Operator: Our next question comes from Roger Read with Wells Fargo.
Roger Read: And actually, to last week to visit a tribal frac site and saw the e-fleet. So pretty impressive setup. One of the things the customer mentioned was a slightly different, I guess, sort of price-to-value contract structure. Looks like from a margin standpoint, you’re doing fine on that. But is there anything you can kind of enlighten us on, on maybe how we thought about traditional pressure pumping contracting and a lot of spot exposure versus kind of how this is going through? What does it mean in terms of sharing gains with the customer? What’s the right way for us to think about that on kind of a price…
Jeffrey Miller: Look, from our standpoint, our — Roger, thank you. We won’t create value for our customers. I think you have to create meaningful value for customers in order to be a long-term supplier and partner to a customer. So we start from that position. And as you said, solid contract for us over the very long term. We went into this focused on maximize value, which in our view, means maximize returns, which we’re able to do under these types of environments. And so rather than play sort of the spot — we don’t intend to play the spot game. That spot game is kind of a — it’s a win-lose on either side of the market. Really, when the market is getting tight, probably operators are losing. When it’s going the other direction, service companies lose a lot.
And our strategy is to stay out of that. And so right contracts with customers that, in our view, are fair and deliver a lot of value both in terms of pumping value and also recovery value. And I think that we’re uniquely positioned to do that. And so improving recovery per foot or production per foot is a long-term game, and we want to play that long-term game with customers that are working on that long-term game. And we’re ecstatic about the customers we have and who we get to work with, try to solve what we think are the real pressing issues of the future in North America frac. And so we don’t get to play that game. That game doesn’t get played successfully if it’s the frac is sure. We need to be part of that process, and our clients allow us to do that.
Roger Read: Appreciate that. The follow-up question I have, it’s unrelated, but I think kind of critical to the announcement this morning raising the dividend. What is the right way for us to think about your uses of free cash flow between, as you did in the fourth quarter, sort of elective repurchases of debt as opposed to maturities? But as we’re thinking debt, dividend is pretty fixed here and then share repurchases. What way do you want us to think about the return of free cash flow?
Eric Carre: Yes. Thanks, Roger. It’s Eric. So think about it in a fairly similar way as what we did in 2023, except higher. So we increased the dividend 6%. We’re now back to about 95% of where we were pre-COVID. In terms of buyback, we intend to continue buying back share. Our intention today is to buy back more share in dollar terms in 2024 than we did in 2023. At the same time, as we did also in 2023, we intend to continue to retire debt and continue to strengthen the balance sheet. So overall, fairly similar structure in ’24 as what we did in ’23 but kind of bump up everything a bit higher.
Operator: Our next question comes from James West with Evercore ISI.
James West: So Jeff, it — you talked about West Africa, North Sea not awakening until ’25. A lot of tendering or just conversations about ’25-’26. I know some of the — your partners like FTI are bidding for deliveries that wouldn’t happen until ’29 and ’30. The offshore rig companies, they’re getting locked up into ’26-’27. I mean the visibility this cycle seems to me to be somewhat unprecedented. And I’m curious if that’s consistent with your view of how things are playing on how customers are behaving and how your conversations are going. Because it seems like the industry is on board with — is it going to be a long cycle? What we recognize, of course, macroeconomic events could derail things. But at least for now, with this oil price range that we’re in, it’s kind of all systems go for a long time.
Jeffrey Miller: Look, I’m careful speaking for the entire industry. But I would say I have this, including Halliburton, very focused on running return — businesses for strong returns over the long term, which is precisely what we all do. And I think that’s good for our clients and it’s good for us as well. And so that level of visibility is not inconsistent with companies planning a future around how to make money for shareholders. And that’s what we’re doing as well. And so I think it’s a very good setup for the rest of this decade, quite frankly, just because, a, we know there’s demand; b, we are able to — our whole value proposition around is how we collaborate and engineer solutions to maximize asset value for our customers.
And this type of setup allows us to do that. The other thing that happens, though, when we run a business for returns is we don’t overinvest in the business. And so we’ve told you kind of where our CapEx will fall and level of growth that we’re looking at. And so we’re very thoughtful about the growth because we are keeping profitable international growth firmly in hand. And so I think assets are tight and they’ll remain tight for those very reasons. It’s very natural economic reasons for an industry that’s running their businesses for return, which is clearly what we’re doing. And then I think our level of CapEx, the way that structured drives that level of thoughtful investment and manages the contracts that we win indirectly. And it also maximizes returning cash to shareholders.
So it’s a very good environment in my view.
James West: Okay. That’s — we certainly agree with that. And then maybe a follow-up for me and potentially, I don’t know if Eric is going to take this one. But the D&E margins, which I know are more levered towards international, where a lot of the volume growth is certainly going to come from, and you’re going to have natural operating leverage from that and inflation. It seems to be cooling somewhat so you should — incremental should improve here. Where are you anticipating? I know you gave this quarter guidance, but that’s seasonal. Where do you anticipate margins? Or maybe if you want to talk about incrementals, however you want to discuss it for D&E going forward as we go through ’24 and into ’25?
