UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
[X]   Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended SeptemberJune 30, 20172023

or
OR

[   ]   Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____

_______to_______
Commission File Number 001-03492

HALLIBURTON COMPANY

(a Delaware corporation)Exact name of registrant as specified in its charter)
Delaware75-2677995
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)

3000 North Sam Houston Parkway East,Houston,Texas77032
(Address of principal executive offices)(Zip Code)
3000 North Sam Houston Parkway East
Houston, Texas  77032
(Address of Principal Executive Offices)

Telephone Number – Area Code (281) 871-2699

(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, par value $2.50 per shareHALNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.☒ Yes ☐ No

Yes[X]No[   ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).☒ Yes ☐ No
Yes[X]No[   ]


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filerAccelerated Filer[X]☒Accelerated filerFiler[   ]☐
Non-accelerated filerFiler[   ]☐(Do not check if a smaller reporting company)Smaller Reporting Company☐
Smaller reporting company[   ]Emerging growth companyGrowth Company[   ]☐


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Yes[   ]No[ ]

☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐ Yes ☒ No
Yes[   ]No[X]

As of October 20, 2017,July 19, 2023, there were 872,540,903898,546,281 shares of Halliburton Company common stock, $2.50 par value per share, outstanding.



HALLIBURTON COMPANY


Index

Page No.
1
1
Condensed Consolidated Statements of Operations
1
Condensed Consolidated Statements of Comprehensive Income
2
Condensed Consolidated Balance Sheets
3
Condensed Consolidated Statements of Cash Flows
4
Notes to Condensed Consolidated Financial Statements
5
Note 1. Basis of Presentation
5
Note 2. Business Segment Information
5
Note 3. Revenue
6
Note 4. Inventories
8
Note 5. Accounts Payable
8
Note 6. Income Taxes
8
Note 7. Shareholders' Equity
9
Note 8. Commitments and Contingencies
10
Note 9. Income per Share
10
Note 10. Fair Value of Financial Instruments
11
Page No.
FINANCIAL INFORMATION
1
Item 1.
Financial Statements
1
-       Condensed Consolidated Statements of Operations
1
-       Condensed Consolidated Statements of Comprehensive Income
2
-       Condensed Consolidated Balance Sheets
3
-       Condensed Consolidated Statements of Cash Flows
4
-       Notes to Condensed Consolidated Financial Statements
5
Item 2.
1312
Executive Overview
12
Liquidity and Capital Resources
15
Business Environment and Results of Operations
17
Results of Operations in 2023 Compared to 2022 (QTD)
19
Results of Operations in 2023 Compared to 2022 (YTD)
21
Forward-Looking Information
23
2523
2523
2624
2624
2624
2725
2725
2725
25
2726
Exhibits
2827
SIGNATURES
29



PART I.FINANCIAL INFORMATION
Item 1.Financial Statements


HALLIBURTON COMPANY
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended
June 30		Six Months Ended
June 30
Millions of dollars and shares except per share data2023202220232022
Revenue:    
Services$4,181 $3,686 $8,347 $6,759 
Product sales1,617 1,388 3,128 2,599 
Total revenue5,798 5,074 11,475 9,358 
Operating costs and expenses:    
Cost of services3,404 3,123 6,803 5,833 
Cost of sales1,316 1,166 2,563 2,155 
General and administrative54 67 108 119 
Impairments and other charges— 344 — 366 
SAP S4 upgrade expense13 — 13 — 
Total operating costs and expenses4,787 4,700 9,487 8,473 
Operating income1,011 374 1,988 885 
Interest expense, net of interest income of $28, $24, $67, and $43(92)(101)(171)(208)
Loss on Blue Chip Swap transactions(104)— (104)— 
Loss on early extinguishment of debt— — — (42)
Other, net(32)(42)(101)(72)
Income before income taxes783 231 1,612 563 
Income tax provision(167)(114)(341)(182)
Net income$616 $117 $1,271 $381 
Net income attributable to noncontrolling interest(6)(8)(10)(9)
Net income attributable to company$610 $109 $1,261 $372 
Basic net income per share$0.68 $0.12 $1.40 $0.41 
Diluted net income per share$0.68 $0.12 $1.39 $0.41 
Basic weighted average common shares outstanding901 904 902 902 
Diluted weighted average common shares outstanding903 909 905 906 
See notes to condensed consolidated financial statements.
HAL Q2 2023 FORM 10-Q | 1
 Three Months Ended
September 30		Nine Months Ended
September 30
Millions of dollars and shares except per share data2017201620172016
Revenue:    
Services$4,118
$2,695
$10,971
$8,320
Product sales1,326
1,138
3,709
3,546
Total revenue5,444
3,833
14,680
11,866
Operating costs and expenses: 
 
 
 
Cost of services3,686
2,743
10,242
8,476
Cost of sales1,069
919
3,008
2,843
General and administrative55
43
185
132
Impairments and other charges—
—
262
3,189
Merger-related costs and termination fee—
—
—
4,057
Total operating costs and expenses4,810
3,705
13,697
18,697
Operating income (loss)634
128
983
(6,831)
Interest expense, net of interest income of $30, $18, $81 and $38(115)(141)(478)(502)
Other, net(23)(39)(67)(117)
Income (loss) from continuing operations before income taxes496
(52)438
(7,450)
Income tax (provision) benefit(135)59
(81)1,836
Income (loss) from continuing operations361
7
357
(5,614)
Loss from discontinued operations, net—
—
—
(2)
Net income (loss)$361
$7
$357
$(5,616)
Net (income) loss attributable to noncontrolling interest4
(1)4
2
Net income (loss) attributable to company$365
$6
$361
$(5,614)
Amounts attributable to company shareholders: 
 
 
 
Income (loss) from continuing operations$365
$6
$361
$(5,612)
Loss from discontinued operations, net—
—
—
(2)
Net income (loss) attributable to company$365
$6
$361
$(5,614)
     
Basic net income (loss) per share$0.42
$0.01
$0.42
$(6.53)
Diluted net income (loss) per share$0.42
$0.01
$0.41
$(6.53)
Basic weighted average common shares outstanding872
862
869
860
Diluted weighted average common shares outstanding873
864
872
860
Cash dividends per share$0.18
$0.18
$0.54
$0.54
     See notes to condensed consolidated financial statements.    

HALLIBURTON COMPANY
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)

Three Months Ended
June 30		Six Months Ended
June 30
Millions of dollars2023202220232022
Net income$616 $117 $1,271 $381 
Other comprehensive income (loss), net of income taxes1 (1)2 4 
Comprehensive income$617 $116 $1,273 $385 
Comprehensive income attributable to noncontrolling interest(6)(8)(10)(9)
Comprehensive income attributable to company shareholders$611 $108 $1,263 $376 
See notes to condensed consolidated financial statements.

HAL Q2 2023 FORM 10-Q | 2
 Three Months Ended
September 30		Nine Months Ended
September 30
Millions of dollars2017201620172016
Net income (loss)$361
$7
$357
$(5,616)
Other comprehensive income, net of income taxes2
1
6
3
Comprehensive income (loss)$363
$8
$363
$(5,613)
Comprehensive (income) loss attributable to noncontrolling interest4
(1)4
2
Comprehensive income (loss) attributable to company shareholders$367
$7
$367
$(5,611)
     See notes to condensed consolidated financial statements.    


HALLIBURTON COMPANY
Condensed Consolidated Balance Sheets
(Unaudited)

Millions of dollars and shares except per share dataJune 30,
2023		December 31,
2022
Assets
Current assets:  
Cash and equivalents$2,105 $2,346 
Receivables (net of allowances for credit losses of $723 and $731)4,946 4,627 
Inventories3,241 2,923 
Other current assets1,151 1,056 
Total current assets11,443 10,952 
Property, plant, and equipment (net of accumulated depreciation of $11,768 and $11,660)4,483 4,348 
Goodwill2,840 2,829 
Deferred income taxes2,570 2,636 
Operating lease right-of-use assets1,054 913 
Other assets1,683 1,577 
Total assets$24,073 $23,255 
Liabilities and Shareholders’ Equity
Current liabilities:  
Accounts payable$3,188 $3,121 
Accrued employee compensation and benefits567 634 
Taxes other than income350 349 
Income tax payable267 294 
Current portion of operating lease liabilities253 224 
Other current liabilities721 723 
Total current liabilities5,346 5,345 
Long-term debt7,931 7,928 
Operating lease liabilities892 791 
Employee compensation and benefits385 408 
Other liabilities792 806 
Total liabilities15,346 15,278 
Shareholders’ equity:  
Common stock, par value $2.50 per share (authorized 2,000 shares, issued 1,065 and 1,066 shares)2,663 2,664 
Paid-in capital in excess of par value— 50 
Accumulated other comprehensive loss(228)(230)
Retained earnings11,459 10,572 
Treasury stock, at cost (167 and 164 shares)(5,201)(5,108)
Company shareholders’ equity8,693 7,948 
Noncontrolling interest in consolidated subsidiaries34 29 
Total shareholders’ equity8,727 7,977 
Total liabilities and shareholders’ equity$24,073 $23,255 
See notes to condensed consolidated financial statements.

HAL Q2 2023 FORM 10-Q | 3
Millions of dollars and shares except per share dataSeptember 30,
2017		December 31,
2016
Assets
Current assets:  
Cash and equivalents$1,898
$4,009
Receivables (net of allowances for bad debts of $165 and $175)4,852
3,922
Inventories2,444
2,275
Prepaid income taxes53
585
Other current assets897
886
Total current assets10,144
11,677
Property, plant and equipment (net of accumulated depreciation of $11,911 and $11,198)8,432
8,532
Goodwill2,685
2,414
Deferred income taxes2,191
1,960
Other assets2,338
2,417
Total assets$25,790
$27,000
Liabilities and Shareholders’ Equity
Current liabilities: 
 
Accounts payable$2,416
$1,764
Accrued employee compensation and benefits706
544
Short-term borrowings and current maturities of long-term debt515
170
Other current liabilities964
1,545
Total current liabilities4,601
4,023
Long-term debt10,423
12,214
Employee compensation and benefits571
574
Other liabilities949
741
Total liabilities16,544
17,552
Shareholders’ equity: 
 
Common shares, par value $2.50 per share (authorized 2,000 shares,
issued 1,069 and 1,070 shares)
2,673
2,674
Paid-in capital in excess of par value169
201
Accumulated other comprehensive loss(448)(454)
Retained earnings13,649
14,141
Treasury stock, at cost (197 and 204 shares)(6,826)(7,153)
Company shareholders’ equity9,217
9,409
Noncontrolling interest in consolidated subsidiaries29
39
Total shareholders’ equity9,246
9,448
Total liabilities and shareholders’ equity$25,790
$27,000
     See notes to condensed consolidated financial statements.  


HALLIBURTON COMPANY
Condensed Consolidated Statements of Cash Flows
(Unaudited)

Six Months Ended
June 30
Millions of dollars20232022
Cash flows from operating activities:  
Net income$1,271 $381 
Adjustments to reconcile net income to cash flows from operating activities:  
     Depreciation, depletion, and amortization486 470 
     Impairments and other charges— 366 
Changes in assets and liabilities:  
     Receivables(337)(930)
     Inventories(318)(371)
     Accounts payable66 491 
     Other operating activities6 (81)
Total cash flows provided by operating activities1,174 326 
Cash flows from investing activities:  
     Capital expenditures(571)(410)
Purchases of investment securities(270)(10)
Sales of investment securities103 — 
     Proceeds from sales of property, plant, and equipment90 116 
     Other investing activities(48)(44)
Total cash flows used in investing activities(696)(348)
Cash flows from financing activities:  
     Stock repurchase program(348)— 
     Dividends to shareholders(289)(217)
     Payments on long-term borrowings— (642)
     Other financing activities(7)116 
Total cash flows used in financing activities(644)(743)
Effect of exchange rate changes on cash(75)(53)
Decrease in cash and equivalents(241)(818)
Cash and equivalents at beginning of period2,346 3,044 
Cash and equivalents at end of period$2,105 $2,226 
Supplemental disclosure of cash flow information:  
Cash payments during the period for:  
     Interest$228 $244 
     Income taxes$388 $190 
See notes to condensed consolidated financial statements.

HAL Q2 2023 FORM 10-Q | 4

 Nine Months Ended
September 30
Millions of dollars20172016
Cash flows from operating activities:  
Net income (loss)$357
$(5,616)
Adjustments to reconcile net income (loss) to cash flows from operating activities: 
 
Depreciation, depletion and amortization1,163
1,117
U.S. tax refund478
430
Payment related to the Macondo well incident(368)(33)
Impairments and other charges262
3,189
Deferred income tax benefit, continuing operations(183)(1,511)
Changes in assets and liabilities: 
 
Receivables(1,064)682
Accounts payable611
(461)
Inventories(49)388
Other250
(947)
Total cash flows provided by (used in) operating activities1,457
(2,762)
Cash flows from investing activities: 
 
Capital expenditures(934)(625)
Payments to acquire businesses, net of cash acquired
(628)—
Proceeds from sales of property, plant and equipment111
176
Other investing activities(56)(73)
Total cash flows used in investing activities(1,507)(522)
Cash flows from financing activities: 
 
Payments on long-term borrowings(1,633)(3,149)
Dividends to shareholders(469)(465)
Other financing activities92
163
Total cash flows used in financing activities(2,010)(3,451)
Effect of exchange rate changes on cash(51)(53)
Decrease in cash and equivalents(2,111)(6,788)
Cash and equivalents at beginning of period4,009
10,077
Cash and equivalents at end of period$1,898
$3,289
Supplemental disclosure of cash flow information: 
 
Cash payments (receipts) during the period for: 
 
Interest$455
$516
Income taxes$(240)$(25)
     See notes to condensed consolidated financial statements.  


Part I. Item 1 | Notes to Condensed Consolidated Financial Statements
HALLIBURTON COMPANY
Notes to Condensed Consolidated Financial Statements
(Unaudited)


Note 1. Basis of Presentation


The accompanying unaudited condensed consolidated financial statements were prepared using generally accepted accounting principles 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 generally accepted accounting principles for annual financial statements and should be read together with our 20162022 Annual Report on Form 10-K.


Our accounting policies are in accordance with United States generally accepted accounting principles. 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.

•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, the condensed consolidated financial statements included herein contain all adjustments necessary to present fairly our financial position as of SeptemberJune 30, 2017,2023 and the results of our operations for the three and ninesix months endedSeptember June 30, 20172023 and 2016,2022, and our cash flows for the ninesix months ended SeptemberJune 30, 20172023 and 2016.2022. 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 the three and ninesix months ended SeptemberJune 30, 20172023 may not be indicative of results for the full year.


Note 2. Business Segment and Geographic Information


We operate under two divisions, which form the basis for the two operating segments we report: the Completion and Production segment and the Drilling and Evaluation segment. Intersegment revenue was immaterial. 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.


HAL Q2 2023 FORM 10-Q | 5
Part I. Item 1 | Notes to Condensed Consolidated Financial Statements
The following table presents information on our business segments.
 Three Months Ended
June 30		Six Months Ended
June 30
Millions of dollars2023202220232022
Revenue:  
Completion and Production$3,476 $2,911 $6,885 $5,264 
Drilling and Evaluation2,322 2,163 4,590 4,094 
Total revenue$5,798 $5,074 $11,475 $9,358 
Operating income:
Completion and Production$707 $499 $1,373 $795 
Drilling and Evaluation376 286 745 580 
Total operations1,083 785 2,118 1,375 
Corporate and other (a)(59)(67)(117)(124)
SAP S4 upgrade expense(13)— (13)— 
Impairments and other charges (b)— (344)— (366)
Total operating income$1,011 $374 $1,988 $885 
Interest expense, net of interest income(92)(101)(171)(208)
Loss on Blue Chip Swap transactions (c)(104)— (104)— 
Loss on early extinguishment of debt— — — (42)
Other, net(32)(42)(101)(72)
Income before income taxes$783 $231 $1,612 $563 
(a)Includes certain expenses not attributable to a business segment, such as costs related to support functions, corporate executives, and operating lease assets, and also includes amortization expense associated with intangible assets recorded as a result of acquisitions.
(b)For the three and six months ended June 30, 2022 respectively, the amounts include $131 million and $136 million charges attributable to Completions and Production, and $178 million and $195 million charges attributable to Drilling and Evaluation. Both periods include a $35 million charge attributable to Corporate and other.
(c)The Central Bank of Argentina maintains currency controls that limit our ability to access U.S. dollars in Argentina and remit cash from our Argentine operations. Our execution of certain trades, known as Blue Chip Swaps, which effectively results in a parallel U.S. dollar exchange rate, resulted in a $104 million pre-tax loss during the second quarter of 2023.

Note 3. 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. Most of 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 of factors, 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 our two reportable segments, in addition to geographical area. Based on the location of services provided and products sold, 46% and 44%of our consolidated revenue was from the United States for the six months ended June 30, 2023 and 2022, respectively. No other country accounted for more than 10% of our revenue.

HAL Q2 2023 FORM 10-Q | 6
 Three Months Ended
September 30		Nine Months Ended
September 30
Millions of dollars2017201620172016
Revenue:    
Completion and Production$3,537
$2,176
$9,273
$6,614
Drilling and Evaluation1,907
1,657
5,407
5,252
Total revenue$5,444
$3,833
$14,680
$11,866
Operating income (loss):    
Completion and Production$525
$24
$1,069
$22
Drilling and Evaluation180
151
427
546
Total operations705
175
1,496
568
Corporate and other (a)(71)(47)(251)(4,210)
Impairments and other charges—
—
(262)(3,189)
Total operating income (loss)$634
$128
$983
$(6,831)
Interest expense, net of interest income(115)(141)(478)(502)
Other, net(23)(39)(67)(117)
Income (loss) from continuing operations before income taxes$496
$(52)$438
$(7,450)
Part I. Item 1 | Notes to Condensed Consolidated Financial Statements

The following table presents information on our disaggregated revenue.
(a) Corporate
Three Months Ended
June 30		Six Months Ended
June 30
Millions of dollars2023202220232022
Revenue by segment:
Completion and Production$3,476 $2,911 $6,885 $5,264 
Drilling and Evaluation2,322 2,163 4,590 4,094 
Total revenue$5,798 $5,074 $11,475 $9,358 
Revenue by geographic region:
North America$2,696 $2,426 $5,461 $4,351 
Latin America994 758 1,909 1,411 
Europe/Africa/CIS698 718 1,360 1,395 
Middle East/Asia1,410 1,172 2,745 2,201 
Total revenue$5,798 $5,074 $11,475 $9,358 

Contract balances
We perform our obligations under contracts with our customers by transferring services and other includes certain expensesproducts in exchange for consideration. The timing of our performance often differs from the timing of our customer’s 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 attributablematerial to a particular business segmentour 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 of one year or less. We have some long-term contracts related to software and integrated project management services such as costs relatedlump sum turnkey contracts. For software contracts, revenue is generally recognized over time throughout the license period when the software is considered to support functions and corporate executives. Other items include amortization expense associated with intangible assets recorded asbe a result ofright to access our acquisitions in the third quarter of 2017 and merger-related costs and termination fee incurred during the nine months ended September 30, 2016.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 SeptemberJune 30, 2017, 43%2023, 35% of our grossnet trade receivables were from customers in the United States and 9%11% were from customers in Venezuela.Mexico. As of December 31, 2016, 28%2022, 38% of our grossnet trade receivables were from customers in the United States and 15%11% were from customers in Venezuela. Other thanMexico. Receivables from our primary customer in Mexico accounted for approximately 9% of our total receivables as of June 30, 2023 and December 31, 2022. While we have experienced payment delays from our primary customer in Mexico, the United Statesamounts are not in dispute and Venezuela, nowe have not historically had, and we do not expect, any material write-offs due to collectability of receivables from this customer. No other country or single customer accounted for more than 10% of our grossnet trade receivables at thesethose 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 a high degree of judgment utilizing significant assumptions, includes analysis of our customers’ historical time to pay, financial condition and various financial metrics, debt structure, credit agency ratings, and production profile, as well as political and economic factors in countries of operations and other customer-specific factors.


Venezuela. Although we have continued to experience delays in collecting payments on our receivables from our primary customer in Venezuela, our outstanding receivables are not disputed, and we continue to believe that they are collectable, with appropriate classification between short-term and long-term on our condensed consolidated balance sheets. In assessing the collectability of these receivables, we considered our historical collection experience with this customer, including both payments received prior to the industry downturn and continued collections at reduced levels during the downturn, and the fact that we have not historically had material write-offs relating to this customer. We also took into account the continued importance to the Venezuelan economy of oil production, our strategic relationship with this customer, our current activity levels and our current intention to continue to provide services to this customer, and an evaluation of this customer’s financial solvency. We also incorporated assumptions regarding potential future events based on market pricing data points. We are actively managing our relationship with this customer, with ongoing dialogue between key executives of both companies, including discussions regarding this customer's intention to pay long-aged trade receivables.
HAL Q2 2023 FORM 10-Q | 7

In the second quarter of 2016, we exchanged $200 million of accounts receivables with our primary customer in Venezuela for an interest-bearing promissory note with a par value of the same amount. We recognized a pre-tax loss on the exchange of $148 million, representing the difference between the par value and fair market value of the note. We are accreting the carrying amount of the note to its par value and the carrying amount of this note is $116 million as of September 30, 2017. Although this customer has made all scheduled interest payments on the note, they did not make the first scheduled principal payment in the third quarter of 2017, which they informed us was due to banking complications. We continue to have discussions with this customer regarding the delay, and they have confirmed their intention to make the payment. While we believe that our customer will make all required payments on this note, further delays in payment on this promissory note or defaults on the customer's indebtedness to other parties may lead to a default on this promissory note. This would result in an impairment charge on the existing carrying amount of this note and potentially further charges on other receivables with this customer, which could have a material adverse effect on our consolidated financial statements.

In the second quarter of 2017, we made a decision to exchange an additional $375 million of outstanding accounts receivable with this customer for an interest-bearing promissory note with a par value of the same amount. We recognized a pre-tax loss of $262 million for a fair market value adjustment related to this exchange within "Impairments and other charges" on our condensed consolidated statements of operations. While this exchange has not been finalized, we continue to pursue this transaction in accordance with applicable law. Although we recognized fair value adjustments, we intend to hold both notes to maturity and collect the entire principal amounts. We do not intend to accept further notes as payment if offered, and we will continue to monitor political and economic conditions in Venezuela.

We have collected over $600 million on receivables in Venezuela since this industry downturn began in late 2014. We believe our collectability assumptions to be reasonable according to the current facts and circumstances. However, differences in actual experience or changes in facts and circumstances may materially affect our financial position or results of operations. Our assumptions and related judgments are sensitive to the political and economic conditions in Venezuela. If conditions in Venezuela worsen or if low commodity prices persist for an extended period of time, we may be required to record adjustments to our receivables balance. Our financial results can be affected by adjustments to these receivables, including any allowance for bad debts, actual write-offs of uncollectable amounts that differ from estimated amounts, fair value adjustments on existing receivables, and potential defaults on the promissory notes we hold.

Subsequent to the fair market value adjustment associated with the additional promissory note exchange, our total outstanding net trade receivables in Venezuela were $429 million as of September 30, 2017, compared to $610 million as of

December 31, 2016. The majority of our Venezuela receivables are United States dollar-denominated receivables. Of the $429 million of receivables in Venezuela as of September 30, 2017, $267 million have been classified as long-term and included within “Other assets” on our condensed consolidated balance sheets. See Note 7 for additional information about the promissory notes and Part II, Item 1(a), “Risk Factors” for additional information on risks associated with our operations in Venezuela, including recent sanctions imposed in Venezuela which could delay our ability to execute the promissory note exchange.

Part I. Item 1 | Notes to Condensed Consolidated Financial Statements
Note 3.4. Inventories


Inventories are stated at the lower of cost and net realizable value. In the United States, we manufacture certain finished products and parts inventories for drill bits, completion products, bulk materials and other tools that are recorded using the last-in, first-out method, which totaled $167 million as of September 30, 2017 and $133 million as of December 31, 2016. If the average cost method had been used, total inventories would have been $25 million higher than reported as of September 30, 2017 and $16 million higher as of December 31, 2016. The cost of the remaining inventory was recorded using the average cost method. Inventories consisted of the following:
Millions of dollarsJune 30,
2023		December 31,
2022
Finished products and parts$2,075 $1,859 
Raw materials and supplies1,037 953 
Work in process129 111 
Total inventories$3,241 $2,923 

Note 5. Accounts Payable

Effective January 1, 2023, we adopted new supplier finance program disclosure requirements contained in guidance issued by the Financial Accounting Standards Board (ASU 2022-04, "Disclosure of Supplier Finance Program Obligations"), other than the roll-forward disclosure, which we will adopt at the beginning of 2024.

We have agreements with third parties that allow 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 the suppliers’ decisions to finance amounts due under these financing arrangements. Our outstanding payment obligations under these agreements were $324 million as of June 30, 2023, and $273 million as of December 31, 2022, and are included in accounts payable on the condensed consolidated balance sheets.

Note 6. Income Taxes

During the three months ended June 30, 2023, we recorded a total income tax provision of $167 million on a pre-tax income of $783 million, resulting in an effective tax rate of 21.3% for the quarter. During the three months ended June 30, 2022, we recorded a total income tax provision of $114 million on a pre-tax income of $231 million, resulting in an effective tax rate of 49.3% for the quarter. The effective tax rate for the three months ended June 30, 2023 was lower than the three months ended June 30, 2022 primarily due to the impact on our effective tax rate for the second quarter of 2022 of the decision to sell our Russian operations and a corresponding increase in the valuation allowance on foreign tax credits.

During the six months ended June 30, 2023, we recorded a total income tax provision of $341 million on a pre-tax income of $1.6 billion, resulting in an effective tax rate of 21.1% for the period. During the six months ended June 30, 2022, we recorded a total income tax provision of $182 million on a pre-tax income of $563 million, resulting in an effective tax rate of 32.2% for the period. The effective tax rate for the six months ended June 30, 2023 was lower than the six months ended June 30, 2022 primarily due to the impact on our effective tax rate for the first six months of 2022 of the decision to sell our Russian operations and a corresponding increase in the valuation allowance on foreign tax credits.

HAL Q2 2023 FORM 10-Q | 8
Millions of dollarsSeptember 30,
2017		December 31,
2016
Finished products and parts$1,565
$1,388
Raw materials and supplies720
778
Work in process159
109
Total$2,444
$2,275
Part I. Item 1 | Notes to Condensed Consolidated Financial Statements

All amounts in the table above are reported net of obsolescence reserves of $280 million as of September 30, 2017 and $263 million as of December 31, 2016.

Note 4.7. Shareholders’ Equity


The following tables summarize our shareholders’ equity activity:activity for the three and six months ended June 30, 2023 and June 30, 2022, respectively:
Millions of dollarsCommon StockPaid-in Capital in Excess of Par ValueTreasury StockRetained EarningsAccumulated Other Comprehensive Income (Loss)Noncontrolling Interest in Consolidated SubsidiariesTotal
Balance at December 31, 2022$2,664 $50 $(5,108)$10,572 $(230)$29 $7,977 
Comprehensive income (loss):
Net income— — — 651 — 4 655 
Other comprehensive income— — — — 1 — 1 
Cash dividends ($0.16 per share)— — — (145)— — (145)
Stock repurchase program— — (100)— — — (100)
Stock plans (a)— (50)113 (3)— — 60 
Other— — — — — (3)(3)
Balance at March 31, 2023$2,664 $— $(5,095)$11,075 $(229)$30 $8,445 
Comprehensive income (loss):
Net income— — — 610 — 6 616 
Other comprehensive income— — — — 1 — 1 
Cash dividends ($0.16 per share)— — — (144)— — (144)
Stock repurchase program— — (250)— — — (250)
Stock plans (a)(1)— 144 (82)— — 61 
Other— — — — — (2)(2)
Balance at June 30, 2023$2,663 $— $(5,201)$11,459 $(228)$34 $8,727 
(a)In the first quarter and second quarter of 2023, we issued common stock from treasury shares for stock options exercised, restricted stock grants, and purchases under our employee stock purchase plan. As a result, additional paid in capital was reduced to zero as of the end of each period, which resulted in a reduction of retained earnings by $3 million and $82 million, respectively. Future issuances from treasury shares could similarly impact additional paid in capital and retained earnings.
Millions of dollarsCommon StockPaid-in Capital in Excess of Par ValueTreasury StockRetained EarningsAccumulated Other Comprehensive Income (Loss)Noncontrolling Interest in Consolidated SubsidiariesTotal
Balance at December 31, 2021$2,665 $32 $(5,511)$9,710 $(183)$15 $6,728 
Comprehensive income (loss):
Net income— — — 263 — 1 264 
Other comprehensive income— — — — 5 — 5 
Cash dividends ($0.12 per share)— — — (108)— — (108)
Stock plans (a)— (32)261 (85)— — 144 
Balance at March 31, 2022$2,665 $— $(5,250)$9,780 $(178)$16 $7,033 
Comprehensive income (loss):
Net income— — — 109 — 8 117 
Other comprehensive loss— — — — (1)— (1)
Cash dividends ($0.12 per share)— — — (109)— — (109)
Stock plans (a)— — 277 (163)— — 114 
Other— — — — — (6)(6)
Balance at June 30, 2022$2,665 $— $(4,973)$9,617 $(179)$18 $7,148 
(a)In the first and second quarter of 2022, we issued common stock from treasury shares for stock options exercised, restricted stock grants and purchases under our employee stock purchase plan. As a result, additional paid in capital was reduced to zero as of the end of each period, which resulted in a reduction of retained earnings by $85 million and $163 million, respectively. Future issuances from treasury shares could similarly impact additional paid in capital and retained earnings.
HAL Q2 2023 FORM 10-Q | 9
Millions of dollarsTotal shareholders' equityCompany shareholders' equityNoncontrolling interest in consolidated subsidiaries
Balance at December 31, 2016$9,448
$9,409
$39
Retained earnings adjustment for new accounting standard (a)(384)(384)—
Payments of dividends to shareholders(469)(469)—
Stock plans340
340
—
Other(52)(46)(6)
Comprehensive income (loss)363
367
(4)
Balance at September 30, 2017$9,246
$9,217
$29
Part I. Item 1 | Notes to Condensed Consolidated Financial Statements
(a) Represents a cumulative-effect adjustment to retained earnings upon our adoption of a new accounting standards update on the income tax consequences of intra-entity transfers of assets other than inventory which was effective January 1, 2017. See Note 8 for further information.
Millions of dollarsTotal shareholders' equityCompany shareholders' equityNoncontrolling interest in consolidated subsidiaries
Balance at December 31, 2015$15,495
$15,462
$33
Payments of dividends to shareholders(465)(465)—
Stock plans348
348
—
Other(39)(52)13
Comprehensive loss(5,613)(5,611)(2)
Balance at September 30, 2016$9,726
$9,682
$44

Our Board of Directors has authorized a program to repurchase our common stock from time to time. We purchased 8.1 million shares of our common stock under the program during the three months ended June 30, 2023 for approximately $250 million. Approximately $5.7$4.5 billion remains remained authorized for repurchases as of SeptemberJune 30, 2017.2023. From the inception of this program in February of 2006 through SeptemberJune 30, 2017,2023, we repurchased approximately 201242 million shares of our common stock for a total cost of approximately $9.6 billion.

approximately $8.4 billion. There were no repurchases made under the program during the nine months ended September 30, 2017.

Accumulated other comprehensive loss consisted of the following:
Millions of dollarsJune 30,
2023		December 31,
2022
Cumulative translation adjustments$(82)$(84)
Defined benefit and other postretirement liability adjustments(102)(101)
Other(44)(45)
Total accumulated other comprehensive loss$(228)$(230)
Millions of dollarsSeptember 30,
2017		December 31,
2016
Defined benefit and other postretirement liability adjustments$(313)$(313)
Cumulative translation adjustments(78)(80)
Other(57)(61)
Total accumulated other comprehensive loss$(448)$(454)


Note 5.8. Commitments and Contingencies


Macondo well incident
The semisubmersible drilling rig, Deepwater Horizon, sank on April 22, 2010 after an explosionCompany is subject to various legal or governmental proceedings, claims or investigations, including personal injury, property damage, environmental, intellectual property, commercial, tax, and fire onboard the rig that began on April 20, 2010. The Deepwater Horizon was owned by an affiliate of Transocean Ltd. and had been drilling the Macondo exploration wellother matters arising in the Gulfordinary course of Mexico forbusiness, the lease operator, BP Exploration & Production, Inc. (BP). We performed a variety of services on that well for BP. Numerous lawsuits relating to the Macondo well incident and alleging damages arising from the blowout were filed against various parties, including BP, Transocean and us, in federal and state courts throughout the United States, mostresolution of which, were consolidated in a Multi District Litigation proceeding (MDL) in the United States Eastern Districtopinion of Louisiana. The defendants in the MDL proceeding filed a variety of cross claims against each other.
The trial for the first phase of the MDL proceeding occurred in February 2013 through April 2013 and covered issues arising out of the conduct and degree of culpability of various parties. In September 2014, the MDL court ruled that, among other things, (1) in relation to the Macondo well incident, BP’s conduct was reckless, Transocean’s conduct was negligent, and our conduct was negligent, (2) fault for the Macondo well incident was apportioned 67% to BP, 30% to Transocean and 3% to us, and (3) the indemnity and release clauses in our contract with BP are valid and enforceable against BP. The MDL court did not find that our conduct was grossly negligent, thereby eliminating our exposure in the MDL for punitive damages.

In September 2014, we reached an agreement, subject to court approval, to settle a substantial portion of the plaintiffs’ claims asserted against us relating to the Macondo well incident (our MDL Settlement) for an aggregate of $1.1 billion. The Court issued final approval of our MDL Settlement and the period for appeal has expired. On May 20, 2015, we and BP entered into an agreement to resolve all remaining claims against each other, and pursuant to which BP will defend and indemnify us in future trials for compensatory damages. We have also entered into an agreement with Transocean to dismiss all claims made against each other. All of our payments with respect to our MDL Settlement have been made. We believe that there is no additional material financial exposure to us in relation to the Macondo well incident.

Securities and related litigation
In June 2002, a class action lawsuit was commenced against us in federal court alleging violations of the federal securities laws in connection with our change in accounting for revenue on long-term construction projects and related disclosures. In the weeks that followed, approximately twenty similar class actions were filed against us. The class action cases were later consolidated, and the amended consolidated class action complaint was filed and served upon us in April 2003. In June 2003, the plaintiffs filed a second amended consolidated complaint that included claims arising out of our 1998 acquisition of Dresser Industries, Inc. and our disclosures and reserves relating to our asbestos liability exposure.

In December 2016, we reached an agreement in principle to settle this lawsuit, without any admission of liability and subject to approval by the district court. During the second quarter of 2017, we paid approximately $54 million of the $100 million settlement fund, and our insurer paid the balance. On July 31, 2017, the district court issued final approval of the settlement. Plaintiff’s counsel fees and costs will be awarded from the settlement fund.

The settlement resolves all pending cases other than Magruder v. Halliburton Co., et. al. (the Magruder case). The allegations arise out of the same general events described above, but for a later class period, December 8, 2001 to May 28, 2002. There has been limited activity in the Magruder case. In March 2009, our motion to dismiss was granted, with leave to re-plead; in March 2012, plaintiffs filed an amended complaint and in May 2012, we filed another motion to dismiss, which remains pending. We cannot predict the outcome or consequences of this case, which we intend to vigorously defend.

Investigations
In December 2010, we received an anonymous e-mail alleging that certain current and former employees violated our Code of Business Conduct (COBC) and the Foreign Corrupt Practices Act (FCPA), principally through the use of an Angolan vendor to satisfy local content requirements. We notified the Department of Justice (DOJ) and initiated an internal investigation. The investigation was later expanded to include unrelated matters concerning a third-party customs agent in Angola and third-party customs and visa agents in Iraq. The DOJ and the Securities and Exchange Commission (SEC) also conducted investigations into these matters and we cooperated in those investigations.

In June 2017, we reached a preliminary understanding with the SEC staff to resolve the SEC's investigation. On July 27, 2017, the Commissioners of the SEC formally approved this settlement. To settle the investigation, we, without admitting or denying any of the factual findings, have consented to the entry of an administrative order stating that in connection with the use of a local content provider in Angola, we violated the books and records and internal controls provisions of the FCPA. In the third quarter of 2017, we made a total payment of approximately $29 million for disgorgement, prejudgment interest, and a civil penalty, and agreed to engage an independent consultant to review aspects of our compliance program in Africa.

Separately, the DOJ advised us that it has completed its investigation andmanagement, will not be taking any action regarding these matters.

Environmental
We are subject to numerous environmental, legal and regulatory requirements related to our operations worldwide. In the United States, these laws and regulations include, among others:
-the Comprehensive Environmental Response, Compensation, and Liability Act;
-the Resource Conservation and Recovery Act;
-the Clean Air Act;
-the Federal Water Pollution Control Act;
-the Toxic Substances Control Act; and
-the Oil Pollution Act.

In addition to the federal laws and regulations, states and other countries where we do business often have numerous environmental, legal, and regulatory requirements by which we must abide. We evaluate and address the environmental impact of our operations by assessing and remediating contaminated properties in order to avoid future liabilities and comply with environmental, legal and regulatory requirements. Our Health, Safety and Environment group has several programs in place to maintain environmental leadership and to help prevent the occurrence of environmental contamination. On occasion we are involved in environmental litigation and claims, including the remediation of properties we own or have operated, as well as efforts to meet or correct compliance-related matters. We do not expect costs related to those claims and remediation requirements to have a material adverse effect on our liquidity, consolidated results of operations or consolidated financial position. Our accrued liabilities for environmental matters were $44 millionThere is inherent risk in any legal or governmental proceeding, claim or investigation, and no assurance can be given as to the outcome of September 30, 2017 and $50 million as of December 31, 2016. Because our estimated liability is typically within a range and our accrued liability may be the amount on the low end of that range, our actual liability could eventually be well in excess of the amount accrued. Our total liability related to environmental matters covers numerous properties.these proceedings.

Additionally, we have subsidiaries that have been named as potentially responsible parties along with other third parties for seven federal and state Superfund sites for which we have established reserves. As of September 30, 2017, those seven sites accounted for approximately $3 million of our $44 million total environmental reserve. Despite attempts to resolve these Superfund matters, the relevant regulatory agency may at any time bring suit against us for amounts in excess of the amount accrued. With respect to some Superfund sites, we have been named a potentially responsible party by a regulatory agency; however, in each of those cases, we do not believe we have any material liability. We also could be subject to third-party claims with respect to environmental matters for which we have been named as a potentially responsible party.


Guarantee arrangements
In the normal course of business, we have in place agreements with financial institutions under which approximately $2.0$2.2 billion of letters of credit, bank guarantees, or surety bonds were outstanding as of SeptemberJune 30, 2017.2023. Some of the outstanding letters of credit have triggering events that would entitle a bank to require cash collateralization. None of these off balanceoff-balance sheet arrangements either has, or is likely to have, a material effect on our condensed consolidated financial statements.



Note 6.9. 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 sharessecurities represent potential common sharespotentially dilutive securities which are excluded from the computation of diluted income or loss per share as their impact would bewas antidilutive.


A reconciliation of the number of shares used for the basic and diluted income per share computations is as follows:
Three Months Ended
June 30		Six Months Ended
June 30
Millions of shares2023202220232022
Basic weighted average common shares outstanding901 904 902 902 
Dilutive effect of awards granted under our stock incentive plans2 5 3 4 
Diluted weighted average common shares outstanding903 909 905 906 
Antidilutive shares:
Options with exercise price greater than the average market price13 14 14 15 
Total antidilutive shares13 14 14 15 

HAL Q2 2023 FORM 10-Q | 10
 Three Months Ended
September 30		Nine Months Ended
September 30
Millions of shares2017201620172016
Basic weighted average common shares outstanding872
862
869
860
Dilutive effect of awards granted under our stock incentive plans1
2
3
—
Diluted weighted average common shares outstanding873
864
872
860
     
Antidilutive shares:    
Options with exercise price greater than the average market price14
12
6
13
Options which are antidilutive due to net loss position—
—
—
1
Total antidilutive shares14
12
6
14

Table of Contents
Part I. Item 1 | Notes to Condensed Consolidated Financial Statements
Note 7.10. Fair Value of Financial Instruments

At September 30, 2017, we held $105 million of investments in fixed income securities with maturities ranging from less than one year to September 2020, of which $66 million are classified as “Other current assets” and $39 million are classified as “Other assets” on our condensed consolidated balance sheets. At December 31, 2016, we also held $92 million of investments in fixed income securities. These securities consist primarily of corporate bonds and other debt instruments, are accounted for as available-for-sale and are recorded at fair value on quoted prices for identical assets in less active markets, which are categorized within level 2 on the fair value hierarchy.

At September 30, 2017 and December 31, 2016, we held an interest-bearing promissory note with our primary customer in Venezuela with a par value of $200 million. The initial fair value of the promissory note of $52 million was based on pricing data points for similar assets in an illiquid market and is categorized within level 3 on the fair value hierarchy. We are using an effective interest method to accrete the carrying amount to its par value as it matures. This accretion income is being recorded through “Interest expense, net of interest income” on our condensed consolidated statements of operations. As of September 30, 2017, the carrying amount of this promissory note was $116 million, consisting of a current portion of $92 million and non-current portion of $24 million, which are classified as “Receivables” and “Other assets,” respectively, on our condensed consolidated balance sheets. Although this customer has made all scheduled interest payments on the note, they did not make the first scheduled principal payment in the third quarter of 2017, which they informed us was due to banking complications. We continue to have discussions with this customer regarding the delay, and they have confirmed their intention to make the payment. As of September 30, 2017, the fair value of this note approximates its initial fair value, which is lower than its carrying amount. However, we continue to hold this note to maturity and account for it under an accretion model as we believe that our customer will make all required payments. Accordingly, we do not believe any write-downs of this note are appropriate at this time. We will continue to monitor conditions in Venezuela and assess the value of this note going forward. The carrying amount as of December 31, 2016 was $70 million, which approximated its fair value.

During the second quarter of 2017, we made a decision to exchange an additional $375 million of our accounts receivable with our primary customer in Venezuela for an additional interest-bearing promissory note with a par value of the same amount. We recognized a pre-tax loss of $262 million for a fair market value adjustment related to this exchange. We determined fair value based on pricing data points for similar notes in an illiquid market which is categorized within level 3 on the fair value hierarchy. While this exchange has not been finalized, we continue to pursue this transaction in accordance with applicable law. See Note 2 for further discussion.


We maintain an interest rate management strategy that is intended to mitigate the exposure to changes in interest rates in the aggregate for our debt portfolio. We use interest rate swaps to effectively convert a portion of our fixed rate debt to floating LIBOR-based rates. Our interest rate swaps, which expire when the underlying debt matures, are designated as fair value hedges of the underlying debt and are determined to be highly effective. These derivative instruments are marked to market with gains and losses recognized currently in interest expense to offset the respective gains and losses recognized on changes in the fair value of the hedged debt. During the first quarter of 2017, we terminated a series of our interest rate swaps with a notional amount of $1.4 billion in conjunction with our early redemption of senior notes. We included the gain from the swap termination in our calculation of early debt extinguishment costs. As of September 30, 2017, we had one remaining interest rate swap relating to one of our debt instruments with a total notional amount of $100 million. The fair value of our interest rate swaps as of September 30, 2017 and December 31, 2016 are included in “Other assets” in our condensed consolidated balance sheets and were immaterial. The fair value of our interest rate swaps are categorized within level 2 on the fair value hierarchy and were determined using an income approach model with inputs, such as the notional amount, LIBOR rate spread and settlement terms that are observable in the market or can be derived from or corroborated by observable data.


The carrying amount of cash and equivalents, receivables, and accounts payable, as reflected in the condensed consolidated balance sheets, approximates fair value due to the short maturities of these instruments.


The carrying amount and fair value of our total debt, including short-term borrowings and current maturities of long-term debt, is as follows:
June 30, 2023December 31, 2022
Millions of dollarsLevel 1Level 2Total fair valueCarrying valueLevel 1Level 2Total fair valueCarrying value
Total debt$7,221 $422 $7,643 $7,931 $6,539 $917 $7,456 $7,928 
 September 30, 2017 December 31, 2016
Millions of dollarsLevel 1Level 2Total fair valueCarrying value Level 1Level 2Total fair valueCarrying value
Total debt$345
$11,906
$12,251
$10,938
 $753
$12,812
$13,565
$12,384


In the first half of 2023, the fair value of our debt increased as a result of lower debt 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 last two 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 to two days from period-end and adjusting for changes in market conditions. Our total fair value and carrying value of debt decreased during the nine months ended September 30, 2017 primarily due to the early extinguishment of $1.4 billion of senior notes. Additionally, differencesDifferences 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 have no debt categorized within level 3 on the fair value hierarchy based on unobservable inputs.hierarchy.


HAL Q2 2023 FORM 10-Q | 11
Note 8. New Accounting Pronouncements
Part I. Item 2 | Executive Overview
Standards adopted in 2017

Stock-Based Compensation
On January 1, 2017, we adopted an accounting standards update issued by the Financial Accounting Standards Board (FASB) which simplifies several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and the classification on the statement of cash flows. In addition, the update allows an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. The element of the update that has the most impact on our financial statements is income tax consequences. Excess tax benefits and tax deficiencies on stock-based compensation awards are now included in our tax provision within our condensed consolidated statement of operations as discrete items in the reporting period in which they occur, rather than previous accounting of recording in additional paid-in capital on our condensed consolidated balance sheets. We have also elected to continue our current policy of estimating forfeitures of stock-based compensation awards at the time of grant and revising in subsequent periods to reflect actual forfeitures. We applied the update prospectively beginning January 1, 2017, and the adoption did not have a material impact on our condensed consolidated financial statements.

Intra-Entity Transfers of Assets
On January 1, 2017, we adopted an accounting standards update issued by the FASB to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. The update requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs, rather than the previous requirement to defer recognition of current and deferred income taxes for an intra-entity asset transfer until the asset had been sold to an outside party. Two common examples of assets included in the scope of this update are intellectual property and property, plant and equipment. The update was applied on a modified retrospective basis resulting in a cumulative-effect adjustment of $384 million recorded directly to retained earnings as of January 1, 2017.

Inventory
On January 1, 2017, we adopted an accounting standards update issued by the FASB which simplifies the measurement of inventory. The update now requires inventory measured using the first in, first out or average cost methods to be subsequently measured at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable cost of completion, disposal and transportation. The update eliminated the requirement to subsequently measure inventory at the lower of cost or market, which could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. The adoption of this update did not impact our condensed consolidated financial statements.

Standards not yet adopted

Revenue Recognition
In May 2014, the FASB issued a comprehensive new revenue recognition standard that will supersede existing revenue recognition guidance under U.S. GAAP. The core principle of the new guidance is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard creates a five step model that requires companies to exercise judgment when considering the terms of a contract and all relevant facts and circumstances. The standard allows for several transition methods: (a) a full retrospective adoption in which the standard is applied to all of the periods presented, or (b) a modified retrospective adoption in which the standard is applied only to the most current period presented in the financial statements with a cumulative-effect adjustment reflected in retained earnings. The standard also requires significantly expanded disclosures regarding the qualitative and quantitative information of an entity's nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. This new revenue recognition standard will be effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period.

We performed a detailed review of our contract portfolio representative of our different businesses and compared historical accounting policies and practices to the new standard. Because the standard will impact our business processes, systems and controls, we also developed a comprehensive change management project plan to guide the implementation. Over the course of 2017, we have conducted training sessions for those in our global organization that will be impacted by the new standard and have developed a web-based training course providing a detailed overview of the key changes within the new standard. Our services are primarily short-term in nature, and we do not expect the new revenue recognition standard will have a material impact on our financial statements upon adoption. We will adopt the new standard utilizing the modified retrospective method that will result in a cumulative effect adjustment as of January 1, 2018.

Leases
In February 2016, the FASB issued an accounting standards update related to accounting for leases, which requires the assets and liabilities that arise from leases to be recognized on the balance sheet. Currently only capital leases are recorded on the balance sheet. This update will require the lessee to recognize a lease liability equal to the present value of the lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term for all leases longer than 12 months. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and liabilities and recognize the lease expense for such leases generally on a straight-line basis over the lease term. This update will be effective for fiscal periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. We are currently evaluating the impact that this update will have on our condensed consolidated financial statements.

Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations


Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in conjunction with the condensed consolidated financial 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 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:segment.
-our Completion and Production segment delivers cementing, stimulation, intervention, pressure control, specialty chemicals, artificial lift, and completion products and services. The segment consists of Production Enhancement, Cementing, Completion Tools, Production Solutions, Pipeline and Process Services, Multi-Chem and Artificial Lift.
-our Drilling and Evaluation segment provides field and reservoir modeling, drilling, evaluation and precise wellbore placement solutions that enable customers to model, measure, drill and optimize their well construction activities. The segment consists of Baroid, Sperry Drilling, Wireline and Perforating, Drill Bits and Services, Landmark Software and Services, Testing and Subsea, and Consulting and Project Management.

•Completion and Production delivers cementing, stimulation, intervention, pressure control, artificial lift, specialty chemicals, and completion products and services. The segment consists of Production Enhancement, Cementing, Completion Tools, Production Solutions, Artificial Lift, Multi-Chem, and Pipeline and Process Services.
•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, Sperry Drilling, Wireline and Perforating, Drill Bits and Services, Landmark Software and Services, Testing and Subsea, and Project Management.

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 located in the United States, Canada, Malaysia, Singapore, and the United Kingdom. With over 50,000approximately 47,000 employees, we operate in approximatelymore than 70 countries around the world, and our corporate headquarters areis in Houston, Texas and Dubai, United Arab Emirates.Texas.

Financial results
Our business continued to strengthen during the third quarter of 2017, marked by increases compared to the second quarter of 2017 in the average North American land rig count and improved profitability in our international business. Our North American business continued to improve in the third quarter of 2017, with revenue growth of 14%, compared to the second quarter of 2017, significantly outperforming the average United States land rig count increase of 6%. While the international markets have been slower to recover and continue to face pricing pressure as customers defer new projects and focus on lowering costs, we are committed to making this market sustainable. Cost cutting remains a major theme in our international business and the use of technology to lower our customer costsvalue proposition is important. Our product service lines continue to deliver technology driven value propositions to help our customers increase production and lower costs.

We generated total company revenue of $5.4 billion during the third quarter of 2017, a 42% increase from the $3.8 billion of revenue generated in the third quarter of 2016. This increase resulted from improved activity, utilization, and pricing associated with pressure pumping services in the United States land market, as well as contributions from our recent artificial lift acquisition in North America. We reported operating income of $634 million in the third quarter of 2017, compared to operating income of $128 million in the third quarter of 2016. Our operating results are benefiting from the structural global cost savings initiatives implemented over the past few years to address challenging market conditions.

During the first quarter, we made the decision to bring back cold-stacked pressure pumping equipment more rapidly than originally planned because of customer demand and to maintain market share while capturing leading edge pricing, and we have successfully executed this reactivation plan. The reactivated equipment has enhanced our overall margins during the first nine months of 2017. North America experienced a significant margin improvement from the first to third quarter of 2017 as a result of activity and pricing increases. We are diligently working towards optimizing margins and reaching targets we have set for our organization, which we believe are achievable through competitive pricing, improved equipment utilization and reducing our cost structure.

Business outlook
While 2016 was challenging as we navigated through the historic industry downturn, we believe our financial results in 2017 reflect our successful execution in a difficult environment and that our strategy has positioned us for any challenges and opportunities ahead. Commodity prices and the North America rig count have improved substantially from first half 2016 lows, and despite a range bound commodity price environment in 2017, we are benefiting from our improved market share, delivery platform and cost containment strategies.


In North America, improved commodity prices and rig counts from 2016 lows have resulted in a rapidly recovering market through the third quarter of 2017, particularly in United States unconventionals. At the current North American rig count, we are drilling approximately the same footage as the peak of 2014, along with significantly increased completions intensity. As rig count stabilizes, our customers focus on efficiencies, optimization and production. We are continuing to collaborate and engineer solutions to maximize asset value for our customerscustomers. We work to achieve strong cash flows and will continuereturns for our shareholders by delivering technology and services that improve efficiency, increase recovery, and maximize production for our customers. Our strategic priorities are to:
- International: Allocate our capital to focusthe highest return opportunities and increase our international growth in both onshore and offshore markets.
- North America: Drive better pricing, increased efficiency, and higher margin through utilization of our automated and intelligent fracturing technologies and increased market penetration of our premium low-emissions electronic fracturing equipment.
- Digital: Continue to drive differentiation and efficiencies through the deployment and integration of digital and automation technologies, both internally and for our customers.
- Capital efficiency: Maintain our capital expenditures in the range of 5-6% of revenue while focusing on increasing equipment utilization, managingtechnological advancements and process changes that reduce our manufacturing and maintenance costs and expandingimprove how we move equipment and respond to market opportunities.
- Sustainability and energy mix transition: Continue to:
• Leverage the increasing number of participants in and scope of Halliburton Labs to gain insight into developing value chains in the energy mix transition;
• Develop and deploy solutions to help oil and gas operators lower their emissions while also using our surface efficiency model. Additionally, we gained significantexisting technologies in renewable energy applications;
• Develop technologies and solutions to lower our own emissions; and
• Grow our participation in the entire life cycle of carbon capture and storage, hydrogen, and geothermal projects globally.

The following charts depict the revenue split between our two operating segments and our four primary geographic regions for the quarter ended June 30, 2023.
HAL Q2 2023 FORM 10-Q | 12
Part I. Item 2 | Executive Overview
38243825
Market conditions
Commodity price volatility continued during the second quarter of 2023 driven by inflationary pressures, changes to OPEC+ production levels, supply chain shortages, demand uncertainty, recessionary fears, and geopolitical conflicts. On June 4, 2023, Saudi Arabia announced it would reduce July production by 1 million barrels per day. On July 3, 2023, Saudi Arabia announced that reduction would extend through August 2023. During the second quarter of 2023, the West Texas Intermediate (WTI) crude oil price averaged approximately $74 per barrel and the Brent crude oil price averaged approximately $78 per barrel. Both of these prices were well below the average price per barrel for 2022. The average Henry Hub natural gas price during the second quarter was $2.16 per million BTU, which is also well below the average price during 2022. While U.S. land rig counts increased in 2022, there has been a decline in the rig count during the second quarter of 2023. These factors contributed to softness in the market for energy services generally in North America market share throughand particularly in gas basins during the downturn by demonstrating to our customers the benefitssecond quarter of our service quality and technology. We have been utilizing this increased market share to drive margin improvement.2023. The historically high level of market share we built in the downturn gives us the ability to focus our work with the most efficient customers, and as such, we continued to execute our strategy of high grading the profitability of our portfolio with customers that value our services. DuringUnited States Energy Information Administration (EIA)'s July 2023 forecast has Brent crude oil spot price averaging $78 per barrel for the third quarter of 2017,2023 and increasing to approximately $80 per barrel in the fourth quarter of 2023.

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

Financial results
The following graph illustrates our revenue and operating margins for each operating segment for the second quarter of 2022 and 2023.

6179
HAL Q2 2023 FORM 10-Q | 13
Part I. Item 2 | Executive Overview
During the second quarter of 2023, we generated total company revenue of $5.8 billion, a 14% increase as compared to the second quarter of 2022. We reported operating income of $1.0 billion during the second quarter of 2023 compared to operating income of $374 million during the second quarter of 2022, which was an important stepincluded the effects of $344 million of impairments and other charges related to our decision to market for sale our Russia operations. Our Completion and Production segment revenue increased 19% in building out our production oriented business lines.

While the international markets were more resilient thansecond quarter of 2023 as compared to the second quarter of 2022, primarily due to increased pressure pumping services in North America through most of the downturn, particularlyland as well as higher completion tool sales and artificial lift activity globally. Our Drilling and Evaluation segment revenue increased 7% in the Eastern Hemisphere, low commodity prices have stressed customer budgetssecond quarter of 2023 as compared to the second quarter of 2022, driven primarily by improvements in drilling-related services globally and wireline activity in the Middle East/Asia region. Both segment results were negatively impacted economics across deepwater and mature fields. As a result, our international business is experiencing activity reductions and pricing pressure in 2017the second quarter of 2023 when compared to 2016. While we are working withthe second quarter of 2022, as a result of the sale of our customersRussian operations during the third quarter of 2022.

In North America, our revenue increased 11% in the second quarter of 2023, as compared to improve project economics through technologythe second quarter of 2022, driven by improved stimulation activity and pricing gains and higher artificial lift activity in North America land, in addition to increased drilling-related services across the region. The North America average rig count increased 1% in the second quarter of 2023 as compared to the second quarter of 2022.

Internationally, revenue increased 17% in the second quarter of 2023, as compared to the second quarter of 2022, primarily driven by improved operating efficiency, any activity improvements fordrilling-related services, higher completion tool sales, and increased pressure pumping services across the remainder of 2017 will likely beregions, partially offset by continued pricing pressure. However, we are nowthe sale of our Russian operations during the third quarter of 2022. The international average rig count increased 18% in the third yearsecond quarter of significant underspending2023 as compared to the second quarter of 2022.

Sustainability and Energy Advancement
We continue to pursue our strategic initiatives around advancing cleaner, affordable energy, and supporting sustainable energy advancements using innovation and technology to decarbonize both our and our customers' operations. This includes the continued development and deployment of solutions designed to help oil and gas operators lower their environmental impact while also using our existing technologies in sustainable energy applications.

Halliburton Labs, our clean energy accelerator, continues to provide us insight into developing value chains in the international markets. This implies that production declines will likely accelerate inenergy mix transition and opportunities to assist early stage companies to enable them to achieve scaling milestones. Halliburton Labs has 25 participants and alumni as of the medium term asend of the backlogsecond quarter of new projects are completed and additional projects are not coming behind them. These eventual declines should help support higher commodity prices and increased international E&P spending.2023.

During the first nine months of 2017, we had $934 million of capital expenditures, an increase of 49% from the first nine months of 2016. We plan to continue adjusting capital spending during 2017 and into 2018 to align with market conditions. We have successfully executed our deployment strategy to reactivate our cold-stacked pressure pumping equipment to respond to customer demand and converting our hydraulic fracturing fleet to Q10 pumps to support our surface efficiency model. We remain committed to generating industry-leading returns and continue to be focused on achieving leading edge pricing, driving better utilization and continuous cost control.

We intend to continue to strengthen our product service lines through a combination of organic growth, investment and selective acquisitions. We are continuing to execute the following strategies in 2017:
- directing capital and resources into strategic growth markets, including unconventional plays and mature fields;
-leveraging our broad technology offerings to provide value to our customers and enable them to more efficiently drill and complete their wells;
-exploring additional opportunities for acquisitions that will enhance or augment our current portfolio of services and products, including those with unique technologies or distribution networks in areas where we do not already have significant operations;
-investing in technology that will help our customers reduce reservoir uncertainty and increase operational efficiency;
-improving working capital and managing our balance sheet to maximize our financial flexibility;
-continuing to seek ways to be one of the most cost efficient service providers in the industry by maintaining capital discipline and leveraging our scale and breadth of operations; and
- collaborating and engineering solutions to maximize asset value for our customers.


Our operating performance and business outlookliquidity are described in more detail in “Business Environment and Results of Operations.”

Financial markets, liquidity, and capital resources
We believe we have invested our cash balances conservatively and secured sufficient financing to help mitigate any near-term negative impact on our operations from adverse market conditions. We closed the third quarter of 2017 at $1.9 billion of cash and equivalents. We also have $3.0 billion available under our revolving credit facility which, combined with our cash balance, we believe provides us with sufficient liquidity to address the challenges and opportunities of the current market. For additional information on market conditions, see “Liquidity"Liquidity and Capital Resources”Resources" and “Business Environment and Results of Operations.”

HAL Q2 2023 FORM 10-Q | 14
Part I. Item 2 | Liquidity and Capital Resources
LIQUIDITY AND CAPITAL RESOURCES


As of SeptemberJune 30, 2017,2023, we had $1.9$2.1 billion of cash and equivalents, compared to $4.0$2.3 billion of cash and equivalents at December 31, 2016. Additionally, we held $105 million of investments in fixed income securities at September 30, 2017, compared to $92 million at December 31, 2016. These securities are reflected in "Other current assets" and "Other assets" in our condensed consolidated balance sheets. Approximately $1.6 billion of our total cash position as of September 30, 2017 was held by our foreign subsidiaries, a substantial portion of which is available to be repatriated into the United States to fund our U.S. operations or for general corporate purposes, with a portion subject to certain country-specific restrictions. We have provided for U.S. federal income taxes on cumulative undistributed foreign earnings where we have determined that such earnings are not indefinitely reinvested.2022.


Significant sources and uses of cash during the first six months of 2023
Sources of cash:
- •Cash flows from operating activities were $1.5 billion during$1.2 billion. This included a negative impact from the first nine monthsprimary components of 2017.
- We received a United States tax refund in the amount of approximately $478 million in the third quarter of 2017, primarily related to the carryback of our net operating losses recognized in 2016.
Uses of cash:
- We early redeemed $1.4 billion of senior notes during the first quarter of 2017, which resulted in a payment of approximately $1.5 billion, inclusive of the redemption premium. We also repaid $45 million of senior notes that matured during the second quarter of 2017.
- Capital expenditures were $934 million in the first nine months of 2017, and were predominantly made in our Production Enhancement, Sperry Drilling, Production Solutions, Baroid, and Wireline and Perforating product service lines.
- We paid approximately $630 million in the third quarter of 2017 to acquire Summit ESP, Ingrain Inc., and Optimization Petroleum Technology. The additions of these three businesses strengthen our artificial lift, wireline, and Landmark portfolios for our global customers.
- During the first nine months of 2017, working capital (receivables, inventories, and accounts payable) increased byof a net $502$589 million, primarily due toassociated with increased business activity.receivables and inventory.
-
Uses of cash:
•Capital expenditures were $571 million.
•We paid $469$348 million infor the repurchase of 11 million shares of our common stock.
•We paid $289 million of dividends to our shareholders during the first nine months of 2017.shareholders.
- We made the final installment settlement payment related to the Macondo well incident in the amount of $335 million, as well as our third and final legal fees payment of $33 million during the first nine months of 2017.
- We paid $54 million in the second quarter of 2017 to settle a class action lawsuit and $29 million in the third quarter of 2017 for a resolution of an SEC investigation of certain past matters related to our operations in Angola and Iraq. See Note 5 to the condensed consolidated financial statements for further information.
Future sources and uses of cash
CapitalWe 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 the full year 2017 is currently expected2023 to be within our target of approximately $1.3 billion5-6% of revenue. We believe this level of spend will allow us to $1.4 billion.invest in our key strategic areas. However, we will continue to maintain capital discipline and monitor the rapidly changing market dynamics, and we may adjust our capital spend accordingly.

Currently,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 $0.18$0.16 per common share, or approximately $156$144 million. Subject to the approvalIn January of 2023, our Board of Directors approved a capital return framework with a goal of returning at least 50% of our intention isannual free cash flow to continue payingshareholders through dividends atand share repurchases and we expect our current rate.returns to shareholders will be in line with our capital return framework for 2023.


We may 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. Repurchases of 8.1 million shares of common stock occurred during the second quarter of 2023 under this program. Approximately $5.7$4.5 billion remainsremained authorized for repurchases as of SeptemberJune 30, 20172023 and may be used for open market and other share purchases. There were no repurchases made under

During the program duringsecond quarter, Halliburton kicked off its migration to SAP S4. The total project investment is estimated to cost approximately $250 million over the nine months ended September 30, 2017.next two and a half years. This new system will provide important efficiency benefits, cost savings, visibility to our operations, and advanced analytics that will benefit Halliburton and its customers.


Other factors affecting liquidity
Financial position in current market. As of SeptemberJune 30, 2017,2023, we had $1.9$2.1 billion of cash and equivalents $105 million in fixed income investments, and $3.0$3.5 billion of available committed bank credit under oura revolving credit facility.facility with an expiration date of April 27, 2027. We believe we have a manageable debt maturity profile, with approximately $500 million coming due beginning in 2025 through 2027. Furthermore, we have no financial covenants or material adverse change provisions in 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 manage our global cash needs, for the remainder of 2017, including capital expenditures, working capital investments, dividends,shareholder returns, if any, and contingent liabilities.


Guarantee agreements. In the normal course of business, we have agreements with financial institutions under which approximately $2.0$2.2 billion of letters of credit, bank guarantees, or surety bonds were outstanding as of SeptemberJune 30, 2017.2023. Some of the outstanding letters of credit have triggering events that would entitle a bank to require cash collateralization.collateralization; however, none of these triggering events have occurred. As of June 30, 2023, we had no material off-balance sheet liabilities and were not required to make any material cash distributions to our unconsolidated subsidiaries.



HAL Q2 2023 FORM 10-Q | 15
Part I. Item 2 | Liquidity and Capital Resources
Credit ratings. Our credit ratings with Standard & Poor’s (S&P) 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 (Moody's) remain Baa1 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. If our customers delay paying or fail to pay us a significant amount of our outstanding receivables, it could have a material adverse effect on our liquidity, consolidated results of operations and consolidated financial condition. See Note 2 to the condensed consolidated financial statements for further discussion related to receivables

Receivables from our primary customer in Venezuela.Mexico accounted for approximately 9% of our total receivables as of June 30, 2023. 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 Q2 2023 FORM 10-Q | 16
Part I. Item 2 | Business Environment and Results of Operations
BUSINESS ENVIRONMENT AND RESULTS OF OPERATIONS


We operate in approximatelymore than 70 countries throughout the world to provide a comprehensive range of services and products to the energy industry. A significant amount of our consolidatedOur revenue is derivedgenerated 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 ninesix months of 2017,2023, based upon the location of the services provided and products sold, 53%46% of our consolidated revenue was from the United States, compared to 40%44% of our consolidated revenue from the United States in the first ninesix months of 2016.2022. No other country accounted for more than 10% of our revenue during these periods.revenue.

Operations in some countries may be adversely affected by unsettled political conditions, acts of terrorism, civil unrest, force majeure, war or other armed conflict, sanctions, expropriation or other governmental actions, inflation, changes in foreign currency exchange rates, foreign currency exchange restrictions and highly inflationary currencies, as well as other geopolitical factors. We believe the geographic diversification of our business activities reduces the risk that loss of operations in any one country, other than the United States, would be materially adverse to our consolidated results of operations.


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 and our customers' expectations about future prices, global oil supply and demand, completions intensity, the world economy, the availability of credit,capital, government regulation, and global stability, which together drive worldwide drilling and completions activity. Additionally, during 2023, we generally 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.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, and well count in North America.below.


The following table below shows the average oil and natural gas prices for West Texas Intermediate (WTI),WTI crude oil, United Kingdom Brent crude oil, and Henry Hub natural gas:gas.
Three Months Ended
June 30		Year Ended
December 31
202320222022
Oil price - WTI (1)
$73.76 $108.72 $96.04 
Oil price - Brent (1)
78.32 113.54 100.78 
Natural gas price - Henry Hub (2)
2.16 7.48 6.45 
(1)Oil price measured in dollars per barrel.
(2)Natural gas price measured in dollars per million British thermal units (Btu), or MMBtu.
 Three Months Ended
September 30		Year Ended
December 31
 201720162016
Oil price - WTI (1)
$48.36
$44.84
$43.14
Oil price - Brent (1)
52.31
45.79
43.55
Natural gas price - Henry Hub (2)
3.15
2.88
2.52
    
(1) Oil price 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 Incorporated rig count informationdata were as follows:
 Three Months Ended
September 30		Nine Months Ended
September 30
Land vs. Offshore2017201620172016
United States:    
Land927
461
841
459
Offshore (incl. Gulf of Mexico)19
18
20
23
Total946
479
861
482
Canada: 
 
 
 
Land207
119
206
110
Offshore1
2
1
2
Total208
121
207
112
International (excluding Canada): 
 
 
 
Land749
711
748
740
Offshore199
225
200
225
Total948
936
948
965
Worldwide total2,102
1,536
2,016
1,559
Land total1,883
1,291
1,795
1,309
Offshore total219
245
221
250
     
 Three Months Ended
September 30		Nine Months Ended
September 30
Oil vs. Natural Gas2017201620172016
United States (incl. Gulf of Mexico): 
 
  
Oil760
391
691
388
Natural gas186
88
170
94
Total946
479
861
482
Canada: 
 
 
 
Oil115
64
110
54
Natural gas93
57
97
58
Total208
121
207
112
International (excluding Canada): 
 
 
 
Oil731
709
729
733
Natural gas217
227
219
232
Total948
936
948
965
Worldwide total2,102
1,536
2,016
1,559
Oil total1,606
1,164
1,530
1,175
Natural gas total496
372
486
384
Three Months Ended
June 30		Six Months Ended
June 30		Year Ended
December 31
20232022202320222022
U.S. Land699 698 722 660 708 
U.S. Offshore20 15 18 15 15 
Canada117 113 169 155 175 
North America836 826 909 830 898 
International959 816 937 819 851 
Worldwide total1,795 1,642 1,846 1,649 1,749 
 Three Months Ended
September 30		Nine Months Ended
September 30
Drilling Type2017201620172016
United States (incl. Gulf of Mexico):    
Horizontal799
373
720
376
Vertical70
61
72
58
Directional77
45
69
48
Total946
479
861
482

HAL Q2 2023 FORM 10-Q | 17

Part I. Item 2 | Business Environment and Results of Operations
Crude oil prices have been extremely volatile duringBusiness outlook
According to the past few years. WTI oil spot prices declined significantly beginning in 2014 from a peak price of $108 per barrel in June 2014 to a low of $26 per barrel in February 2016, a level which had not been experienced since 2003. Brent crude oil spot prices declined from a high of $115 per barrel in June 2014 to $26 per barrel in January 2016. Since the low point experienced in early 2016, oil prices have increased and become range bound in 2017. WTI oil spot prices ranged from a low of $42 per barrel in June 2017 to a high of $54 per barrel in February 2017. Brent crude oil spot prices ranged from a low of $44 in June 2017 to a high of $60 in September 2017. The average WTI and Brent oil spot prices during the third quarter of 2017 were $48 and $52, respectively.

Crude prices rose in the third quarter of 2017 due to increasing expectations for global economic and oil demand growth and falling Organization of the Petroleum Exporting Countries (OPEC) production, which led to declining global oil inventories. Strengthening global economic conditions and geopolitical factors are the main drivers for the expected rise in oil demand in 2018. The United States Energy Information Administration (EIA) forecastsJuly 2023 "Short Term Energy Outlook", the Brent spot price is expected to average 2018 Brent crude oil price$78 per barrel for the third quarter of 2023, with an expected full year 2023 average of $79 per barrel, a decline of approximately $22 per barrel, or 22%, as compared to be $54the full year 2022 average. According to the EIA, WTI prices are expected to average $73 per barrel in their October 2017 "Shortthe third quarter of 2023 and to average $74 per barrel for the full year 2023, resulting in a decrease of approximately $21 per barrel, or 22%, compared to the full year 2022.

The EIA July 2023 “Short Term Energy Outlook," while WTIOutlook” projects Henry Hub natural gas prices are projected to average about $3.50 less$2.63 per barrel. CrudeMMBtu during the third quarter of 2023, and to average $2.62 per MMBtu for the full year 2023, resulting in a decrease of $3.83 per MMBtu, or 59%, compared to the full year 2022.

Per the International Energy Agency (IEA) July 2023 "Oil Market Report", the forecasted global oil demand is set to average 102.1 million barrels per day in 2023, an approximate 2 million barrels per day increase from 2022. The EIA projects crude oil production in the United States is now projected towill average 9.212.56 million barrels per day in 2017, while 2018 projections of 9.92023, an approximate 6% increase from the average 11.89 million barrels per day would markin 2022.

We continue to expect that oil and gas demand will grow over the highest annual averagenext several years, despite the actions taken by central banks in United States history. The International Energy Agency's (IEA) October 2017 "Oil Market Report" forecastsan attempt to control inflation by increasing interest rates and the 2017 globalresulting concern about a potential economic slowdown. We believe the demand will be driven by economic expansion, energy security concerns, and population growth. Oil and gas continues to average approximately 98 million barrels per day, which is up 2% from 2016, with 2018 forecasts of 99 million barrels per day.

The average Henry Hub natural gas spot pricedemonstrate its critical role in the United States was $2.98 per MMBtuglobal economy and meeting long term demand requires sustained capital investment. We believe many years of increased investment in September 2017, which was flatexisting and new sources of production is the only solution to increase supply and that production will be needed from June 2017, due to natural gas production keeping pace with consumptionconventional and demand for exports. However, natural gas prices have risen 72% from a low of $1.73 in March 2016. The EIA October 2017 “Short Term Energy Outlook” expects growth in natural gas exportsunconventional, deep-water and domestic natural gas consumption to cause a rise in natural gas prices to a projected EIA average spot price of $3.19 per MMBtu in 2018.shallow-water, and short and long-cycle projects.


North America operations
The United States land rig count continued its increaseDespite the softness in the third quarter of 2017, with a 6% improvement over the second quarter of 2017 and 101% improvement over the third quarter of 2016. North America oil-directed rig count increased 420 rigs, or 92%, in the third quarter of 2017 as compared to the third quarter of 2016, while the natural gas-directed rig countmarket for energy services in North America increased 134 rigs, or 92%, during the same period. As a resultfirst six months of the recent uptickyear as discussed above, we expect upstream spending to grow in activity2023, with international and North America upstream spending growth in the structural changeshigh teens and around 10%, respectively, compared to our delivery platform we made over the past few years, after recording operating losses2022. We anticipate overall upstream market activity in North America in the first three quarterssecond half of 2016, we returned2023 to operating profitabilitybe slightly lower than in the fourth quarter of 2016 with continued improvements throughout 2017. Rig count has stabilized during the third quarter of 2017, with customers searching for improved production with an increased focus on efficiency and optimization of wells.

In the Gulf of Mexico, the average offshore rig count for the third quarter of 2017 was down two rigs, or 10%, compared to the second quarter of 2017. The impacts of Hurricane Harvey led customers in the Gulf of Mexico and Eagle Ford to suspend activity temporarily in the third quarter of 2017. Low commodity prices have stressed budgets and have impacted economicsfirst half. Our international business is growing at a strong pace across the deepwater market, negatively impacting activity and pricing. These headwinds still persist today,all regions, and we believe there will continueexpect our differentiated technology offerings, selective contract wins, and our unique collaborative approach to be challenges in 2017 to deepwater project economics. Activity in the Gulf of Mexico is dependent on governmental approvals for permits, our customers' actions, and the entry and exit of deepwater rigs in the market.

International operations
The average international rig count for the third quarter of 2017 was essentially flat compared to both the second quarter of 2017 and the third quarter of 2016. Lower sustained crude oil prices have caused many of our customers to reduce their budgets and defer several new projects; however, we have continued to workworking with our customers, to improve project economics through technology and improved operating efficiency. In Latin America, rig count has grown slightly in the third quarter of 2017, after experiencing historic lows across the region during 2016. These increases were driven by Argentina, Mexico and Brazil. Venezuela continues to experience significant political and economic turmoil. While the region is slowly showing signs of improvement, there are significant headwinds and pricing pressures that must be overcome to obtain a full recovery and we remain focused on efficiencies in our execution. For the Eastern Hemisphere, we believe the first quarter represented the bottom of the international rig count. The Middle East remains our most active international market, with the largest part of the work focused on maximizing production in mature fields with the use of technology and expanded reservoir knowledge. Due to the longer term contractual nature of international markets and the level of continuing price pressure, we expect pricing pressures will offset activity gains over the near term.deliver profitable growth.



HAL Q2 2023 FORM 10-Q | 18
Venezuela. The Venezuelan government currently has a dual-rate foreign exchange system: (i) the DIPRO, which represents a protected rate of 10.0 Bolívares per United States dollar made available for vital imports such as food, medicine and raw materials for production; and (ii) the DICOM, which is intended to be a free floating system that will fluctuate according to market supply and demand. The DICOM continues to significantly devalue and had a market rate of 3,345 Bolívares per United States dollar at September 30, 2017, as compared to a market rate of 276 Bolívares per United States dollar in early 2016 when the DICOM was created. We are utilizing the DICOM to remeasure our net monetary assets denominated in Bolívares. The continued devaluation of the Bolívar under the DICOM did not materially affect our financial statements for the nine months ended September 30, 2017 due to our immaterial net monetary position in the local currency.

Part I. Item 2 | Results of Operations in 2023 Compared to 2022 (QTD)
As of September 30, 2017, our total net investment in Venezuela was approximately $727 million, with less than $1 million of net monetary liabilities denominated in Bolívares, and we had an additional $36 million of surety bond guarantees outstanding relating to our Venezuelan operations.

See Note 2 and Note 7 to the condensed consolidated financial statements for additional information about outstanding receivables from our primary customer in Venezuela and Part II, Item 1(a), “Risk Factors” for additional information on risks associated with our operations in Venezuela, including recent sanctions imposed in Venezuela.


RESULTS OF OPERATIONS IN 20172023 COMPARED TO 20162022


Three Months EndedSeptember June 30, 20172023 Compared with Three Months EndedSeptember June 30, 20162022

Three Months Ended
June 30		FavorablePercentage
REVENUE:Three Months Ended
September 30		FavorablePercentage
Millions of dollars20172016(Unfavorable)ChangeMillions of dollars20232022(Unfavorable)Change
Revenue:Revenue:
By operating segment:By operating segment:
Completion and Production$3,537
$2,176
$1,361
63 %Completion and Production$3,476 $2,911 $565 19 %
Drilling and Evaluation1,907
1,657
250
15
Drilling and Evaluation2,322 2,163 159 7 
Total revenue$5,444
$3,833
$1,611
42 %Total revenue$5,798 $5,074 $724 14 %
  
By geographic region:  By geographic region:
North America$3,163
$1,658
$1,505
91 %North America$2,696 $2,426 $270 11 %
Latin America530
415
115
28
Latin America994 758 236 31 
Europe/Africa/CIS722
744
(22)(3)Europe/Africa/CIS698 718 (20)(3)
Middle East/Asia1,029
1,016
13
1
Middle East/Asia1,410 1,172 238 20 
Total revenue$5,444
$3,833
$1,611
42 %Total revenue$5,798 $5,074 $724 14 %
Operating income:Operating income:
By operating segment:By operating segment:
Completion and ProductionCompletion and Production$707 $499 $208 42 %
Drilling and EvaluationDrilling and Evaluation376 286 90 31 
Total operationsTotal operations1,083 785 298 38 
Corporate and otherCorporate and other(59)(67)8 12 %
SAP S4 upgrade expenseSAP S4 upgrade expense(13)— (13)n/m
Impairments and other chargesImpairments and other charges— (344)344 n/m
Total operating incomeTotal operating income$1,011 $374 $637 170 %
n/m = not meaningfuln/m = not meaningful


Operating Segments
OPERATING INCOME:Three Months Ended
September 30		FavorablePercentage
Millions of dollars20172016(Unfavorable)Change
Completion and Production$525
$24
$501
2,088 %
Drilling and Evaluation180
151
29
19
Total705
175
530
303
Corporate and other(71)(47)(24)(51)
Total operating income$634
$128
$506
395 %


Consolidated revenue was $5.4 billion in the third quarter of 2017, an increase of $1.6 billion, or 42%, as compared to the third quarter of 2016, primarily associated with improvements in pressure pumping services and drilling activity, as well as contributions from our recent artificial lift acquisition in North America. Revenue from North America was 58% of consolidated revenue in the third quarter of 2017, compared to 43% of consolidated revenue in the third quarter of 2016, reflecting the improvement that our North America operations are experiencing as the oil and gas industry recovers.

Consolidated operating income was $634 million during the third quarter of 2017 compared to $128 million in the third quarter of 2016. Operating results improved primarily from increased activity, utilization and pricing associated with pressure pumping services.

OPERATING SEGMENTS

Completion and Production
Completion and Production revenue in the thirdsecond quarter of 20172023 was $3.5 billion, an increase of $1.4 billion,$565 million, or 63%19%, fromwhen compared to the thirdsecond quarter of 2016.2022. Operating income in the thirdsecond quarter of 20172023 was $525$707 million, an increase of $501$208 million, fromor 42%, when compared to the thirdsecond quarter of 2016. Improved operating2022. These results were primarily related todriven by increased activity, utilization and pricing associated with pressure pumping services in the United States land market, as well as stimulationand artificial lift activity in Canada and the Gulf of Mexico,North America land along with higher completion sales globally. These improvements were partially offset by reduced well intervention services in addition to contributions from our recent artificial lift acquisition.North America land.


Drilling and Evaluation
Drilling and Evaluation revenue in the thirdsecond quarter of 20172023 was $1.9$2.3 billion, an increase of $250$159 million, or 15%7%, fromwhen compared to the second quarter of 2022. Operating income in the second quarter of 2023 was $376 million, an increase of $90 million, or 31%, when compared to the second quarter of 2022. These results were due to an increase in drilling-related services globally and higher wireline activity in the Middle East. Partially offsetting these improvements was lower project management activity in Saudi Arabia, Colombia, and Ecuador.

Both segments' results were negatively impacted in the second quarter of 2023 when compared to the second quarter of 2022, as a result of the sale of our Russian operations during the third quarter of 2016. Improved results were driven by increased drilling activity and logging services in the United States land market,project management and drilling fluid services in Mexico, and drilling activity in Russia. These increases were partially offset by reduced activity and pricing for drilling-related services in the Eastern Hemisphere.2022.


Operating income in the third quarter of 2017 was $180 million, an increase of $29 million, or 19%, compared to the third quarter of 2016, driven by improved pricing and activity for drilling-related services in the United States land market,
HAL Q2 2023 FORM 10-Q | 19

Part I. Item 2 | Results of Operations in 2023 Compared to 2022 (QTD)
partially offset by the impact of pricing pressures and activity reductions in the Eastern Hemisphere for drilling and logging activity.Geographic Regions


GEOGRAPHIC REGIONS

North America
North America revenue in the thirdsecond quarter of 20172023 was $3.2$2.7 billion, a 91% improvementan 11% increase compared to the thirdsecond quarter of 2016. Revenue increases were2022. This increase was primarily driven by improved customer demandstimulation activity and pricing gains, mainly in our United StatesNorth America land, sector, resultinghigher completion tool sales and drilling-related services across the region, improved artificial lift and cementing activity, and increased well intervention services in increased pricingthe U.S. Gulf of Mexico. Partially offsetting these improvements were decreased well intervention services in North America land and utilization across almost all of our product service lines, primarilydecreased pressure pumping services drilling fluids and drilling services, coupled with contributions from our recent artificial lift acquisition.in Canada.


Latin America
Latin America revenue in the thirdsecond quarter of 20172023 was $530$994 million, a 28%31% increase compared to the thirdsecond quarter of 2016, primarily as a result of2022, due to increased well construction services, project management activity, and drilling servicessoftware sales in Mexico, along with higher completion tool sales, testing services, and wireline activity across the region, and improved pressure pumping and drilling-related services in Argentina, increasedArgentina. Partially offsetting these improvements were lower project management activity and drilling-related services in Colombia and higher activity for well intervention and pipelines services in Brazil. These increases were partially offset by reduced activity in Venezuela and lower completion tool sales in Brazil.Ecuador.


Europe/Africa/CIS
Europe/Africa/CIS revenue in the thirdsecond quarter of 20172023 was $722$698 million, a decline of 3% decrease compared to the second quarter of 2022. This decline was primarily driven by the sale of our Russian operations during the third quarter of 2016. The decreases during the quarter were primarily driven by2022, in addition to reduced activity across multiple product service lines in Angola, lower completion tool sales in Azerbaijan, and lower cementing and drilling-related activity in the North Sea.Norway. These decreases were partially offset by activity improvementsimproved well construction services in RussiaAfrica, and Nigeriahigher completion tool sales, pressure pumping services, and increased project management activity influids services across the North Sea.region.


Middle East/Asia
Middle East/Asia revenue in the thirdsecond quarter of 20172023 was $1.0$1.4 billion, relatively flata 20% increase compared to the thirdsecond quarter of 2016. Improved2022, resulting from improved drilling-related services, higher completion tool sales, increased stimulation activity, and increased wireline services across the region, in addition to improved project management activity in Iraq and Kuwait. Partially offsetting these improvements were lower project management activity in Saudi Arabia and reduced well interventionconstruction services in Australia.

Other Operating Items

SAP S4 Upgrade Expense. During the Middle East were partially offset by reduced drilling activity across the region.

NONOPERATING ITEMS

Interest expense, net decreased $26 million in the thirdsecond quarter of 2017, compared2023, Halliburton kicked off its migration to SAP S4 which will take place over the next two and a half years. This new system will provide important efficiency benefits, cost savings, enhanced visibility to our operations, and advanced analytics that will benefit Halliburton and its customers. We expect this upgrade to payback in three years after an investment of $250 million. For the second quarter of 2023, we recognized expense of $13 million on the migration.

Impairments and other charges. During the three months ended June 30, 2022, we recognized a pre-tax charge of $344 million, related to the third quarterwrite down of 2016, primarilyall our net assets in Russia as a result of our decision to market our Russia operations for sale due to interest savingsthe additional sanctions enacted against Russia arising from the early extinguishmentconflict in Ukraine.

Nonoperating Items

Argentina Blue Chip Swap. The Central Bank of $1.4 billionArgentina maintains currency controls that limit our ability to access U.S. dollars in Argentina and remit cash from our Argentine operations. The execution of senior notescertain trades known as Blue Chip Swaps, effectively results in a parallel U.S. dollar exchange rate. This parallel rate, which cannot be used as the first quarter of 2017.basis to remeasure our net monetary assets in U.S. dollars under U.S. GAAP, was 101% higher than Argentina's official exchange rate at June 30, 2023. During the three months ended June 30, 2023, we entered into Blue Chip Swap transactions, which resulted in a $104 million pre-tax loss on investment.


Effective tax rate. During the three months ended SeptemberJune 30, 2017,2023, we recorded a total income tax provision of $135$167 million on a pre-tax income of $496$783 million, resulting in an effective tax rate of 27.2%.21.3% for the quarter. During the three months ended SeptemberJune 30, 2016,2022, we recorded a total income tax benefitprovision of $59$114 million on a pre-tax lossesincome of $52$231 million, resulting in an effective tax rate of 114.3%. Our49.3% for the quarter. The effective tax rate during the third quarter of 2016 was primarily impacted by a $29 million tax benefit reflecting the beneficial use of an Argentinian tax treaty that reduces the taxation of royalty payments for intellectual property. The effective tax rates in both periods were impacted by the geographic mix of earnings for the respective periods.

Nine Months EndedSeptemberthree months ended June 30, 2017 Compared with Nine Months EndedSeptember2023 was lower than the three months ended June 30, 2016
REVENUE:Nine Months Ended
September 30		FavorablePercentage
Millions of dollars20172016(Unfavorable)Change
Completion and Production$9,273
$6,614
$2,659
40 %
Drilling and Evaluation5,407
5,252
155
3
Total revenue$14,680
$11,866
$2,814
24 %
     
By geographic region:    
North America$8,164
$4,968
$3,196
64 %
Latin America1,501
1,432
69
5
Europe/Africa/CIS2,005
2,317
(312)(13)
Middle East/Asia3,010
3,149
(139)(4)
Total revenue$14,680
$11,866
$2,814
24 %

OPERATING INCOME:Nine Months Ended
September 30		FavorablePercentage
Millions of dollars20172016(Unfavorable)Change
Completion and Production$1,069
$22
$1,047
4,759 %
Drilling and Evaluation427
546
(119)(22)
Total1,496
568
928
163
Corporate and other(251)(4,210)3,959
94
Impairments and other charges(262)(3,189)2,927
92
Total operating income (loss)$983
$(6,831)$7,814
—

Consolidated revenue was $14.7 billion in the first nine months of 2017, an increase of $2.8 billion, or 24%, as compared to the first nine months of 2016,2022 primarily due to increased pressure pumping servicesthe impact on our effective tax rate for the second quarter of 2022 of our decision to sell our Russian operations and drilling activity in North America, partially offset by reduced drilling and logging activitya corresponding increase in the Eastern Hemisphere. Revenue from North America was 56% of consolidated revenue in the first nine months of 2017, compared to 42% of consolidated revenue in the first nine months of 2016, reflecting the improvement that our North America operations are experiencing as the oil and gas industry recovers.valuation allowance on foreign tax credits.


Consolidated operating income was $983 million in the first nine months of 2017, which includes a $262 million pre-tax loss for a fair market value adjustment related to Venezuela. See Note 2 to the condensed consolidated financial statements for further discussion. This compares to an operating loss of $6.8 billion during the first nine months of 2016, which includes $4.1 billion for a merger termination fee and related costs and $3.2 billion of impairments and other charges.
HAL Q2 2023 FORM 10-Q | 20
Part I. Item 2 | Results of Operations in 2023 Compared to 2022 (YTD)
Six Months Ended June 30, 2023 Compared with Six Months Ended June 30, 2022

Six Months Ended
June 30		FavorablePercentage
Millions of dollars20232022(Unfavorable)Change
Revenue:
By operating segment:
Completion and Production$6,885 $5,264 $1,621 31 %
Drilling and Evaluation4,590 4,094 496 12 
Total revenue$11,475 $9,358 $2,117 23 %
By geographic region:
North America$5,461 $4,351 $1,110 26 %
Latin America1,909 1,411 498 35 
Europe/Africa/CIS1,360 1,395 (35)(3)
Middle East/Asia2,745 2,201 544 25 
Total revenue$11,475 $9,358 $2,117 23 %
Operating income:
By operating segment:
Completion and Production$1,373 $795 $578 73 %
Drilling and Evaluation745 580 165 28 
Total operations$2,118 $1,375 $743 54 
Corporate and other(117)(124)7 6 %
SAP S4 upgrade expense(13)— (13)n/m
Impairments and other charges— (366)366 n/m
Total operating income$1,988 $885 $1,103 125 %
n/m = not meaningful

Operating results improved primarily from increased activity, utilization and pricing associated with pressure pumping services and completion tool sales in North America.Segments


OPERATING SEGMENTS

Completion and Production
Completion and Production revenue in the first ninesix months of 20172023 was $9.3$6.9 billion, an increase of $2.7$1.6 billion, or 40%31%, fromcompared to the first ninesix months of 2016.2022. Operating income for the segment in the first ninesix months of 20172023 was $1.1$1.4 billion, an increase of $578 million, or 73%, compared to operating income of $22 million in the first ninesix months of 2016. Improved operating2022. These results were primarily related to increased activity,driven by higher utilization and pricing associated withfor pressure pumping services in North America land and Mexico and higher completion tool sales in Brazil, U.S. Gulf of Mexico, and Saudi Arabia. Also improving were artificial lift activity in North America land and Kuwait and well intervention services in the United States land marketU.S. Gulf of Mexico and Canada, partially offset by reducedSaudi Arabia. Partially offsetting these improvements were lower completion tool sales in the Eastern Hemisphere.Norway.


Drilling and Evaluation
Drilling and Evaluation revenue in the first ninesix months of 20172023 was $5.4$4.6 billion, an increase of $155$496 million, or 3%, from the first nine months of 2016. Operating income in the first nine months of 2017 was $427 million, a decrease of $119 million, or 22%12%, compared to the first ninesix months of 2016. Increased drilling2022. Operating income for the segment in the first six months of 2023 was $745 million, an increase of $165 million, or 28%, compared to the first six months of 2022. These results were primarily impacted by increased drilling-related services in Middle East/Asia and Mexico, higher wireline activity globally, and increased project management activity in ourMexico. Increased fluid services in North America operationsland and the U.S. Gulf of Mexico also contributed to the results. Partially offsetting these improvements was decreased project management activity in Saudi Arabia, Colombia, and Ecuador.

Both segment results were

offset by reductions across negatively impacted in the majorityfirst six months of 2023 when compared to the first six months of 2022, as a result of the sale of our product service lines inRussian operations during the Eastern Hemisphere due to pricing pressures and activity reductions, particularly drilling and logging services.third quarter of 2022.

HAL Q2 2023 FORM 10-Q | 21
GEOGRAPHIC REGIONS
Part I. Item 2 | Results of Operations in 2023 Compared to 2022 (YTD)

Geographic Regions

North America
North America revenue in the first ninesix months of 20172023 was $8.2$5.5 billion, a 64%26% increase compared to the first ninesix months of 2016. These results were2022, largely driven by improved customer demand in our United States land sectorhigher activity and pricing primarily associated with increases in both pricing and activity, primarily related to pressure pumping and wireline activity in North America land and the U.S. Gulf of Mexico and fluid services drillingacross the region. Improved artificial lift activity andin North America land along with higher completion tool sales.sales in the U.S. Gulf of Mexico also contributed to this increase. Partially offsetting these improvements was lower well intervention services in North America land.


Latin America
Latin America revenue in the first ninesix months of 20172023 was $1.5$1.9 billion, a 5%35% increase compared to the first ninesix months of 2016,2022, resulting primarily due to increased activity for well intervention, stimulationfrom improvements across multiple product service lines in Mexico, Brazil, and drilling-related servicesArgentina along with higher completion tool sales in Brazil, increased activity for pressure pumping, drilling-related and logging services in Colombia, and improved drilling-related andthe Caribbean. Partially offsetting these improvements was lower project management activity in Ecuador. Partially offsetting these increases were reduced activity in the majority of our product service lines in VenezuelaColombia and Mexico, reduced completion tool sales in Brazil and lower drilling activity in Argentina.Ecuador.


Europe/Africa/CIS
Europe/Africa/CIS revenue in the first ninesix months of 20172023 was $2.0$1.4 billion, a 13%3% decrease fromcompared to the first ninesix months of 2016,2022. This decline was primarily resulting fromdriven by the sale of our Russian operations during the third quarter of 2022, in addition to lower activity reductionsacross multiple product service lines in Norway and pricing pressure, particularlyreduced drilling-related services in well completion and pressure pumping services across the region, as well as all of ourAzerbaijan. These declines were partially offset by increases in multiple product service lines in Angola, West Africa, and the North Sea. These decreases were partially offset by improved activity for cementing, drillingUnited Kingdom combined with increased pressure pumping in Algeria and pipeline services in Russia.Egypt.

Middle East/Asia
Middle East/Asia revenue in the first ninesix months of 20172023 was $3.0$2.7 billion, a 4% decrease from25% increase compared to the first ninesix months of 2016, due to reduced2022, resulting primarily from increased activity across multiple product service lines in Saudi Arabia, United Arab Emirates, Qatar, Indonesia, and Iraq, higher drilling activityservices in Thailand, and completion tool sales across the region, and lower logging activity in Thailand. These decreases were partially offset by improved stimulation and well intervention activity in the Middle East, increased project management activity in Iraq,Kuwait. Partially offsetting these improvements was lower drilling and higher drilling fluids and project managementwireline activity in India.Australia.


OTHER OPERATING ITEMSOther Operating Items


CorporateSAP S4 Upgrade Expense. As noted above, Halliburton kicked off its migration to SAP S4 which will take place over the next two and other expenses were $251 million in the first nine months of 2017 compared to $4.2 billion in the first nine months of 2016.a half years. During the first ninesix months ended June 30, 2023, we recognized expense of 2017, we incurred approximately $42$13 million of charges for litigation settlements,on the majority of which related to the resolution of an SEC investigation and one-time executive compensation charges. See Note 5 to the condensed consolidated financial statements for further information. During the first nine months of 2016, we incurred $4.1 billion of charges for a merger termination fee and related costs.migration.


Impairments and other charges were $262 million incharges. During the ninesix months ended SeptemberJune 30, 2017, associated with2022, we recognized a fair market value adjustmentpre-tax charge of $366 million, primarily related to Venezuela. See Note 2 to the condensed consolidated financial statements for further discussion. This compares to $3.2 billiona $344 million write down of all our net assets in company-wide charges during the nine months ended September 30, 2016, which consistedRussia as a result of fixed asset impairments and write-offs, inventory write-downs, impairments of intangible assets, severance costs, facility closures, a loss on exchange for a promissory note in Venezuela, and other charges.

NONOPERATING ITEMS

Interest expense, net was $478 million in the first nine months of 2017, which includes $104 million in costs related to the early extinguishment of $1.4 billion of senior notes during the first quarter of 2017. This compares to $502 million of net interest expense in the first nine months of 2016, which includes $41 million of debt redemption fees and associated expenses related to the $2.5 billion of senior notes mandatorily redeemedour decision in the second quarter of 2016. The2022 to market our Russia operations for sale due to the additional sanctions enacted against Russia arising from the conflict in Ukraine. In the first ninequarter of 2022, we recognized a pre-tax charge of $22 million to write down all of our assets in Ukraine, including $16 million in receivables, due to the ongoing conflict between Russia and Ukraine.

Nonoperating Items

Argentina Blue Chip Swap. As noted above, during the six months ended June 30, 2023, we entered into Blue Chip Swap transactions, which resulted in a $104 million pre-tax loss on investment during the six-month period.

Loss on early extinguishment of 2017 reflects the corresponding interest savings from these debt payments.

Effective tax rate. During the ninesix months ended SeptemberJune 30, 2017,2022, we recorded a $42 million loss on the early redemption of $600 million aggregate principal amount of our 3.8% senior notes, which included premiums and unamortized expenses.

Effective tax rate. During the six months ended June 30, 2023, we recorded a total income tax provision of $81$341 million on a pre-tax income of $1.6 billion, resulting in an effective tax rate of 21.1%. During the six months ended June 30, 2022, we recorded a total income tax provision of $182 million on pre-tax income of $438$563 million, resulting in an effective tax rate of 18.5%. During the nine months ended September 30, 2016, we recorded a total income tax benefit of $1.8 billion on pre-tax losses of $7.5 billion, resulting in an effective tax rate of 24.6%32.2%. The effective tax rates in both periods were impacted by the geographic mix of earningsrate for the respective periods.

ENVIRONMENTAL MATTERS

We are subject to numerous environmental, legal and regulatory requirements related to our operations worldwide. For information related to environmental matters, see Note 5six months ended June 30, 2023 was lower than the six months ended June 30, 2022 primarily due to the condensed consolidated financial statements.impact on our effective tax rate for the first six months of 2022 of our decision to sell our Russian operations and a corresponding increase in the valuation allowance on foreign tax credits.


HAL Q2 2023 FORM 10-Q | 22
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-Q are 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”“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 risk 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 SEC. We also suggest that you listen to our quarterly earnings release conference calls with financial analysts.


Item 3.Quantitative and Qualitative Disclosures About Market Risk


For quantitative and qualitative disclosures about market risk, see Part II, Item 7(a), “Quantitative and Qualitative Disclosures About Market Risk,” in our 20162022 Annual Report on Form 10-K. Our exposure to market risk has not changed materially since December 31, 2016.2022.


Item 4.Controls and Procedures


In accordance with the Securities Exchange Act of 1934 Rules 13a-15 and 15d-15, we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of SeptemberJune 30, 20172023 to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Our disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.


There has been no change in our internal control over financial reporting that occurred during the quarter ended SeptemberJune 30, 20172023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


HAL Q2 2023 FORM 10-Q | 23
Part II. Item 1 | Legal Proceedings
PART II.OTHER INFORMATION

Item 1.Legal Proceedings


Information related to Item 1.Legal Proceedings is included in Note 58 to the condensed consolidated financial statements.


Item 1(a).Risk Factors


The statements in this section describe the known material risks to our business and should be considered carefully. TheAs of June 30, 2023, there have been no material changes in risk factor below updates the respective risk factorfactors previously discusseddisclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016. As of September 30, 2017, there have been no other material changes in risk factors previously disclosed.2022.


Our business in Venezuela subjects us to actions by the Venezuelan government, sanctions imposed or other actions by the U.S. and foreign governments, the risk of delayed payments, and currency risks, which could have a material adverse effect on our liquidity, consolidated results of operations, and consolidated financial condition.
HAL Q2 2023 FORM 10-Q | 24
There are risks associated with our operations in Venezuela, which continues to experience significant political and economic turmoil, including the possibility that the Venezuelan government could assume control over our operations and assets. The political and economic conditions have deteriorated further in 2017, leading to uncertainty in the future business climate, the state of security, and governance of the country. This environment increases the risk of civil unrest, armed conflicts, adverse actions by the government of Venezuela, or imposition of additional sanctions or other actions by the U.S. and foreign governments that may restrict our ability to continue operations or realize the value of our assets. In July 2017, the U.S. Government announced sanctions on 13 Venezuelan individuals, including a current employee of our primary customer in Venezuela. In August 2017, the U.S. Government imposed additional economic sanctions around certain financing transactions in Venezuela. These new sanctions prohibit dealings by our U.S. employees and entities in new debt issued by our primary customer in Venezuela or the Venezuelan Government, dealings in certain existing Venezuelan government bonds, as well as dividend payments or other profit distributions to the Venezuelan Government. These sanctions could delay our ability to execute the promissory note exchange discussed further in Note 2 to the condensed consolidated financial statements. There can be no assurance that other sanctions affecting our business in Venezuela will not be imposed in the future. Any such sanctions may have a material adverse effect on our ability to operate in Venezuela.

Part II. Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds
We have continued to experience delays in collecting payments on our receivables from our primary customer in Venezuela, and this customer did not make the first scheduled principal payment on our $200 million promissory note, which they informed us was due to banking complications. While we believe that our customer will make all required payments on this note, further delays in payment on this promissory note or defaults on the customer's indebtedness to other parties may lead to a default on this promissory note. This would result in an impairment charge on the existing carrying amount of this note and potentially further charges on other receivables with this customer. If conditions continue to worsen in the country and we experience further delays or failure in receiving payment on our remaining receivables, it could have a material adverse effect on our liquidity, consolidated results of operations, and consolidated financial condition.

The future results of our Venezuelan operations will be affected by many factors, including the foreign currency exchange rate, actions of the Venezuelan government, and general economic conditions such as continued inflation and future customer payments and spending. For further information, see Note 2 to the condensed consolidated financial statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations - Business Environment and Results of Operations - International operations - Venezuela."


Item 2.Unregistered Sales of Equity Securities and Use of Proceeds


Following is a summary of our repurchases of our common stock during the three months ended SeptemberJune 30, 2017.2023.
PeriodTotal Number
of Shares Purchased (a)		Average
Price Paid per Share		Total Number
of Shares
Purchased as
Part of Publicly
Announced Plans or Programs (b)		Maximum
Number (or
Approximate
Dollar Value) of
Shares that may yet
be Purchased Under the Program (b)
April 1 - 30701,574 $33.33692,713$4,726,916,897
May 1 - 314,735,512 $29.634,364,403$4,597,796,046
June 1 - 303,230,784 $31.793,063,070$4,500,012,292
Total8,667,870 $30.738,120,186
(a)Of the 8,667,870 shares purchased during the three-month period ended June 30, 2023, 547,684 were acquired from employees in connection with the settlement of income tax and related benefit withholding obligations arising from vesting in restricted stock grants. These shares were not part of a publicly announced program to repurchase common stock.
(b)Our Board of Directors has authorized a program to repurchase our common stock from time to time. Approximately $4.5 billion remained authorized for repurchases as of June 30, 2023. From the inception of this program in February of 2006 through June 30, 2023, we repurchased approximately 242 million shares of our common stock for a total cost of approximately $9.6 billion.

PeriodTotal Number
of Shares Purchased (a)		Average
Price Paid per Share		Total Number
of Shares
Purchased as
Part of Publicly
Announced Plans or Programs (b)		Maximum
Number (or
Approximate
Dollar Value) of
Shares that may yet
be Purchased Under the Program (b)
July 1 - 3116,277
$44.32—$5,700,004,373
August 1 - 31186,891
$40.12—$5,700,004,373
September 1 - 3073,442
$41.17—$5,700,004,373
Total276,610
$40.64— 

(a)
All of the 276,610 shares purchased during the three-month period ended September 30, 2017 were acquired from employees in connection with the settlement of income tax and related benefit withholding obligations arising from vesting in restricted stock grants. These shares were not part of a publicly announced program to purchase common stock.

(b)
Our Board of Directors has authorized a program to repurchase our common stock from time to time. Approximately $5.7 billion remains authorized for repurchases as of September 30, 2017. From the inception of this program in February 2006 through September 30, 2017, we repurchased approximately 201 million shares of our common stock for a total cost of approximately $8.4 billion.

Item 3.Defaults Upon Senior Securities


None.


Item 4.Mine Safety Disclosures


Our barite and bentonite mining operations, in support of our fluidfluids services business, are subject to regulation by the federal U.S. Mine Safety and Health Administration under the Federal Mine Safety and Health Act of 1977.1977. Information concerning mine safety violations or other regulatory matters required by section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104) is included in Exhibit 95 to this quarterly report.


Item 5. Other Information


None.During the three months ended June 30, 2023, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.



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Item 6.Exhibits

Part II. Item 6 | Exhibits
Item 6. Exhibits
*3.1
*†10.1
*12.110.2
*31.1
*31.2
**32.1
**32.2
*95
*101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
*101.SCHXBRL Taxonomy Extension Schema Document
*101.CALXBRL Taxonomy Extension Calculation Linkbase Document
*101.LABXBRL Taxonomy Extension Label Linkbase Document
*101.PREXBRL Taxonomy Extension Presentation Linkbase Document
*101.DEFXBRL Taxonomy Extension Definition Linkbase Document
*104Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
*
*Filed with this Form 10-Q.
**Furnished with this Form 10-Q.
†Management contracts or compensatory plans or arrangements


SIGNATURES
HAL Q2 2023 FORM 10-Q | 26


SIGNATURES


As required by the Securities Exchange Act of 1934, the registrant has authorized this report to be signed on behalf of the registrant by the undersigned authorized individuals.


HALLIBURTON COMPANY

/s/ Christopher T. WeberEric J. Carre/s/ Charles E. Geer, Jr.
Christopher T. WeberEric J. CarreCharles E. Geer, Jr.
Executive Vice President andSenior Vice President and
Chief Financial OfficerCorporate ControllerChief Accounting Officer




Date: October 27, 2017July 26, 2023



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