SAP spending trajectory. If we put all of that together, what does the margin side of the story look like 26? Any preliminary thoughts on that?

Well, look, I think the second half looks stronger than the first half, most certainly. You know, when we look around the world, it's pretty steady around the world with the, you know, obviously, larger tenders are gonna be more competitive. And we see some of those. But, you know, by and large, it's a stable market internationally.

And so, you know, I see, you know, again, progress as we get certainly into the second half of the year around March.

Yes, sir. I've been is it relate

Go ahead, go ahead.

No. I was gonna jump to your SAP question, but if you have a follow-up for Jeff, go ahead.

No. SAP. Let's cover SAP first, Eric.

Okay. Yes. So SAP, we guided $45 million for Q1, and that's pretty much the run rate that you should be thinking about throughout 2026. So $40 million to $45 million. We anticipate the project to complete in Q4 of this year.

Which is a little later than we had earlier guided. We've adjusted the plan slightly as we learn, you know, progressing through the rollout of the system. We've also brought on the scope of the project to include some of the adjacent processes such as outsourcing our payroll and redesigning our overall OTC process. So in summary, about $45 million, $40 to $45 million a quarter until the end of the year, and project completed in Q4. With expected savings of about $100 million a year, after the project is completed.

Right. Sorry. I might go back to your first question a little bit here as well. So when if you if I look at all of 2026, as I said, I think the second half is better than the first half.

But, you know, again, North America is taking a conservative posture. I think we've got some bright spots internationally. But I think the more important point is what's happening in terms of the rebalancing of the market. And that's really this pragmatic view of the world as opposed to idealistic.

Barrels are being absorbed. Decline rates are higher now than they were in terms of because unconventionals are a larger part of the supply stack. And quite frankly, exploration success has been anemic. And while all that happening, demand is growing.

So I think we're setting up for, you know, rebalancing year in '26 of supply and demand to be followed by very sustained strength.

Right. No. That makes a ton of sense. Jeff. Like you said, rebalancing here, and really the focus should be on 27-28, Right? And, hopefully, things go in the right direction. So thank you, Jeff, Eric. Thanks a lot.

Thank you. Thank you.

Thank you. Our next question or comment comes from the line of Neil Mehta from Goldman Sachs. Mr. Mehta, your line is now open.

Hey, Jeff, and good morning, team. Quick question here first on the international breakout. You said up slightly, 26% versus 25%. Can you just go give us a tour around the world, Jeff, and give us perspective by market. Where do you see increments and decrements?

Yeah. Look. And our outlook at this point is flattish to maybe up a little modestly. Look.

I think Latin America leads the way. In terms of growth. Brazil, deepwater is powering ahead. Our Argentina, we see quite a bit of growth, and that's, you know, obviously right in our wheelhouse.

Ecuador, Guyana, obviously. Guyana has been a strong business for us, and we'll continue to be. And so overall, Latin America, very much bright spot. You know, Middle East, think it's flattish, flattish, maybe even down slightly.

And I say that just because I'm well aware of the activity growth in Saudi Arabia, but taking a bit more conservative view of the timing and pacing of that coming back. It likely will, but it's less clear to me sort of how impactful and how early that would be. But overall, the rest of The Middle East is very, very, very, you know, solid business. Pleased with that business.

And then Asia Pacific, really looks fairly flattish to us. You know, a lot of gas demand in Asia. So positive things happening, but overall, flattish for '26 anyway.

Yeah. That's a helpful break. And then, Jeff, maybe just take a moment to talk about VoltaGrid. I think we've gotten more comfortable as an investment community around that business and the potential, and you've announced an important joint venture in Melisa.

From where you sit, how important is this business for you guys? How big can it be? Do you see yourself as a logical consolidator over time? Do you like minority today?

Just your perspective. Anything you're willing to share about it.

Yeah. Well, look. Well, what I'd say, I'm really excited about where we are and the outlook for that business and the international piece of that business. I won't comment on The U.

I think that's well understood in the pace of growth there. Our role and ownership in VoltaGrid. As we look around the world, a lot of interest from customers around the combination of VoltaGrid technology and Halliburton's proven execution and footprint and capability. And so, you know, solid pipeline, like the volume.

And so I think that this could be a very big business over time. I mean, it's, you know, like all businesses, we're starting. We're fairly very familiar with the business. It's gonna grow at the pace that it will, but we've already, you know, committed to 400 megawatts.

So I think 400 megawatts is a good start. As we place those. And what we've seen historically is that we place a few 100 megawatts, and then that tends to grow over time. As data centers expand.

And there's just no question that there's not enough electricity power generation in the world today in The US or anywhere else. So very confident in this, and I think it could be a very big business. Over time.

Yep. Thanks, Jeff.

The next question or comment comes from the line of David Anderson from Barclays. Mr. Anderson, your line is now open.

Great. Thank you very much. Good morning, Jeff. How are you?

Morning, Dave.

You've talked about rebalancing of the market. Was wondering if you could talk more about North American stimulation market and how that's rebalancing. You talked about the attrition going on, but I'm not I'm wondering how pricing is holding up here and whether or not you see this firming up throughout the year. Because you're also seeing equipment moving out to Middle East I know you talked about you bringing some equipment down to Vaca Muerta.

So how is that component kind of factoring into pricing? Do you expect pricing to kind of hold up here? And is this sort of a part of the rebalancing story?

Yeah. Look. I think, Brett, pricing is fairly stable at this point. We didn't we Q4 is fairly stable.

And as we go into Q1, we are Frac business stays very stable as well going into Q1. Now from a pricing standpoint, broadly, I think that, you know, given where pricing is and and and performance of companies in that market, we're fortunate that we outperform them by the market by quite a bit. But, you know, pricing reaches a point where it's, you know, it's not the companies aren't investing in it. We are moving equipment away from it. And so I think it's certainly stable at that level.

And, yeah, I think there's incentives to move equipment outside The US, which we're doing in some cases. And so I think we're at a bottom, and I would expect that that improves over time. But I'm not gonna give you a date when it improves. But I think the bias is towards there's not investment in the market in terms of more equipment, and equipment is wearing out, which we know.

And equipment, in some cases, is moving outside The US. And some equipment in ours, in some cases, is being stacked. So I think all of those are positive, and rational behavior in a market where, you know, we require returns.

That makes a lot of sense. Of course, you do. On that side. I was wondering if you could talk Eric, maybe you could talk a little bit more about the C and P margin progression throughout the year.

The guide for first quarter is more or less aligned with what we were looking for. But how should we think about kind of where the rest of the year shakes out in the margin side? And perhaps you could also just talk a little bit how MultiChem, the sale of MultiChem impacts that and maybe the decision to sell MultiChem. And does that provide an uplift for margins throughout the year?

So let me start with the MultiChem. So we think the sales should be completed this quarter. The impact on the margin will be positive, but frankly, it will not be material overall. Talking about the progression of CMP margin, we think the margin progress throughout the year.

But let me give you some color as well to the guide of margins from Q4 to Q1. Because while it is not, you know, out of line with the differential in margin that we've seen in prior year, the actual makeup is a bit different. So if you look at the Q1, so we guided about 300 basis points down for C and P margin. So that is actually coming from three buckets. The first bucket, which is over half of the drop, is related to the roll-off of completion tool sales.

That part is not unusual. What is a bit unusual is the amount of completion tool sales we had in Q4. If you look at the progression Q3 to Q4, our completion tool, revenue increase was three times what we saw in the prior two years. So that talks a lot to the strength of our completion business, but that's about over half of the drop. Then you get about 25% of the drop that's related to the typical seasonality in the international business for C and P.

As our CNP business is increasingly has an increasingly large footprint in the international markets. And that's about 3% to 6% reduction in revenue. So that's kinda typical with historical decreases, and the rest is really a products geographic mix issue, which is really not structural, you know, as it relates to CMP. And then there is a bit of a kind of an optical view on Q4 to Q1, which is we typically have a lot of tailwind with the US frac business, which goes through seasonal factor I mean, seasonality in Q4. And benefits from an uplift going into Q1. We don't have any of that this year as our Q1 frac business in The US looks to be just straight flat to Q4. So again, a little bit of color as the makeup of the Delta is a bit different from prior years.

Understood. Thank you very much.

Thank you.

Our next question or comment comes from the line of Arun Jayaram from JPMorgan. Mr. Jayaram, your line is now open.

Yes. Good morning. Jeff and Eric. Appreciate the outlook for us on 2026. Wondering if we could maybe think about what your outlook comments around international and North America could mean for overall margins.

You gave us some good color on where you expect revenues to kind of shake out. But just trying to narrow thoughts around, you know, the streets today sitting at just under $4 billion of EBITDA 'twenty six? And just trying to want to get just general comfort level of where the Street sits today based on your outlook comments.

Yeah. Go ahead, Eric. No. If you look at, just kinda margins overall as Jeff progresses, we think H2 is better than H1. So you're going to see some slight progression through the year.

And, you know, why we typically don't comment on, you know, street estimates or provide guidance at this stage on margins, the $4 billion that you quoted is really within the range of outcomes that we are looking at.

Great. That's helpful, Eric. And just my follow-up, Jeff, in your prepared comments, you talked about Zoos IQ and some of the things that Halliburton's doing to help North American operators boost well productivity. I also wanted to talk to you a little bit about some of the updates we've gotten from the majors where they're talking about using lightweight proppant and surfactants.

And I was wondering if you could discuss some of these efforts and maybe how you're helping clients maybe to use some of these emerging technologies? And could these be needle movers for Halliburton?

Look. My comments are around our technology. And the technology that we produce, and very pleased with what we're doing. You know, And I think that the ability to place proppant and do things with proppant effectively is one of the really unique features of Zoos IQ.

And I think that's, you know, under all conditions, a very valuable solution. And as I said, a building block to how recovery is improved because, quite frankly, where the sand goes has been an unknown in this business since it started in 1947. And, really, just in the last year, or two have we been able to directly measure sand placement and also control, and this is where sand goes. And this is primarily because of the Zeus setup and its ability to, you know, handle the pressure and the things in order to respond to the resume.

Great. Thanks.

Our next question or comment comes from the line of James West from Melius Research. Mr. West, your line is open.

Thanks. Good morning, Jeff and Eric.

Morning, James.

Hey, James.

So, Jeff, clearly, international outlook, second half better than first half, we get that. But as well, a little bit of a wild card, but curious where you think there could be pockets of, you know, strength that emerge knowing that, you know, neither you or I, as long as we were doing this, have a, you know, a crystal ball and the cycle is always gonna play out a little bit differently. But we've got a lot of things in the works here that could influence the oil price. And so could cause some markets to either inflect higher or lower, where do you think the maybe the surprises could come from if you think about a higher oil price environment in the second half and leading into, of course, as you described it, a solid upturn in 'twenty seven, 'twenty eight?

Well, look. I think, Argentina is one that's gonna respond. It's already responding. But I think when I think about that market, the pace of interest in, you know, international investors in that market is high.

I mean, that's become a very solid market that's gonna become more and more responsive to commodity price in a positive way. You know, kudos to the operators in that market today who have, you know, taken on the challenge of building infrastructure and back evacuating the hydrocarbons from the market. I mean, these are all of the things that a very dynamic market can do and will do and that's what we're seeing being done in Argentina. I think The Caribbean is another place where really excited about, you know, possibilities and what could happen sort of throughout The Caribbean.

You know, as we look at next year, I think that, you know, West Africa is another where we're seeing sort of renewed interest in and better terms for operators and better terms for us where we're able to execute, you know, sort of all of our services in these markets. So I'm pleased with that. I think that's a bright spot. And then ultimately, Algeria I think, over time, you know, in '26 could become a brighter spot than we would expect.

So I'm thinking about upside surprise. I think those are some of the places where we could see those.

Okay. That's very helpful, Jeff. And then just a follow-up for me. On the power markets broadly.

You know, VoltaGrid is obviously you with your investment there and taking them into The Middle East and leveraging your platform is critical here. How are you thinking about other potential investments in power? Is VoltaGrid kind of your main objective here or you talking with others? I mean, how do you think about this, the build-out of, you know, the electrification theme and the data center theme and the power theme?

As it relates to Halliburton.

Well, thanks. It's one of the things that we take a step at a time is the bottom line. I mean, we're certainly aligned with VoltaGrid in The US. We're knowledgeable and have built out a team around power that's looking at our international business.

Both in The Middle East and beyond The Middle East, most certainly. And so, you know, I think what we'll do, like we do in all things around here, is we take them a step at a time. We build businesses. We don't get ahead of our skis.

And, you know, we look for the things that we think will be contributing to that. And so, you know, the outlook is really good in this area. We know a lot about it. And would expect that we continue to grow that business as we, you know, get deals done.

Got it. Thanks, Jeff.

Our next question or comment comes from the line of Stephen Gengaro from Stifel. Mr. Gengaro, your line is open.

Thank you. Good morning, everybody.

Good morning.

Good morning, Stephen.

So curious, Jeff, do you what do you think about, like, the fourth quarter was stronger than we had thought and there was less downtime '4. You know, more solid than we expected. I think, you know, the operators that we work for, they busy. I mean, we've got a solid group of customers that take a long view of unconventionals and technology for that matter. And so for that reason, you know, stayed busier certainly for us.

And I think that, you know, that's probably how this market may look more this way over time, although I expect there probably will be, you know, solid inflection if commodity price gives us some help.

Thank you. And then the follow-up is just around sort of your expectations for sort of completion of efficiency and sort of the impact on US production, just as we're thinking about, you know, kind of frac demand relative to some of the other high-tech services you provide and how that kinda impacts US production. And if you think we have enough activity right now to sustain production.

Yeah. You know, outlook is we're probably at maintenance sort of levels today, if not below those. Is my view. Know?

And I think that, you know, technology driving better recovery is really the key as we look ahead. I mean, the go faster, we are going faster, but we're pumping continuous pumping at rates that, you know, you really just can't pump any faster. And so I think the real hurdle is going to be how to better produce a fantastic resource. And I know that technology is at the core of that same as it has been everywhere.

And so look, I think our frac fleets get bigger than they were in the past. You know? And so I think it takes more horsepower to do more work. It takes more technology to keep the both working, continuous pumping.

Requires technology as does certainly the ability to place sand. That said, our drilling services business is continuing to strengthen into what has been a, you know, a slowing market, at least from a rig count standpoint. And I think that's a reflection again of technology. You know, what we do with Logix, which is our automation platform for drilling, what the tools themselves are able to do.

We see somewhat I mean, that the uptake on that's been fantastic, and I think that's all driven by, you know, the real drilling, requirements to, you know, drill longer wells, longer wells, more complex wells. And so look. I'm just pleased with the growth of technology for both of our divisions today.

Great. Thanks for all the color.

Yep. Thank you.

Thank you. Our next question or comment comes from the line of Scott Gruber from Citigroup. Mr. Gruber, your line is now open.

Yes. Good morning, Jeff and Eric.

Morning.

Morning.

I wanna come back to Power as the growth prospect. Are certainly exciting and exciting to hear that they're bubbling to the surface internationally. How do the prospective returns on these power projects compare to your organic investments? You know, you also have pockets of growth, obviously, within your core, and maybe that expands with Venezuela.

So just curious how the power project returns kind of compare. Are they higher, lower, broadly in line? And more importantly, kinda how does that shape, you know, the vigor with which you could deploy capital into the power opportunities?

Yeah. Yeah. It's Eric here. So I think it will depend on the opportunities, the country, what type of other potential power sources we would be competing with.

So it's really early to tell you that it's, you know, accretive, dilutive to our current return. It will depend. But overall, these are typically very long-term contracts, you know, where you enter in it with a fairly low-risk long-term, very good view of what you have to deliver. And if we look at the comparison of what's been happening in North America, then you could say the returns are probably higher than what we have today.

I got it. Thank you, Eric. And then, Eric, maybe if you could walk through some of the items that will impact cash conversion this year. You know, thinking about working capital, do you anticipate continued catch-up payments?

You know, from your customer in Mexico? Anything to note on cash taxes and, you know, any comment on SAP spending, you know, for the full course of the year? Would be appreciated.

Yeah. I mean, look. There is a lot of moving parts in what you're describing. It's a bit early to comment on working capital impact, collections, etcetera.

I mean collections have been great throughout the year. It was a bit challenging as we talked on several calls. Collecting from Mexico. The situation seemed to be going a lot better.

So look, we'll give more details and we'll update our thoughts overall on all the kinda ins and outs, that that touches, you know, the projection around free cash flow.

Okay. Thank you.

Our next question or comment comes from the line of Derek Podhaizer from Piper Sandler. Mr. Podhaizer, your line is now open.

Hey. Good morning. I just wanted to go back to the attrition discussion in US land. Obviously, a lot of moving pieces here between equipment high grading, idling, stacking legacy diesel fleets, redeploying some of those fleets international.

Unconventional markets. But just when you look at your fleet, maybe Kansas, the market, is everything deployed that could be, or are there a few fleets that could be thrown together? Just trying to think through the tangible attrition in your comment around the small increase in demand could tighten this market quickly. What does that look like for you?

And the market, and what could it mean for C and T specifically this year?

Well, we have consciously stacked fleets. We stacked fleets in Q3. And we stacked some more fleets in Q4, all of which could go back to work for returns that are acceptable to us, and some of those may go. But, you know, from our standpoint, our fleet's in really good shape. And, there are things that could go to work that aren't working.

And they will go to work when we see, you know, the appropriate level of pricing for those. But when I look at the whole market in terms of attrition, I'll just use, you know, an observation, in terms of fleet size. You know, we've got let's say, 65,000 horsepower out for a simul frac, we see a number of fleets in the market running 120,000 horsepower to do similar work that tells me that, you know, equipment is being repaired and put together and an effort to keep it working, which tells me that expanding or taking those apart, would be really a challenge. And so the market is moving more towards bigger fracs that require more equipment, and I think the ability to add fleets is just really not there.

And so it doesn't take much in my view to create tightness just because the performance requirements are high. The technology requirements are increasing, and all of those things create quite a bit of tightness.

Got it. That's helpful. Moving over to The Middle East, I know in your comments, you talked about a flattish outlook, even slightly down. Can you just maybe walk through some of the regions for us and what you're seeing specifically Saudi, UAE, Kuwait, Oman, Iraq, anything else you'd like to highlight?

Look. I see fairly stable in most of those markets. You know, there's always shifting from completion to drilling and drilling to completion in some. I'd say, you know, UAE is strong.

Kuwait is very strong for us. I think Iraq is a good story in terms of activity that we see coming up. And so look, I think as I look across the entirety of The Middle East, fairly stable. See, again, rigs being added in Saudi Arabia, very positive.

But taking a bit of a more cautious view around the timing of that.

Got it. Great. Thanks, Jeff. I'll turn it back.

Thank you.

Our next question or comment comes from the line of Marc Bianchi from TD Cowen. Mr. Bianchi, your line is now open.

Hey. Thank you. Jeff, I was hoping you could comment on the offshore market outlook in a little bit more detail. I think everybody is sort of anticipating some sort of uptick in the '6. But there have been prior calls for upticks that didn't materialize. So just kind of curious what your view is on that.

Look, I'll leave a lot of that to the rig contract in terms of rig placements, etcetera, but we've won a lot of offshore work. It's very strong for us. Continues to be a significant part of our international business. And I'd say the bias towards integration and our value proposition in offshore is important, and it's one of the reasons that we're winning work in offshore.

It's really strong in Norway, Latin America, West Africa. All of those will be busy for us. And I think the other indicator is our completion tool order book is at an all-time high, which, you know, tends to be, again, biased towards deepwater and offshore work. So, you know, from our perspective, that's a strong business for us, and expect it, where we are for it to stay strong in 2026.

Okay. Great. Thanks. And then the other question I have was on Venezuela.

Going back to that. So you had mentioned that you're looking to grow the business as soon as commercial and legal terms are resolved. And including payment certainty. Can you maybe level set for us what that timeline might look like?

And is this going to be led by the IOCs and then Halliburton will follow? Or do you anticipate Halliburton moving in either coincident or perhaps before some of these IOCs make up their mind?

Well, I think there's, you know, paths to both of those. And, you know, as we work through what payment certainty looks like and how we solve for that, obviously, IOCs are an important part of that, but we also there are companies operating there today that we can work for under the right conditions and circumstances. And so, you know, from a timing perspective, as we solve those, which I don't think there's a lot of will to solve for these things. And so, you know, this is, you know, we can mobilize in weeks.

I think it's in months. That we, you know? But, again, we work through those things, but I feel confident we can move fairly quickly as opportunities arise. And, again, talking with lots of customers, some operating, some wanting to operate, and, you know, and this will all be a continuum of getting back to work in Venezuela.

Okay. Very good. I'll turn it back. Thank you.

I'm afraid that's all the time we have for questions. At this time. I would like to turn the conference back over to Mr. Miller for any closing remarks.

Yes. Thank you, Howard. Before we wrap up today's call, let me close with this. I'm excited about Halliburton's opportunities now and in the years ahead.

Our differentiated technology delivers exceptional value for our customers and for Halliburton, and the ongoing shift towards collaborative work means Halliburton is squarely where the market is headed. Look forward to speaking with you again next quarter.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day.