Ladies and gentlemen, if you have a question or comment. If your question has been answered or you wish to remove yourself from the queue, simply press *11 again. Again, if you have a question or comment, please press *11 on your telephone keypad. Our first question or comment comes from the line of David Anderson from Barclays. Mr. Anderson, your line is open.

Thank you, and good morning, gentlemen. So within your 2027 framework that you provided, can you talk a little bit about The Middle East in terms of how you see that trending? You are having it is increasing this quarter and in the fourth quarter, which seems to be kind of going against trend. So how does that sort of play out in your mind? Over the next couple of quarters? And also within that guidance, that 200-basis-point margin improvement I am curious how much international unconventionals are impacting that. Is that starting to be a driver for margins yet?

Yeah. Hi, David. Eric. Let me kind of provide some high level view on the margin improvement first. And then I will hand it over to Shannon to discuss the Middle East part of your question. So again, important to understand that the view on 2027 is an early view. It is based on 2 major assumptions. 1, which is our business in North America is flat and our business in The Middle East is flat to H2 of 2026. So if we walk through the numbers from a very, very high level perspective, So we should finish 2026 at about $22.5 billion The growth we indicated for 2027 means about $1 billion and change additional revenue. 200 basis points in margin, means about $500 to $600 million in operating profit. So about half of it is going to come from cost savings, operating cost savings, structural cost savings and the ramp down of the SAP S/4 program. So what remains is basically incremental margins on the additional revenue of about 20 to 30% range. So we think that is a very reasonable assumption. So that is, at this stage, how we get to the 200-basis-point improvement in margins.

Yes, David, good morning. What we see in Middle East, I will start with there, then I will move to the unconventional question. Is that region has been incredibly resilient. it is obviously highly fluid right now. But we see a good market moving forward. As Eric said, H2, flat to H2 of next year, But if you look at really the things that we have won over the last year or so, restarting in Jafurah. Unconventionals, the reentry work that we have won. Integrated offshore work, our IRAC We have seen Iraq starting to get busier, and we went some work there, as you know, with IFMS. And also the expansion of artificial lift throughout the region, both Saudi Kuwait, Oman, and Iraq. And all of that work we see as accretive to our business. So we are really pleased with the direction of travel for our business and believe that is an important market to the operators there. But also important market to the world. So we see that staying busy, throughout next year. And as it relates to just unconventional, as far as next year, we are really excited the direction we are going. We are now operating in 6 Over 6 countries around the world. Plus, actually. Argentina, Algeria, UAE, Kuwait, Australia, Saudi, and adding a few more. But I think what is important is the work we are winning in unconventionals. it is not about the horsepower. it is about the technology and some deliberate decisions we made in those investments and that is part of the reason you see that growth in unconventionals for us.

Appreciate the color. Both Shannon and Eric. Follow-up here sort of related to that would be on Latin America. It looks particularly interesting for 2027. I was wondering if you could talk about some of the specific opportunities that you are seeing over the next few years Argentina, as you just mentioned. But we also have Mexico, which seems to be doing better. And Venezuela being talked about quite a bit. Could you sort of address some of the upside that potentially there for Latin America, not just in 2027 but beyond?

Yeah, David. I say interesting, but exciting. We believe Latin America will lead the charge for growth for us. Certainly in Argentina with the unconventional growth we have seen, As I mentioned in prepared remarks, Venezuela, we are open for business. teams are open. We will be delivering a dozen plus ESPs to a major customer in Venezuela. Mexico, probably not an H1 recovery. It will stay fairly flat, but opportunities in H2 But I do not wanna forget about Suriname in this conversation. We have won some significant work between Total Energies and Petronas in an integrated way. But I think if I look at Latin America, a lot of the work they are winning is really centered around our value proposition. it is how we engage with our customers, and also their confidence in our ability to execute.

Appreciate. Thank you very much.

Thank you. Next question or comment comes from the line of Arun Jayaram from JPMorgan. Your line is open, sir.

Yeah. Good morning, team. Jeffrey, fairly unusual for how to provide kinda outlook comments at this time of the year, particularly prior to budgeting season from the big oils integrated and E and Ps. So I guess my first question is what gave you and the team confidence to provide you know, this revenue and margin guidance kind of this early in the season? And maybe just give us a sense of how confident you are to deliver call it, that mid single digit growth and the 200-plus-basis points of margin expansion.

Thank you, Arun. Look, wanted to help you see what I see. That is the primary driver here. I do not like where margins are today. And we have made specific choices around cost structure, and I believe I am confident that the direction of travel for margins is up. And wanted to make sure that I shared that with you sooner rather than later. And also make clear that this outlook, this plan does not depend on a North America frac recovery. From a confidence perspective, look, Halliburton's international depth is meaningful. And you heard Shannon allude to a lot of and we have seen the growth. The adoption of technology that we have worked on for a number of years is meaningful. We are seeing solid steady drumbeat of technology adoption. Around the world. We have got confidence in the cost structure in terms of we have taken and also SAP being implemented. Got a lot of confidence in our core business and the kind of technology that is being adopted. And then finally, it is the pipeline of new work. And I. We see it. it is moving from contract award to start up and then to execution. that is happening. And I suppose, finally, the energy security is a real thing. And I know we are heading into an upcycle, and so that all gives me a lot of confidence around 2027. And as I said, wanted to make sure I shared that with you sooner rather than later.

Great. And just my follow-up is on North America. We have observed a pretty nice rebound in the rig count yet completion activity has been quite measured. We do know a lot of the rigs being picked up are by private E and Ps and not the publics. Jeffrey and Shannon, can you talk a little bit about the disconnect and when do you see this translating into incremental demand for frac and understanding that you have outlined some pretty conservative expectations of kind of a. Called a muddled along scenario to. Today.

Yeah, Shannon here. Yeah, we see roughly 40 rigs being added in North America. So we have seen a an uptick, as I have mentioned in prepared remarks around Sperry bits and mud in the 23 percent growth we have seen just in Q3 alone. And we have seen province adding and increasing their activity on the unconventional frac side of things. And our customers right now are in the middle of their budget cycle, but we are seeing some really good, anecdotes that are that is playing out right here in front of us. For example, we just had a big customer go to tender and only 1 service company showed up. We had another customer give us. Call us back and extended our e fleet with price and then added another fleet on top of that. And we had several increases of prices throughout the quarter. So we are seeing those indicators and we do know it is a very tight market and there is not a whole lot of capacity out there. And so when we think about 2027. Again, early days, as far as looking at 2027, but we see there is a real opportunity for growth in frac in North America next year.

Great. Thank you.

Thank you. Our next question or comment comes from the line of Steve Richardson from Evercore. Mister Richardson, your line is now open.

Thank you. I was wondering if you just follow-up on that last question. A little bit, Shannon, if we could on North American frac. Like, do we need to see your big customers pick up activity, to be a little bit more pointed, or are you seeing enough momentum in the market with broader activity that, that pricing comes through? And can you talk about how anomalous was Q3 from these moves? And repricing that was going on?

Yeah. Steve, Q3, there was whitespace that we saw and that was a good indicator that whitespace was not dead time. It was us actually making deliberate choices to move crews around at a higher price. that is first. We are seeing Q4, you know, you will have some level of seasonality, but we are seeing that tight as well as far as whitespace. I believe the bigger customers, the bigger operators, we have actually here over the last week or so seen indications of some of them going and looking at their frac schedule next year and actually have gotten phone calls. So all it takes is really 1 or 2 of these guys to put together a spud-to-spud program and that changes things for Halliburton and will benefit in a big way.

Got it. Thank you. And then perhaps another follow-up on the Middle East. Appreciate you are guiding flat activity with the second half of this year of what we have observed. Can you talk a little bit about the incremental cost that the business is absorbing right now? And if there is a cessation of hostilities and things start to normalize, Or is there some upside in international margins there just from those costs rolling off?

Yes. I would say there is certainly an increased cost with just logistics and getting materials to location. With everything going on within the Strait. We have built all of that cost assumptions into 2027 and assuming that will continue. I see the upside really in you know, if you look at H2, it is you know, times, you know, times 2 really. That. that is up year over year. We see growth there. But more importantly, the growth we see is from our core business, some of the awards I have mentioned

Thanks very much.

Thank you. Our next question or comment comes from the line of Saurabh Pant from Bank of America. Mister Pant, your line is open.

Hi. Thank you. Good morning, Jeffrey, Shannon, and Eric. Morning, sir. Hey. Eric, I think I heard on 2027 margin improvement, the 200-basis-point, I think. Derek calling out half of that is from cost improvement, just the SAP roll off. Maybe can you dig into that a little bit for us Eric? How much of that is S/4 rolloff versus cost cutting? And then just in general, when we think about 2027 margin, I think there are several crosscurrents. These cost savings initiatives, but, there are also some pricing headwinds. In a pretty inflationary environment, and yet you are able to deliver these kind of margin improvements. Maybe just unpack that a little bit for us, Eric.

Yes. So if I. If we start with the cost reduction, which I said was about half of the improvement in margin in 2027. So some of it comes from the cost rightsizing we did in Q3. Which you can look at being partially operational costs and partially structural costs. So the structural cost will remain until we decide. Otherwise, operational costs sometime tend to address imbalances in terms of product lines or geographic revenue growth mix. So these might come back up over time. But we estimate overall that the cost will be between 100 million and $150 million for next year. In terms of SAP, we have been spending about a little bit over a $150 million a year It will not go away in 1 go. Because we have to maintain some level of support as we transition to the new system and make sure everything works fine. But overall, the savings are estimated to be anywhere in between $120 million and $150 million. So give or take, will be around, you know, $250 to $300 million coming from cost savings. And the rest of it is as I mentioned earlier, very reasonable assumptions on incremental margins from our core business. So yes, they are inflationary pressures. Some of them are already built in our Q3 numbers and our Q4 numbers. So we do not necessarily expect to have a lot more inflation from there. But, offsetting that also, we are not assuming meaningful pricing. and we are seeing pricing firm up. So all in, we believe that our view of 2027 is a very balanced view with what we know today.

No. that is very helpful, Eric. Thank you. It does seem very balanced. I agree with that. And then the second 1, maybe Jeffrey or Shannon, if you want to answer this. You did have some comments in your prepared remarks about Venezuela, I think you were talking about expecting solid growth going forward. We know you signed a couple of MOUs recently with a couple of customers in the country. Just maybe talk to that a little bit. How big could Venezuela be? How fast could this move? And how should we think about this opportunity for Halliburton?

Yeah. Good morning, Saurabh. Shannon here. Yeah. As I said, we are open for business. Team is in place. Facilities open and equipment has moved. And we are getting multiple inbounds and you. You have probably read all the reports that I have. You know, a lot of major operators, ENI Total, Chevron, Repsol, all looking at have either entered or will enter. The work that we started with has been primarily interventions as we expected. But just in the quarter here, we will have a dozen ESPs being delivered. And as far as size, before we left Venezuela, it was greater than a $5 billion business. We see that tracking to being a sizable country for us in the future. That will not happen overnight, but we do like our start to the year. And it is trending that direction.

Okay. Okay. No. That makes sense. And the fact that your portfolio is fuller, has a lot more production in it. Right? I think that should be helping as well. But that is that is very helpful, Shannon. I will I will turn it back. Thank you.

Thank you. Our next question or comment comes from the line of James West from Melius Research. Mister West, your line is open.

Hey. Good morning, guys. Lots of good color already on the call. I wanted to dig in on 2 points. 1 is on the Middle East. Your guidance assumes flat lining from second half, which is obviously better than Q2, but no growth. If we were to see you know, some type of resolution here you know, what could that growth look like? Or maybe another way to think about it is what was the level of activity or where you are relative to where you were, preconflict?

Yeah, James. Thank you. Look. We have taken a view that we have got a great line of sight of what we know is resilient and that is how we think about 2027. But you know, if things were to resolve immediately somehow dare to dream would be my comment. I mean, I think you would see solid growth. I do not know how to even forecast that under the conditions we are under today other than what we have line of sight to. But, obviously, a good business where we have done a lot of really good work. We have won some important contracts, and I think that you know, if that were to somehow go away, know, the core business, sort of the ongoing core business would pull up pretty quickly.

Okay. Okay. And then maybe on a North America, the. or U.S. frac, I guess, more to the point. You know, you have moved equipment out. Because you did not like the returns and the pricing sounds like from Jeffrey, your comments and the. Arun's comments and Shannon's comments that you are starting to see some movement on price. Could you maybe characterize, is this widespread yet? Is it kind of 1-off? Like, where are we? Are we in the early days of that pricing cycle? Are we getting to that pricing cycle? Kinda I mean, you guys you guys dominate the market. So kinda. Where do you where do you think we are in that cycle?

Yeah. Hey. What we have seen really starting in late Q2 is a steady progression of conversations on starting at the privates, on more activity. And being opportunistic of really where the strip was at that time and some operators that have hedges and saying, I can I can create some value here? Right. We. The sense that we see right. What we see right now is more foundational kind of contracts being looked at and believing that commodity pricing is sticky. And that is driving another level. And I have mentioned those anecdotes that we have been seeing, and those are real. And we have seen them kind of a steady drumbeat of more of those, and that right there alone has really created some tightness. And like I said, you know, we are the largest in North America and we are assuming that is flat for 2027. But we are really excited about the conversations we are having.

Yeah. Let me just clarify or just add to that a little bit just to say that as we described 2027, that is an assumption that we have made. That is not our view for North America. We are actually quite excited about North America. We run great frac business, but we do run it differently. Because, you know, our return expectations are different maybe than what the markets are. And, and so we run it for absolute returns, and we will raise price or we lose share. And Shannon said we are early in the process but the anecdotes and the activity dialogue absolutely points in the right direction for recovery.

Right. Got it. Thanks, Jeffrey. Thanks, Shannon.

Thank you. Our next question or comment comes from the line of Derek Podhaizer from Piper Sandler. Mr. Podhaizer, your line is now open.

Hey. Good morning. I just wanted to revisit the international growth engines you mentioned in the prepared remarks. Last quarter, you said you were ahead of schedule. Originally, you talked about 2.5 billion to $3 billion by 2028. Just wanted to hear about your confidence as you look over the next couple of years. And now you are actually talking towards the high end of that range. So what type of visibility do you have into the different product lines, the regions? Split it out onshore, offshore that is driving this expected growth trying to think about these growth engines as we move into 2027.

Yep. Good morning, Derek. Yep. Yeah. Hey. The growth engines first, they are. They are growing, and we have a lot of visibility to those. On track and actually ahead of schedule as far as our target. You know, you start with drilling, really love our business. We have mentioned 2 pretty significant awards here in the quarter. Both in Brazil and EastMed. Those are good examples of drilling moving the right direction. Look at unconventionals, I mentioned, know, a dozen-plus countries around the world We have just, within the last 2 months, we have added 2 spreads. 1 in Argentina and now have Jafora up and running. And have a good runway of over 30 thousand stages that will need to fracked in Kingdom next year. Production services. The STEM vessel starts up at the end of the, of this quarter here and then lift. What a fantastic story that been for Halliburton going from a single country when we acquired it now we are in 21 countries and added 2 countries just in the last year. So all of those things are good baselines to the growth and the target I would mentioned and they are multi year. But I think what is important in this whole conversation, these have been deliberate choices we have made on strategy and choices we made on technology investment that is paying off.

Got it. Great. that is super helpful. Know there is been a lot of discussion around in The Middle East, more about looking next year, but maybe if you can help us understand some of the more recent disruptions that we saw which turned into rig suspensions, both onshore and offshore conventional, unconventional. Maybe you can just help us with the state of the market right now, specifically around Saudi. Then maybe how we should think about as we trend towards the end of the year into next year?

Yeah. Derek, hey. The recent over the last couple weeks, yeah, it is been it is been fluid. There has been some disruptions. Well, I would say that the events you have read about have not had a real material impact on operations. We see the rig count holding steady both offshore You mentioned Saudi, there is a little bit of a dip in rig count in the unconventionables. that is not related to the crisis. We see those building back see a real runway of activity moving forward. it is it is obviously very fluid. We keep a real close eye on that. But right now, like I said, the last couple weeks have not had any impact on operations.

Great. Thanks for all the comments, Shannon. I will turn it back.

Thank you. Our next question or comment comes from the line of Josh Silverstein. From UBS. Mister Silverstein, your line is now open.

Hey. Thanks. Good morning, guys. Last quarter, 1 of the big awards discussed was in Iraq over there. And you guys kinda labeled it as transformational for you guys. Can you just discuss a little bit more details on kind of the timing of the ramp, you know, and just talk a bit about the margin profile for Iraq relative to maybe rest of the Middle East?

Yeah. Good morning, Josh. Hey. that is. That project, I have missed project, that is a multiyear project. You know, it. it is a it is a bit of a wind up for a project of that size, but it is real significant work. The start of that project will begin sometime probably H1 of next year, and it will start with more subsurface, landmark studies, those sort of things. You know, this is a full-field development. So it is. Think of us as going in there and studying the field, understanding where to drill, where to put the pads, and all the infrastructure around it. it is a 5- to 8-year project. So it will, build over time. And as far as Iraq, it has been a very challenged market for us. And we see that win and also some activity that is coming that is gonna be impactful for us, structurally and help improve that market. The wins you have seen and the work we are gonna be doing is not only good for Iraq, but it is good for Halliburton. So just a little bit of a wind up on the IFMS work, but, excited about it.

Got it. And then maybe just on the offshore front, you know, you have highlighted, you know, Logix and some closed-loop drilling opportunities as key differentiators for you guys. Are these, you know, primarily helping you win market share, or are you able to win market share and gain margin with it as well? Thanks.

Yeah. Hey. We really like our position offshore. Just over the. Just year to date, we have won about close to $4 billion of work, and we believe all of that is accretive. The acquisition that we have made at Secall has been additive to that automation that you mentioned. And you look at the offshore wins we have had I mentioned the Suriname work with Total Energies and Block 52 with PETRONAS. The EastMed work We are gonna see robust activity in Norway with $10 billion of investments going exploration and development, and that is a big market for us. So you know, that automation and some of the acquisitions and really the deliberate focus on technology has helped us pull through a lot of these offshore winds I mentioned. So really love our position globally with offshore.

Hello? Still online? I will -- we will pull him. We will go on to the next question. He can come back if he has a follow-up.

Our next question or comment is Mr. Scott Gruber from Citigroup. Mister Gruber, your line is now open.

Yes. Good morning, everybody. So as I listened to the call here, a lot of bullish data points, you know, across the international markets. You know, really from Venezuela to Argentina, deepwater, and even your Middle East revenues are growing, which I think is a is a surprise to everybody. You know, as I as I think about pricing abroad, you mentioned that the prices are starting to stabilize. But what do you think would need to manifest from here for you and your peers to start to see you know, more broad based pricing gains you know, is it. If we just see the Middle East activity normalize, would that be you know, a sufficient you know, consumption of capacity, you know, across tools and people to, complement the absorption that is going on in other markets to start to see some pricing gains? Or what else do you think needs to happen?

I would say pricing has continued to get better. it is been it is going to be accretive. We see a strong pipeline This year, we have won roughly about $14 billion of work year to date. And our view is this, is nobody's really overbuilt in this market, so it is tight. And what that tightness is really has us in a place where we are making deliberate choices of where we go and or, you know, we had us. Just here in the last month, we had Sperry tools that were 3 different customers need them. We had to make a choice of where to go. So I think the general macro outlook for us, we expect more tightening. With tightening, we think that creates an opportunity for more price. So, yeah, we see that as being accretive.

Got it. No. It sounds good. And just turning to free cash flow, you guys have been carrying some extra working capital, you know, through the SAP implementation phase. What does that mean for free cash in Q4? And what is your early read on potential free cash conversion you know, next year as margins improve and your cost base comes down?

Yes, Scott. it is it is it is Eric. So in terms of free cash flow, we were a little below what we were expecting in Q3. Some of it was due to collections that were a bit lower that has started to fix itself, this month. And some headwinds in inventory related to S4, related to the buildup of inventory for a lot of the projects that Shannon mentioned, as well as some concerns around Middle East logistics at large. If we look at Q4 and the overall year, So for Q4, we think cash flow from operations will be about $1 billion If you take out CapEx net of sales of about $300 million, so, that lands you at about $1.6 billion of free cash flow for the year. As we look at 2027, we believe that goes up with the improved profits generated in the business. We think as well that free cash flow margins will improve in 2027.

Okay. I appreciate it, Eric. I will turn it back.

Thank you. Thank you. Thank you. Our next question or comment comes from the line of Keith MacKey from RBC Capital Markets. Mr. MacKey, your line is now open.

Hey. Good morning, and thanks. The release called out Mexico for having improved performance quarter over quarter within multiple product and service lines. Can you just maybe give us a bit more color on what drove that and generally what you are seeing in the market in Mexico?

Yeah. Hey. The Mexico business, we have continued to see it improve. I think the macro environment we are seeing in 2027 should be, you know, should be supporting even further, activity 2028 is probably, as I have said, more of an H2 event, but what has driven really the quarter has been software sales. That really has what is been the impact there.

Got it. Appreciate that. And just secondly, on the 2027 outlook, appreciate the comments you have given so far. Just curious if you could maybe walk us through a little bit about how you might think the results of the U. S. Mid elections might impact your guide either positively or negatively? You know, potentially? Or do you think that there could be any impact depending on how the results go, or is it something that will just have to monitor at this point?

Look. I. You know, politics change all the time. I am quite confident in our business. Under any political outcome. So that is not factored into our outlook. I think that you know, macroeconomics and the requirement for energy has never been more acute than it is right now. And I think that, a lot of quality of life is built around the availability and affordability of oil and gas, which sets up this industry, oilfield services, for a really strong few years.

Okay. Thanks very much. Yeah.

Thank you. Thank you. Our next question or comment comes from the line of Sebastian Erskine from Rothschild. Mr. Erskine, your line is now open.

Yes, morning. Thanks for taking my questions. I appreciate all the color on the call. Just in terms of the guidance, you are trying to back out. So obviously, roughly flat North America sort of implies that international growth of about, call it, 7 to 10% year over year. I mean maybe could you give a view how much of that you already have a view on in terms of kind of the contracted work that you have kind of secured over through this year versus how much would be new wins and something of the around the Middle East? Just trying to get a sense of the building blocks around, call it, 7% to 10% growth year over year in 2027, assuming based on that assumption.

Yes. Hey, I would say I heard North America and Middle East there, I believe. Hey, the Middle East business is contracted. We have real good line of visibility to that. In North America, I would say, hey, everything our frac spreads are all working and busy. And again, we are not making any believe that will be modeling right now. it is just flat for us in 2027. But. Yeah. Really, North America, we think is gonna be higher than what we. We have talked about.

Super. Appreciate it. And then just very quickly, kind of just on the guide, just a clarification. I appreciate, Eric, you gave that number in terms of the 2027. But in terms of the North America base, obviously, you have got this sort of unseasonal kind of the step up on the fourth quarter. So just in terms of is that based off the 2026 average or the Q4 exit rate in terms of flat North America?

Is your question around 2027 or is it around Q4?

Yeah. it is just in terms of the North American, they got the flat North America into 2027. Is that based off the average of the 2026 or exit rate for 4Q?

Total year. Total year to total year.

Super. Appreciate it. Thanks very much.

Thank you. I am afraid that concludes our Q&A session. At this time, I would like to turn conference back over to management for any closing remarks.

Yes. Thank you, Operator. And before we wrap up, today's call, let me just close with this. I see growing multiyear demand for oilfield services and I am confident that in 2027, Halliburton will deliver revenue growth margin expansion, and leading returns for shareholders. I look forward to speaking with you next quarter. Let's close out the call.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day. Speakers, stand by.