The accompanying unaudited condensed consolidated financial statements were prepared using United States generally accepted accounting principles (GAAP) for interim financial information and the instructions to Form 10-Q and Regulation S-X. Accordingly, these financial statements do not include all information or notes required by generally accepted accounting principlesU.S. GAAP for annual financial statements and should be read together with our 20222023 Annual Report on Form 10-K.

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 September 30, 2023March 31, 2024 and the results of our operations for the three and nine months ended September 30,March 31, 2024 and 2023, and 2022, and our cash flows for the ninethree months ended September 30, 2023March 31, 2024 and 2022.2023. 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 nine months ended September 30, 2023March 31, 2024 may not be indicative of results for the full year.

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. 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.

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.

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, 45%42% and 47% of our consolidated revenue was from the United States for both the ninethree months ended September 30,March 31, 2024 and 2023, and 2022.respectively. No other country accounted for more than 10% of our revenue.revenue for those periods.

We perform our obligations under contracts with our customers by transferring services and products in exchange for consideration. The timing of our performance often differs from the timing of our 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 material to our condensed consolidated financial statements.

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 lump sum turnkey contracts. For software contracts, revenue is generally recognized over time throughout the licenseduration of the contract period when the software is considered to be a right to access our intellectual property. For lump sum turnkey projects, we recognize revenue over time using an input method, which requires us to exercise judgment. Revenue allocated to remaining performance obligations for these long-term contracts is not material.

As of September 30, 2023, 34%March 31, 2024, 32% of our net trade receivables were from customers in the United States and 12%10% were from customers in Mexico. As of December 31, 2022, 38%2023, 33% of our net trade receivables were from customers in the United States and 11%9% were from customers in Mexico. Receivables from our primary customer in Mexico accounted for approximately 10%8% and 9%6% of our total receivables as of September 30, 2023March 31, 2024 and December 31, 2022,2023, respectively. While we have experienced payment delays from our primary customer in Mexico, the amounts are not in dispute and we have not historically had, and we do not expect, any material write-offs due to collectability of receivables from this customer. No country other countrythan the United States or single customer accounted for more than 10% of our net trade receivables at those dates.

We have risk of delayed customer payments and payment defaults associated with customer liquidity issues. We routinely monitor the financial stability of our customers and employ an extensive process to evaluate the collectability of outstanding receivables. This process, which involves a high degree of judgment utilizing significant assumptions,and estimates, includes analysis of our customers’ historical time to pay, financial condition and various financial metrics, debt structure, credit ratings, and production profile, as well as political and economic factors in countries of operations and other customer-specific factors.

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“Disclosure of Supplier Finance Program Obligations"Obligations”), other than. The standards update also includes a prospective annual requirement to disclose a rollforward of the roll-forwardamount of the obligations during the annual reporting period. We will include the rollforward disclosure which we will adopt atin our Annual Report on Form 10-K for the beginning of 2024.year ending December 31, 2024, as required.

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 $320$325 million as of September 30, 2023,March 31, 2024, and $273$322 million as of December 31, 2022,2023, and are included in accounts payable on the condensed consolidated balance sheets.

During the three months ended September 30,March 31, 2024, we recorded a total income tax provision of $178 million on a pre-tax income of $787 million, resulting in an effective tax rate of 22.6% for the quarter. During the three months ended March 31, 2023, we recorded a total income tax provision of $192$174 million on a pre-tax income of $916$829 million, resulting in an effective tax rate of 21.0% for the quarter. During the three months ended September 30, 2022, we recorded a total income tax provision of $156 million on a pre-tax income of $705 million, resulting in an effective tax rate of 22.2% for the quarter.

The Company is subject to various legal or governmental proceedings, claims or investigations, including personal injury, property damage, environmental, intellectual property, commercial, tax, and other matters arising in the ordinary course of business, the resolution of which, in the opinion of management, will not have a material adverse effect on our consolidated results of operations or consolidated financial position. There is inherent risk in any legal or governmental proceeding, claim or investigation, and no assurance can be given as to the outcome of these proceedings.

In the normal course of business, we have in place agreements with financial institutions under which approximately $2.4$2.6 billion of letters of credit, bank guarantees, or surety bonds were outstanding as of September 30, 2023.March 31, 2024. Some of the outstanding letters of credit have triggering events that would entitle a bank to require cash collateralization. Nonecollateralization; however, none of these triggering events have occurred. As of March 31, 2024, we had no material off-balance sheet arrangements either has, or is likelyliabilities and were not required to have, amake any material effect oncash distributions to our condensed consolidated financial statements.unconsolidated subsidiaries.

Basic income or loss per share is based on the weighted average number of common shares outstanding during the period. Diluted income per share includes additional common shares that would have been outstanding if potential common shares with a dilutive effect had been issued. Antidilutive securities represent potentially dilutive securities which are excluded from the computation of diluted income or loss per share as their impact was antidilutive.

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.

In the first ninethree months of 2023,2024, the fair value of our total debt decreased as a result of $150 million in debt repurchases, as discussed in Note 11. Debt and higher debt yields, primarily driven by an increase in U.S. Treasury rates.bond 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. Differences between the periods presented in our level 1 and level 2 classification of our long-term debt relate to the timing of when third party market transactions on our debt are executed. We have no debt categorized within level 3 on the fair value hierarchy.

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“Item 1. Financial Statements"Statements” contained herein.

The business operations of our segments are organized around four primary geographic regions: North America, Latin America, Europe/Africa/CIS, and Middle East/Asia. We have manufacturing operations in various locations, the most significant of which are in the United States, Malaysia, Singapore, and the United Kingdom. With approximately 48,00049,000 employees, we operate in more than 70 countries around the world, and our corporate headquarters is in Houston, Texas.

The following charts depict the revenue split between our two operating segments and our four primary geographic regions for the quarterthree months ended September 30, 2023.March 31, 2024.

Globally, we continue to be impacted by increasedextended 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 thetheir operational impact.

The following graph illustrates our revenue and operating margins for each operating segment for the thirdfirst quarter of 20222023 and 2023.2024.

During the thirdfirst quarter of 2023,2024, we generated total company revenue of $5.8 billion, an 8%a 2% increase as compared to the thirdfirst quarter of 2022.2023. We recorded operating income of $1.0 billion during$987 million in the thirdfirst quarter of 20232024, flat when compared to operating income of $846 million during the thirdfirst quarter of 2022.2023. Our Completion and Production segment revenue increased 11%was down slightly in the thirdfirst quarter of 20232024 as compared to the thirdfirst quarter of 2022, primarily due to2023. Reduced pressure pumping services in U.S. land were offset by improved stimulation activity internationally, higher completion tool sales globally,in the Western Hemisphere and Europe/Africa, increased stimulation activity in Latin America, higher cementing activity internationally, and increased cementingartificial lift activity in the Eastern Hemisphere.North America. Operating income increased due to completion tool product sales and activity and pricing in artificial lift and cementing services. Our Drilling and Evaluation segment revenue increased 4%7% in the thirdfirst quarter of 20232024 as compared to the third quarter of 2022, driven primarily by improvements in fluids and wireline activity globally and higher drilling services internationally.

Our North America average rig countrevenue decreased 13%8% in the thirdfirst quarter of 20232024, as compared to the thirdfirst quarter of 2022.2023, driven by lower pressure pumping services in U.S. land along with lower wireline activity throughout the region. Partially offsetting these declines were improved completion tool sales, higher pressure pumping services, and improved drilling-related services in the Gulf of Mexico, along with higher artificial lift activity and increased drilling services in U.S. land.

Internationally, revenue increased 17%12% in the thirdfirst quarter of 2023,2024, as compared to the thirdfirst quarter of 2022,2023, largely driven by improved stimulation activity in multiple product service lines in Latin America, increased drilling services in the Middle East, higher completion tool salesfluid services in Europe and increased fluids activity acrossthe Middle East, and improved cementing services in all regions. Also improving were testing services and wireline activity across the regions and cementing activity in the Eastern Hemisphere. ThesePartially offsetting these improvements were partially offset by lower project management activity across all regions.in the Middle East/Asia and reduced fluid services in Asia. The international average rig count increased 11%5% in the thirdfirst quarter of 20232024 as compared to the third quarter of 2022.

Our operating performance and liquidity are described in more detail in "Liquidity“Liquidity and Capital Resources"Resources” and “Business Environment and Results of Operations.”

As of September 30, 2023,March 31, 2024, we had $2.0$1.9 billion of cash and equivalents, compared to $2.3 billion of cash and equivalents at December 31, 2022.2023.

We manufacture most of our own equipment, which provides us with some flexibility to increase or decrease our capital expenditures based on market conditions. We currently expect capital spending for 20232024 to be within our target of approximately 5-6%6% of revenue. We believe this level of spend will allow us to invest in our key strategic areas. However, wetechnologies, including the construction and deployment of our Zeus electric fracturing systems in North America, our iStar Intelligent Drilling and Logging Platform, and our iCruise Intelligent Rotary Steerable System. We will continue to maintain capital discipline and monitor the rapidly changing market dynamics, and we may adjust our capital spend accordingly.

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 $0.16$0.17 per common share, or approximately $144$151 million. In January of 2023, our Board of Directors approved a capital return framework with a goal of returning at least 50% of our annual free cash flow to shareholders through dividends and share repurchases and we expect our returns to shareholders will be in line with our capital return framework for 2023.2024.

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. We repurchased 5.17.0 million shares of common stock during the thirdfirst quarter of 20232024 under this program. Approximately $4.3$3.8 billion remained authorized for repurchases as of September 30, 2023March 31, 2024 and may be used for open market and other share purchases.

During the second quarter of 2023, we began our migration to SAP S4, andwhich we expect to complete by the end of 2025. During the three months ended March 31, 2024, we incurred $34 million in expense on our SAP S4 migration. The total project investment is estimated to cost approximately $250 million, andof which we have spent $36incurred $85 million to date. We believe the new system will provide important efficiency benefits, cost savings, enhanced visibility to our operations, and advanced analytics that will benefit us and our customers.

Receivables from our primary customer in Mexico accounted for approximately 10%8% of our total receivables as of September 30, 2023.March 31, 2024. 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.

We operate in more than 70 countries throughout the world to provide a comprehensive range of services and products to the energy industry. Our revenue is generated from the sale of services and products to major, national, and independent oil and natural gas companies worldwide. The industry we serve is highly competitive with many substantial competitors in each segment of our business. Based uponDuring the first three months ended of 2024, based on the location of the services provided and products sold, 45%42% of our consolidated revenue was from the United States, for bothcompared to 47% of our consolidated revenue from the nineUnited States in the first three months ended September 30, 2023 and 2022.of 2023. No other country accounted for more than 10% of our revenue.revenue for those periods.

Activity within our business segments is significantly impacted by spending on upstream exploration, development, and production programs by our customers. Also impacting our activity is the status of the global economy, which impacts oil and natural gas consumption.

Some of the more significant determinants of current and future spending levels of our customers are oil and natural gas prices and our customers' expectations about future prices, global oil supply and demand, completions intensity, the world economy, the availability of capital, government regulation, and global stability, which together drive worldwide drilling and completions activity. Additionally, during 2023,2024, 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 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.

AccordingAs we look into the rest of 2024, we remain positive on the oil and natural gas markets, and continue to the EIA October 2023 "Short Term Energy Outlook", the Brent spot price is expected to average $93 per barrelsee strength across our portfolio. We expect strong oil and natural gas demand growth for the fourth quarterrest of 2023, a 5% increase when compared to the Q4 2022 price of $88 per barrel. According to EIA, the WTI prices are expected to average $88 per barrel in the fourth quarter of 2023, a 6% increase when compared to the Q4 2022 price of $83 per barrel. The EIA's full year 2024 average projection for Brent and WTI oil prices is $88 per barrel and $83 per barrel, respectively, resulting in a 4% increase in each price, when compared to the full year 2023.