Halliburton · 10-Q · Item 2 MD&A

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 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 asset value throughout the lifecycle of the reservoir from locating hydrocarbons and managing geological data, to

drilling and formation evaluation, well construction and completion, and optimizing production throughout the life of the asset.

Activity levels within our operations are significantly impacted by spending on upstream exploration, development, and

production programs by major, national, and independent oil and natural gas companies. We report our results under two

segments, the Completion and Production segment and the Drilling and Evaluation segment.

•Completion and Production delivers cementing, stimulation, specialty chemicals, intervention, pressure control,

artificial lift, and completion products and services. The segment consists of Artificial Lift, Cementing, Completion

Tools, Pipeline and Process Services, Production Enhancement, and Production Solutions. During the second

quarter of 2026, we completed the sale of a portion of our chemical business.

•Drilling and Evaluation provides field and reservoir modeling, drilling, fluids, evaluation, and precise wellbore

placement solutions that enable customers to model, measure, drill, and optimize their well construction activities.

The segment consists of Baroid, Drill Bits and Services, Halliburton Project Management, Landmark Software and

Services, Sperry Drilling, Testing and Subsea, and Wireline and Perforating.

The business operations of our segments are organized around four primary geographic regions: North America, Latin

America, Europe/Africa/CIS, and Middle East/Asia. We have manufacturing operations in various locations, the most

significant of which are in the United States, Malaysia, Singapore, and the United Kingdom. With over 46,000 employees, we

operate in more than 70 countries around the world, and our corporate headquarters is in Houston, Texas.

Our value proposition is to collaborate and engineer solutions to maximize asset value for our customers. We strive to

achieve strong cash flows and returns for our shareholders by delivering technology and services that improve efficiency,

increase recovery, and maximize production for our customers. Our strategic priorities are to:

- International: Consistently increase international growth in our directional drilling, unconventionals, well

intervention, and artificial lift businesses. Develop behind-the-meter power generation, independently or through

collaboration with Voltagrid.

- North America: Maximize value by, among other things, utilizing our Zeus IQ electric fracturing platform, our

iCruise rotary steerable systems and LOGIX automation.

- Digital: Continue to drive differentiation and efficiencies through the deployment of digital and automation

technologies, both internally and for our customers.

- Capital efficiency: T1Maintain our capital expenditures at about $1.1 billion, while leveraging technology and targeted

process improvements to enhance utilization of existing capital.

- Shareholder returns: T2Return over 50% of annual free cash flow to shareholders through dividends and share

repurchases.

- Advance a Sustainable Energy Future: Continue to develop technologies and solutions to help lower our customers’

and our emissions intensity, grow our low carbon energy business, and support Halliburton Labs early-stage

company participants.

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Part I. Item 2 | Executive Overview

The following charts depict the revenue split between our two operating segments and our four primary geographic

regions for the three months ended June 30, 2026.

Market conditions

During the second quarter of 2026, market conditions were impacted by the ongoing geopolitical conflict in the Middle

East, which disrupted activity levels in certain markets and affected operations across both of our segments.

Oil prices increased in the second quarter of 2026 compared to the first quarter of 2026. The West Texas Intermediate

(WTI) crude oil price averaged approximately $96 per barrel during the second quarter of 2026, compared to approximately

$72 per barrel during the first quarter of 2026, or a 33% increase. The Brent crude oil price averaged approximately $103 per

barrel during the second quarter of 2026, compared to approximately $80 per barrel during the first quarter, or a 29% increase.

Higher commodity prices generally support customer activity and capital spending in the markets we serve, as operator

investment decisions are often influenced by expectations regarding future commodity prices.

T3Trade tensions and tariffs continue to influence the global demand outlook, with varying impacts across end markets.

We continue to monitor and evaluate the effects of these on goods imported into the United States. During the second quarter of

2026, we recognized a gain of approximately $57 million related to a government refund recovery, which is included in

“Impairments and other charges (credits)” on the Condensed Consolidated Statements of Operations. We continue to monitor

developments related to trade policy and evaluate the potential effects of future tariff actions on our business, financial position,

results of operations and cash flows.

T4Globally, we continue to be impacted by inflationary cost increases, primarily related to logistics, chemicals, and

cement. We manage these pressures through global procurement strategies, technology modifications, and sourcing efficiencies.

As a standard practice, we generally seek to pass a portion of these cost increases on to our customers and believe we have

effective solutions in place to minimize their operational impact.

Customers remained focused on capital discipline, production optimization, operating efficiency, and expected returns

on investment. Customer activity and spending decisions were influenced by the geopolitical conflict in the Middle East, higher

commodity prices, uncertainty related to global trade policies and tariffs, and inflationary cost pressures. As a result, customers

continued to evaluate investment opportunities while balancing growth objectives, operating priorities, and return expectations.

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Part I. Item 2 | Executive Overview

Financial results

The following graph illustrates our revenue and operating margins for each operating segment for the second quarter of

During the second quarter of 2026, we generated total company revenue of $5.7 billion, a 4% increase as compared to

the second quarter of 2025. We reported operating income of $778 million, including a pre-tax credit on impairments and other

credits of $95 million, in the second quarter of 2026, as compared to operating income of $727 million in the second quarter of

Our Completion and Production segment revenue was relatively flat in the second quarter of 2026 as compared to the

second quarter of 2025. Revenue improvements were primarily driven by increased stimulation activity and improved artificial

lift activity in Latin America, higher completion tool sales in Europe/Africa, and improved pressure pumping services in Africa.

Offsetting these increases were lower activity across multiple product service lines in the Middle East, and decreased

stimulation activity and lower specialty chemicals activity resulting from the completed sale of a portion of our chemical

business in North America. Operating income was further adversely impacted by activity mix and reduced pricing for

stimulation services in US Land and Latin America.

Our Drilling and Evaluation segment revenue increased 7% in the second quarter of 2026 as compared to the second

quarter of 2025. These results were primarily driven by higher drilling-related services in North America, Europe/Africa, and

Asia, and higher activity across multiple product service lines in Latin America. Partially offsetting these increases were lower

drilling-related services and decreased wireline activity in the Middle East.

Our North America revenue was relatively flat in the second quarter of 2026 as compared to the second quarter of

2025. These results were primarily driven by improved well construction activity and increased stimulation activity in US Land.

Partially offsetting these increases were lower stimulation activity in the Gulf of America and Canada, and a decrease in well

intervention services and lower specialty chemicals activity resulting from the completed sale of a portion of our chemical

business in US Land.

T5Internationally, revenue increased 6% in the second quarter of 2026 as compared to the second quarter of 2025, largely

driven by improved stimulation services and higher project management activity in Latin America, increased well construction

activity and higher project management activity in Africa, and higher completion tool sales in Europe/Africa. Partially

offsetting these increases was lower activity across multiple product service lines in the Middle East due to conflict-related

disruptions.

Our operating performance and liquidity are described in more detail in “Liquidity and Capital Resources” and

“Business Environment and Results of Operations.”

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Part I. Item 2 | Liquidity and Capital Resources

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2026, we had $2.0 billion of cash and equivalents, compared to $2.2 billion of cash and equivalents at

Significant sources and uses of cash during the first six months of 2026

Sources of cash:

•Cash flows from operating activities were $1.1 billion. Working capital, which consists of receivables, inventories,

and accounts payable, had a negative impact of $187 million.

Uses of cash:

•Capital expenditures were $427 million.

•We repurchased 7.9 million shares of our common stock for $308 million, which includes the excise tax payment

for prior year share repurchases.

•We paid $285 million of dividends to our shareholders.

•We paid $101 million primarily in connection with an equity investment.

Future sources and uses of cash

We manufacture most of our own equipment, which provides us with some flexibility to increase or decrease our

capital expenditures based on market conditions. We currently expect capital spending for 2026 to be approximately $1.1

billion. We believe this level of spending will enable continued investment in our core strategic technologies and businesses,

including the international expansion of our artificial lift, well intervention, unconventionals, and drilling technologies. We will

continue to maintain capital discipline and monitor the rapidly changing market dynamics, and we may adjust our capital

spending 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 $0.17 per common share, or approximately $143 million. In 2023, our Board

approved a capital return framework with a goal of returning at least 50% of our annual free cash flow to shareholders through

dividends and share repurchases, and we expect our returns to shareholders will be in line with our capital return framework for

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 million shares of common stock during the

second quarter of 2026 under this program. Approximately $1.7 billion remained authorized for repurchases as of June 30, 2026

and may be used for open market and other share purchases.

During 2023, we began our migration to SAP S4 which we expect to complete in T6the fourth quarter of 2026. For the

six months ended June 30, 2026, we incurred $88 million in expense on our SAP S4 migration and expect the estimated cost to

be approximately $45 million in the third quarter of 2026. 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.

We may, from time to time, redeem, repurchase, or otherwise acquire our outstanding debt through privately

negotiated transactions, open market purchases, redemptions, tender offers or otherwise, but we are under no obligation to do

so.

Other factors affecting liquidity

Financial condition in current market. As of June 30, 2026, we had $2.0 billion of cash and equivalents and $3.5

billion of available committed bank credit under our revolving credit facility, with an expiration date of August 16, 2030. We

believe we have a manageable debt maturity profile, with approximately $90 million due February 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 expected global cash needs, including capital expenditures, working capital investments,

shareholder returns, if any, debt repurchases, if any, and scheduled interest and principal payments, in the short term and long

term.

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Part I. Item 2 | Liquidity and Capital Resources

Guarantee agreements. In the normal course of business, we have agreements with financial institutions under which

approximately $3.3 billion of letters of credit, bank guarantees, or surety bonds were outstanding as of June 30, 2026. Some of

the outstanding letters of credit have triggering events that would entitle a bank to require cash collateralization; however, none

of these triggering events have occurred. As of June 30, 2026, we had no material off-balance sheet liabilities and were not

required to make any material cash distributions to our unconsolidated subsidiaries.

We have entered into credit default swaps (CDSs) with third-party financial institutions that have an aggregate

notional amount outstanding as of June 30, 2026 of $217 million, compared to an aggregate notional amount outstanding as of

December 31, 2025 of $592 million, related to borrowings provided by the financial institutions to one of our primary

customers in Mexico, of which portions of the proceeds were utilized by this customer to pay certain of our outstanding

receivables. The aggregate notional amount outstanding of the CDSs reduces monthly over its remaining 3-month term.

Credit ratings. Our credit ratings with Standard & Poor’s remain BBB+ for our long-term debt and A-2 for our short-

term debt, with a stable outlook. Our credit ratings with Moody's Investors Service remain A3 for our long-term debt and P-2

for our short-term debt, with a stable outlook.

Customer receivables. In line with industry practice, we bill our customers for our services in arrears and are,

therefore, subject to our customers delaying or failing to pay our invoices. In weak economic environments, we may experience

increased delays and failures to pay our invoices due to, among other reasons, a reduction in our customers’ cash flow from

operations and their access to the credit markets, as well as unsettled political conditions.

Receivables from our primary customer in Mexico accounted for approximately 7% of our total receivables as of both

June 30, 2026 and December 31, 2025. While we have experienced payment delays from our primary customer in Mexico, the

amounts are not in dispute and we have not historically had, and we do not expect, any material write-offs due to collectability

of receivables from this customer.

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Part I. Item 2 | Business Environment and Results of Operations

BUSINESS ENVIRONMENT AND RESULTS OF OPERATIONS

We operate in more than 70 countries throughout the world and provide a broad 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 numerous competitors across each of our

business segments. Based on the location of services provided and products sold, 37% and 39% of our consolidated revenue

was attributable to the United States during the six months ended June 30, 2026 and 2025, respectively. No other country

accounted for more than 10% of our revenue for those periods.

Demand for our services and products is largely dependent on our customers' spending for the exploration,

development, and production of oil and natural gas reserves. Customer spending is influenced by a variety of factors, including

commodity prices and expectations regarding future prices, global oil and natural gas supply and demand fundamentals, the

availability of capital, government policies and regulations, geopolitical developments, and overall economic conditions.

Activity levels in certain markets may also be influenced by longer-term trends affecting energy demand, including

increasing electricity consumption associated with digital infrastructure and data center growth. These factors collectively

influence global drilling, completions, intervention, and production-related activity levels.

Because a significant portion of our business supports our customers' capital spending programs, our financial

performance is closely tied to oil and natural gas prices and worldwide drilling and completions activity. Lower commodity

prices generally result in reduced customer spending and lower activity levels, while higher commodity prices typically support

increased investment and activity. Accordingly, our operating results are significantly affected by changes in commodity prices

and global rig activity, which are summarized in the tables below.

The table below shows the average prices for West Texas Intermediate (WTI) crude oil, United Kingdom Brent crude

oil, and Henry Hub natural gas.

Three Months Ended

Year Ended

Oil Price - WTI (1)

Oil Price - Brent (1)

Natural Gas Price - Henry Hub (2)

(1)

Oil prices measured in dollars per barrel.

(2)

Natural gas price measured in dollars per million British thermal units (Btu), or MMBtu.

The historical average rig counts based on the weekly Baker Hughes rig count data were as follows:

Three Months Ended

Six Months Ended

Year Ended

US Land

US Offshore

Canada

North America

International (1)

Worldwide Total

(1)

For the three and six months ended June 30, 2025, historical average rig counts shown are based on data provided by Baker Hughes, which

included retroactive adjustments to international rig counts previously reported as a result of a methodology change.

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Part I. Item 2 | Business Environment and Results of Operations

Business outlook

We expect customer spending to remain focused on capital discipline, production optimization, and operational

efficiency across both international and North America markets.

T7Operations in certain Middle East markets continue to be affected by ongoing geopolitical developments, including

periodic operational disruptions, reduced activity in some areas, and higher logistics and supply chain costs. Activity in the

region is recovering from conflict-related lows; however, the pace of recovery remains dependent on day-to-day developments

in the region.

Outside of the Middle East, we expect activity growth to be led by production services, drilling, unconventionals, and

lift. These markets continue to be supported by customer investment in development projects, production capacity maintenance,

and selected offshore and strategic energy projects. In North America, customer activity remains focused on maximizing returns

and improving operating efficiency within existing capital budgets. Over the long term, we expect North America to remain

critical for global energy security, which will require advanced technology and greater service intensity.

While current industry fundamentals remain generally supportive of customer activity, the outlook for our business

remains subject to uncertainty. Customer spending and activity levels may be affected by volatility in oil and natural gas prices,

changes in global supply and demand balances, inflationary pressures, supply chain constraints, the availability of capital,

geopolitical developments, trade policies, sanctions, and regulatory actions. These factors may impact the timing and scope of

customer projects and demand for our services and products.

Table of Contents

Part I. Item 2 | Results of Operations in 2026 Compared to 2025 (QTD)

Three Months Ended

Favorable

Percentage

Millions of dollars

(Unfavorable)

Change

Revenue:

By operating segment:

Completion and Production

1%

Drilling and Evaluation

7

Total revenue

4%

By geographic region:

North America

1%

Latin America

Europe/Africa/CIS

Middle East/Asia

Total revenue

4%

Operating income:

By operating segment:

Completion and Production

(8)%

Drilling and Evaluation

8

Total operations

(2)

Corporate and other

SAP S4 upgrade expense

Impairments and other credits

—

n/m

Total operating income

7%

n/m = not meaningful

Operating Segments

Completion and Production

Completion and Production revenue in the second quarter of 2026 was $3.2 billion, or relatively flat, when compared

to the second quarter of 2025. Operating income in the second quarter of 2026 was $474 million, a decrease of $39 million, or

8%, when compared to the second quarter of 2025. Revenue improvements were primarily driven by increased stimulation

activity and improved artificial lift activity in Latin America, higher completion tool sales in Europe/Africa, and increased

pressure pumping services in Africa. Offsetting these increases were lower activity across multiple product service lines in the

Middle East, and decreased stimulation activity and lower specialty chemicals activity resulting from the completed sale of a

portion of our chemical business in North America. Operating income was further adversely impacted by activity mix and

reduced pricing for stimulation services in US Land and Latin America.

Drilling and Evaluation

Drilling and Evaluation revenue in the second quarter of 2026 was $2.5 billion, an increase of $173 million, or 7%,

when compared to the second quarter of 2025. Operating income in the second quarter of 2026 was $338 million, an increase of

$26 million, or 8%, when compared to the second quarter of 2025. These results were primarily driven by higher drilling-

related services in North America, Europe/Africa, and Asia, and higher activity across multiple product service lines in Latin

America. Partially offsetting these increases were lower drilling-related services and decreased wireline activity in the Middle

East.

In the second quarter, the geopolitical conflict in the Middle East affected both of our operating segments.

Table of Contents

Part I. Item 2 | Results of Operations in 2026 Compared to 2025 (QTD)

Geographic Regions

North America

North America revenue in the second quarter of 2026 was $2.3 billion, relatively flat, as compared to the second

quarter of 2025. These results were primarily driven by improved well construction activity and increased stimulation activity

in US Land. Partially offsetting these increases were lower stimulation activity in the Gulf of America and Canada, and a

decrease in well intervention services and lower specialty chemicals activity resulting from the completed sale of a portion of

our chemical business in US Land.

Latin America

Latin America revenue in the second quarter of 2026 was $1.1 billion, a 15% increase compared to the second quarter

of 2025. These results were primarily driven by improved project management activity and well construction activity in

Ecuador, improved stimulation activity in Argentina, higher completion tool sales and increased stimulation activity in Mexico,

increased activity across multiple product service lines in the Caribbean and Brazil, and higher testing services and wireline

activity across the region. Partially offsetting these increases were lower well construction services and decreased project

management activity in Mexico, and lower completion tool sales in Brazil.

Europe/Africa/CIS

Europe/Africa/CIS revenue in the second quarter of 2026 was $1.0 billion, a 24% increase compared to the second

quarter of 2025. These results were primarily driven by higher activity across multiple product service lines in Angola and

Nigeria, increased drilling-related services and higher completion tool sales in the North Sea, higher completion tool sales in the

Mediterranean and Ivory Coast, and higher well construction activity in Namibia. Partially offsetting these increases were lower

wireline activity and decreased pipeline services in the North Sea, and lower completion tool sales in the Caspian Area.

Middle East/Asia

Middle East/Asia revenue in the second quarter of 2026 was $1.3 billion, an 11% decrease compared to the second

quarter of 2025. These results were primarily driven by decreased activity across multiple product service lines in Saudi Arabia,

Iraq, Qatar, and Kuwait due to conflict-related disruptions. Partially offsetting these decreases were higher testing services in

the United Arab Emirates and improved drilling-related services in Asia.

Other Operating Items

Corporate and Other. During the three months ended June 30, 2026, Corporate and Other expense totaled $83 million,

which was an increase of $17 million, or 26%, as compared to the three months ended June 30, 2025. This increase was

primarily attributable to higher executive compensation costs and increased amortization expense related to recent acquisitions.

SAP S4 Upgrade Expense. As previously mentioned, during 2023, we began our migration to SAP S4, which we

expect to complete in the fourth quarter of 2026. During the second quarter of 2026 and 2025, we recognized $46 million and

$32 million of expense on our SAP S4 migration, respectively.

Impairments and Other Credits. During the three months ended June 30, 2026, we recognized a pre-tax credit of $95

million primarily due to gains on our equity investments, and a government refund recovery, partially offset by a loss on the

sale of a portion of our chemical business. See Notes to Condensed Consolidated Financial Statements, Note 2. Impairments

and Other Charges (Credits) for further discussion of these charges (credits).

Nonoperating Items

Income Tax Provision. During the three months ended June 30, 2026, we recorded a total income tax provision of $126

million on a pre-tax income of $664 million, resulting in an effective tax rate of 19.0% for the quarter. During the three months

ended June 30, 2025, we recorded a total income tax provision of $131 million on a pre-tax income of $611 million, resulting in

an effective tax rate of 21.4% for the quarter.

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Part I. Item 2 | Results of Operations in 2026 Compared to 2025 (QTD)

Internal Revenue Service Notice of Proposed Adjustment. We are subject to taxes in the United States and in numerous

jurisdictions where we operate or where our subsidiaries are organized. Our tax returns are routinely subject to examination by

the taxing authorities in the jurisdictions where we file tax returns. In most cases we are no longer subject to examination by tax

authorities for years before 2014. The only significant operating jurisdiction that has tax filings under review or subject to

examination by the tax authorities is the United States. Our United States federal income tax filings for tax years 2016 through

2024, including carry back of 2016 net operating losses to 2014, are currently under review or remain open for review by the

IRS.

On September 28, 2023, we received a NOPA from the IRS covering our 2016 U.S. tax return. The NOPA proposed

an adjustment to reclassify approximately 95% of the $3.5 billion termination fee paid to Baker Hughes in 2016 from an

ordinary expense deduction to a capital loss. The termination fee was paid to Baker Hughes under the merger agreement after

antitrust regulators in multiple jurisdictions failed to approve our proposed merger. It is common commercial practice to include

a termination fee in a merger agreement to compensate the target for damages incurred when the acquisition does not go

forward. The IRS’s long-understood position at the time of payment had been to treat such payments as an ordinary and

necessary business expense. T8We strongly disagree with the proposed adjustment on both a factual and legal basis, and we plan

to vigorously contest it.

We expect that resolving this dispute will take substantial time. In 2023, we initiated the IRS administrative appeals

process, which is ongoing. Failing a resolution through that process, the matter will ultimately be resolved by the United States

federal courts.

We regularly assess the likelihood of adverse outcomes resulting from tax examinations to determine the adequacy of

our tax reserves, and we believe our income tax reserves are appropriately provided for all open tax years. We cannot assure

you that the matter will be determined in our favor or against us, and if the matter is ultimately determined unfavorably to us, it

could have a material adverse impact on our results of operations and cash flows. Based on tax attributes currently available, we

estimate that, should the IRS's position prevail through the appellate process and subsequent litigation, the proposed adjustment

could result in cash taxes due of approximately $640 million (plus interest thereon in the case of amounts due for previous tax

years). Our estimates are calculated under current tax law and on the basis of our assumptions regarding taxable income and

loss and other tax attributes over the relevant period, of which the law could change and which assumptions could and likely

will differ materially from actual results. In any event, no payment of any additional tax is currently required, nor do we

anticipate that the proposed adjustment would materially and adversely impact our ability to meet our expected uses of cash,

including future capital expenditures, working capital investments, and scheduled debt repayments, or our ability to return cash

to shareholders, even if a final determination of the matter is reached that is adverse to us.

Table of Contents

Part I. Item 2 | Results of Operations in 2026 Compared to 2025 (YTD)

Six Months Ended

Favorable

Percentage

Millions of dollars

(Unfavorable)

Change

Revenue:

By operating segment:

Completion and Production

(1)%

Drilling and Evaluation

6

Total revenue

2%

By geographic region:

North America

(2)%

Latin America

Europe/Africa/CIS

Middle East/Asia

Total revenue

2%

Operating income:

By operating segment:

Completion and Production

Drilling and Evaluation

4

Total operations

(6)

Corporate and other

SAP S4 upgrade expense

Impairments and other (charges) credits

n/m

Total operating income

n/m = not meaningful

Operating Segments

Completion and Production

Completion and Production revenue in the first six months of 2026 was $6.2 billion, or relatively flat, when compared

to the first six months of 2025. Operating income for the segment in the first six months of 2026 was $913 million, a decrease

of $131 million, or 13%, when compared to the first six months of 2025. Revenue declines were primarily driven by decreased

activity across multiple product service lines in North America and the Middle East. Offsetting these decreases were improved

activity across multiple product service lines in Latin America, higher completion tool sales in North America, Europe/Africa,

and Asia, increased pressure pumping services in Africa, and increased well intervention services in Europe/Africa. Operating

income was further adversely impacted by activity mix and reduced pricing for stimulation services in Latin America.

Drilling and Evaluation

Drilling and Evaluation revenue in the first six months of 2026 was $4.9 billion, an increase of $262 million, or 6%,

when compared to the first six months of 2025. Operating income for the segment in the first six months of 2026 was $689

million, an increase of $25 million, or 4%, when compared to the first six months of 2025. These results were primarily driven

by higher activity across multiple product service lines in Latin America, improved drilling related services in North America

and Europe, and increased fluids services in Asia. Partially offsetting these increases were lower activity across multiple

product service lines in the Middle East and decreased wireline activity in Europe.

In the first six months of 2026, the geopolitical conflict in the Middle East affected both of our operating segments.

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Part I. Item 2 | Results of Operations in 2026 Compared to 2025 (YTD)

Geographic Regions

North America

North America revenue in the first six months of 2026 was $4.4 billion, a 2% decrease compared to the first six

months of 2025. These results were primarily driven by lower stimulation activity across the region, lower artificial lift activity

and decreased well intervention services in US Land, a reduction in specialty chemicals activity in US Land following the sale

of a portion of our chemical business, and decreased fluid services in the Gulf of America. Offsetting these decreases were

improved well construction activity in US Land, increased drilling-related services in Canada, and higher completion tool sales

in the Gulf of America.

Latin America

Latin America revenue in the first six months of 2026 was $2.2 billion, an 18% increase compared to the first six

months of 2025. These results were primarily driven by increased activity across multiple product service lines in Ecuador, the

Caribbean, and Brazil, increased stimulation activity and higher completion tool sales in Mexico, and increased stimulation

activity in Argentina. Partially offsetting these increases were decreased well construction activity and lower project

management activity in Mexico, and lower completion tool sales in Brazil.

Europe/Africa/CIS

Europe/Africa/CIS revenue in the first six months of 2026 was $1.9 billion, an 18% increase compared to the first six

months of 2025. These results were primarily driven by higher well construction activity and increased well intervention

services in the region, improved activity across multiple product service lines in Angola, and increased completion tool sales in

Norway and Ivory Coast. Partially offsetting these increases were lower completion tool sales in the Caspian Area and

Romania, and decreased wireline activity in the North Sea.

Middle East/Asia

Middle East/Asia revenue in the first six months of 2026 was $2.6 billion, a 12% decrease compared to the first six

months of 2025. These results were primarily driven by lower activity across multiple product service lines in the Middle East

due to conflict-related disruptions, and decreased wireline activity and lower well intervention services in Asia. Partially

offsetting these decreases were higher fluid services in Brunei, increased testing services in Turkey and the United Arab

Emirates, and improved completion tool sales in Australia.

Other Operating Items

Corporate and Other. During the six months ended June 30, 2026, Corporate and Other expense totaled $152 million,

which was an increase of $20 million, or 15%, as compared to the six months ended June 30, 2025. This increase was primarily

attributable to higher executive compensation costs and increased amortization expense related to recent acquisitions.

SAP S4 Upgrade Expense. As previously mentioned, during 2023 we began our migration to SAP S4, which we expect

to complete in the fourth quarter of 2026. During the six months ended June 30, 2026 and 2025, we recognized $88 million and

$62 million of expense on our SAP S4 migration, respectively.

Impairments and Other Charges (Credits). During the six months ended June 30, 2026, we recognized a pre-tax credit

of $95 million primarily due to gains on our equity investments, and a government refund recovery, partially offset by a loss on

the sale of a portion of our chemical business. During the six months ended June 30, 2025, we took a pre-tax charge of $356

million to adjust our cost to market conditions. These charges consisted primarily of severance costs, an impairment of assets

held for sale, an impairment of facility closures and lease terminations, and other items. See Notes to Condensed Consolidated

Financial Statements, Note 2. Impairments and Other Charges (Credits) for further discussion of these charges (credits).

Nonoperating Items

Pension Settlement Charges from Plan Terminations. During the six months ended June 30, 2026, the Company

entered into agreements to transfer certain defined benefit pension obligations to third-party insurers in connection with plan

terminations. As a result, the Company recognized approximately $23 million of non-cash pension settlement charges,

primarily related to the acceleration of actuarial losses previously recorded in accumulated other comprehensive income. This is

included in “Other, net” on the Condensed Consolidated Statements of Operations.

Income Tax Provision. During the six months ended June 30, 2026, we recorded a total income tax provision of $231

million on a pre-tax income of $1.2 billion, resulting in an effective tax rate of 18.7%. The effective tax rate for this period was

primarily impacted by the release of a valuation allowance in the amount of $32 million related to changes in deferred tax asset

realizability. During the six months ended June 30, 2025, we recorded a total income tax provision of $234 million on pre-tax

income of $917 million, resulting in an effective tax rate of 25.5%. The effective tax rate for this period was primarily impacted

by the additional valuation allowance recognized on our deferred tax assets, which resulted from the pre-tax $356 million of

impairments and other charges.

Table of Contents

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, including those in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations –

Business Environment and Results of Operations – Business Outlook, 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,” and other expressions. We may also provide oral or written forward-looking information in our statements

and other materials we release to the public. Forward-looking information involves risks and uncertainties and reflects our best

judgment based on current information. Our results of operations can be affected by inaccurate assumptions we make or by

known or unknown risks and uncertainties. In addition, other factors may affect the accuracy of our forward-looking

information. As a result, no forward-looking information can be guaranteed. Actual events and the results of our operations may

vary materially.

We do not assume any responsibility to publicly update any of our forward-looking statements regardless of whether

factors change as a result of new information, future events, or for any other reason, except as required by law. You should

review any additional disclosures we make in our press releases and Forms 10-K, 10-Q, and 8-K filed with or furnished to the

Securities and Exchange Commission. We also suggest that you listen to our quarterly earnings release conference calls with

financial analysts.