Halliburton Company (NYSE:HAL) Q4 2022 Earnings Call Transcript

Roger Read: Congratulations and well done on the quarter. I’d like to come back to some of your guidance and expectations for the international market. As we look at ’23, you said kind of 15% but bias to the upside of that. I was just curious what what finished the year strong in ’22, maybe better than expectations and sort of feeds into that expectation of, let’s say, at least mid-teens to higher as we think about international in ’23.

Jeff Miller: Look, I think it’s sort of like everything is pointing at busier ’23 than ’22. That comes in the form of tender pipeline, that comes in form of sort of backlog increasing, product backlog that we’ve seen strengthened throughout the year and all of that sort of point — I mean all of it points to ’23, maybe even into ’24. Discussions with customers, sort of the intensity of customers, view of staying busy and producing more barrels sooner rather than later. It’s a very favorable market. And so it just gives me a lot of confidence in the outlook for ’23 and particularly from our standpoint where we sit with technology and our global footprint.

Roger Read: And then on the supply chain side, not just yours, but the one you see for the industry. Any areas you think continue to have, let’s just call it, headwinds broadly as we look at ’23, something that would slow project development or acceleration in ’23?

Jeff Miller: Yes, I don’t see anything that slows things down. Are there things that have extended lead times today, we’re still working through some of that. But I don’t think anything meaningful gets in the way of getting started. I think we still see inflation in the marketplace. So that’s one of the ways that we saw for getting things. But I don’t think that it’s going to be a headwind necessarily. We’re starting to see rigs come back. There will be a lot of work around getting those ready in some places. But clearly, motivated customers and there will be some — as I said, some inflation to get all of that done, but I don’t see those as headwinds.

Operator: Our next question comes from Scott Gruber from Citi.

Scott Gruber: Jeff, you mentioned a very full completion calendar here in the US. A quick question on that topic. Does that pertain to the fleets that the new e-frac fleet will be coming in to replace. My question relates to, is there work already lined up that would keep the legacy fleet fully deployed or those fleets need to be bid on to new jobs?

Jeff Miller: Look, no, we’ve got everything as spoken for in ’23, whether replacement or not, I think over time, e-fleets, replace fleets, but they don’t do it initially. And so there’ll be some period of time where fleets take the place of legacy fleets, but that’s not what we see in €˜23, we see everything busy in ’23.

Scott Gruber: Got you, that’s encouraging. And then turning to D&E margins, it’s another nice year of expansion there. And obviously, you guys have had internal initiatives that structurally lift those margins, but you also have a number of tailwinds today from pricing to mix. How should we think about any incrementals this year you’re willing to provide some color there? And overall, how should we think about where you could take D&E margins over the medium to longer term. I was looking back at our model and your D&E margins basically match where they were last cycle. So think about whether you guys can get to the 20% plus margin that you witnessed back in the late 2000s if this up cycle sustains?