Operator: And it comes from the line of Luke Lemoine with Piper Sandler.
Luke Lemoine: Jeff, you talked last quarter about a record number of these fleets that you signed in 2Q. I wanted to see if you could give us a qualitative update on incremental these fleets maybe interest from customers and how you see your, this program shaping up for 24? And then, if you could provide any commentary on conventional equipment displacements, that would be helpful, too.
Jeff Miller: Look, we’ve continued on the track we were on. We’ve continued to see very strong demand. Yes, we’ve signed up new fleets. This quarter, we put a couple of work. I believe that trajectory is unchanged. And so very pleased with the trajectory that we see around e-fleets and they’re performing very, very well. So that continues to sort of build up the confidence of the market and that technology. I think that the fact that they are lower TCO than existing equipment is a big part of why they are successful. From a displacement standpoint, we’ve described as we bring out electric equipment, we would retire diesel equipment. And I’ve always said, it’s not a perfect science of 1:1. But we’ve had an opportunity this year to retire diesel fleets, which we’ve described.
And by doing that has effectively accelerated the marketplace. And what we’re really pleased to see a repeat customer. And I think that’s an important component of confidence in the technology, customers come back for a second one.
Operator: And it comes from the line of Stephen Gengaro with Stifel. Please proceed.
Stephen Gengaro: Two things for me. The first, when you think — you mentioned this I think a little bit earlier, Jeff, but when you think about U.S. production levels, where do you think frac fleet activity needs to be. Are we around that level, do you think to keep production flat under or over.
Jeff Miller: Look, I think that’s going to be unique to different and certainly the different operators and levels of efficiency and many other things. Look, I think that we’ll know a lot more as we go into next year and start to see where production levels are. Clearly, this year saw a lot of broad activity by a lot of operators early in the year, and I suspect North America is getting the benefit of that right now. The private market was super busy the first part of the year 2023. You saw that group not really drill wells as we got into the late summer, which is the time they normally would. And so I think that will weigh on probably production as we go into ’24. That said, we’ve got a commodity market that is probably quite supportive.
And so it’d be hard to imagine less, not more. But in terms of production going into 2024, it would seem that a big chunk of what was added in ’23 is not repeating right now with good weigh on production. That said, as I’ve said before, I think we’ll see activity up, not down from here for those reasons.
Stephen Gengaro: Great. Thanks. And then my follow-up question was around sort of the maybe lesser Tier 1 acreage out there and sort of the impact that you think it has on how’s business from both the pressure pumping but also across C&P in North America as far as, does it help, do you think efficiencies are slowing on the completion side. So how does that phenomena play into sort of demand and service intensity of sort of on a per production or per well basis.
Jeff Miller: Look, it drives service intensity up without question. And that’s good for Halliburton. It also drives technology in terms of things like our downhole diagnostics, which we call SmartFleet. But I mean I think addressing productivity per foot which comes in the form of efficiency, and placement, reconciling all of those things between well design and production, having the tools to do that, and that’s precisely what we introduced to the marketplace in the form of SmartFleet, which is a critical building block in my view, solving for that. And I think that’s why we’re seeing uptake on that technology. So I think that never bet against this industry ever. I mean our customers in North America are very smart, very good, very competitive.
And the history of this industry broadly is improving recovery factors, whether it’s through process and methodology or automation or in many cases, just physics and science. And I think that what that does do is it drives more reps for Halliburton. It will drive more sand in wells that will do a lot of things. But I also expect, as we’ve done for so many years, that we’ll see the actual breakeven cost or the cost of producing oil and gas in North America continue to come down on the back of technology.
Operator: It comes from the line of Marc Bianchi with TD Cowen. Please proceed.
Marc Bianchi: Thank you. I wanted to ask about the C&P performance here in the third quarter and the outlook for fourth quarter. If I look at sort of the original guidance for third quarter, it was for margins to be flat, but they ended up growing by 100 basis points. And then as we look to fourth quarter, the decline is kind of guided to 100 basis points. Was there a pull forward of some completion tool sales that would usually occur in the fourth quarter? Is that explaining it? Or are there some other elements that we should be thinking about as we bridge from where we were in the second quarter?
Jeff Miller: Look, I expect to see strong performance from C&P, Q4 and beyond. Look, I think that I’ve described some seasonality. But I think what you’re really seeing is the quantity and the quality of the development work that’s happening around the world. I mean, you saw equipment is clearly tight moving up. We’ve got a leadership position. And several things in C&P whether it’s production enhancement, which is very important internationally as well, cementing and completion tools. And then, certainly, it helps that North America executed very well. So we’ve seen flat margins despite the rig count being down.
Marc Bianchi: Okay. Thanks for that Jeff. The other one I had was on kind of the international growth. So if I look at your Middle East and Africa, it was flat this quarter. I’m curious how you’re thinking about that region and maybe the other regions if we’re going to get to sort of a low double digits for the year. are any regions leading that or would you expect them all to grow at a similar type rate?
Jeff Miller: Well look, as I said, I expect we finished this year at high double digits, not low double digits. And so look, expect to see growth, but we’re seeing growth everywhere. I mean, growth can be lumpy at different times. It depends on what’s happening in a particular region on any given day or set of quarters. But I would say this quarter, we’ve grown 17% overall and would expect to see solid growth in ’24. And so that will be in bright region, but I am not concerned at all about quarter-to-quarter where growth happens to be. We’ve seen very strong in Middle East earlier this year, and we’ll probably see growth for the full year. So I think that quarter-to-quarter, trying to measure that is not as impactful as sort of year-on-year. And I think we take a set of assets and we put them to work where we see the best returns on them. And some of those C&P margins that you’re seeing are at the root of that.
Operator: It comes from the line of Jim Rollyson with Raymond James. Please proceed.
