Item 8. Financial Statements and Supplementary Data.

			PAGE
Financial Statements
Management’s Report on Internal Control Over Financial Reporting			35
Reports of Independent Registered Public Accounting Firm			36
Consolidated Statements of Operations for the years ended December 31, 2020, 2019 and 2018			39
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2020, 2019 and 2018			40
Consolidated Balance Sheets at December 31, 2020 and 2019			41
Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018			42
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2020, 2019 and 2018			43
Notes to Consolidated Financial Statements
Note 1. Description of Company and Significant Accounting Policies			44
Note 2. Impairments and Other Charges			47
Note 3. Business Segment and Geographic Information			48
Note 4. Revenue			50
Note 5. Receivables			51
Note 6. Leases			52
Note 7. Inventories			54
Note 8. Property, Plant and Equipment			54
Note 9. Debt			55
Note 10. Commitments and Contingencies			56
Note 11. Income Taxes			56
Note 12. Shareholders’ Equity			59
Note 13. Stock-based Compensation			59
Note 14. Income per Share			62
Note 15. Financial Instruments and Risk Management			62
Note 16. Retirement Plans			64
Quarterly Financial Data (Unaudited)			67

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MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of Halliburton Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in the Securities Exchange Act Rule 13a-15(f).

Internal control over financial reporting, no matter how well designed, has inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Further, because of changes in conditions, the effectiveness of internal control over financial reporting may vary over time.

Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation to assess the effectiveness of our internal control over financial reporting as of December 31, 2020 based upon criteria set forth in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on our assessment, we believe that, as of December 31, 2020, our internal control over financial reporting is effective. The effectiveness of Halliburton’s internal control over financial reporting as of December 31, 2020 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report that is included herein.

HALLIBURTON COMPANY

by

/s/ Jeffrey A. Miller						/s/ Lance Loeffler
Jeffrey A. Miller						Lance Loeffler
Chairman of the Board, President and						Executive Vice President and
Chief Executive Officer						Chief Financial Officer

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Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

Halliburton Company:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Halliburton Company and subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 5, 2021 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 6 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2019 due to the adoption of Accounting Standards Codification Topic 842, Leases.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of the Realizability of Deferred Tax Assets

As discussed in Notes 1 and 11 to the consolidated financial statements, the Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the financial statements. A valuation allowance is provided for deferred tax assets if it is more likely than not that these items will not be realized, which is dependent upon the generation of the future taxable income. As of December 31, 2020, the Company had gross deferred tax assets of $3.8 billion and a related valuation allowance of $1.4 billion.

We identified the evaluation of the realizability of domestic deferred tax assets as a critical audit matter. The evaluation of the realizability of domestic deferred tax assets, specifically related to domestic net operating loss

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carryforwards and foreign tax credits, required subjective auditor judgment to assess the forecasts of future taxable income over the periods in which those temporary differences become deductible. Changes in assumptions regarding forecasted taxable income, specifically revenue growth rates, could have an impact on the Company’s evaluation of the realizability of the domestic deferred tax assets.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the critical audit matter. This included controls related to the development of forecasts of future taxable income. We evaluated the assumptions used in the development of forecasts of future taxable income, specifically revenue growth rates, by comparing to historical actuals while considering current and anticipated future commodity prices or market events. We also evaluated the Company’s history of realizing domestic deferred tax assets by evaluating the expiration of domestic net operating loss carryforwards and foreign tax credits.

Assessment of the Fair Value of Property, Plant and Equipment

As discussed in Notes 1, 2, and 8 to the consolidated financial statements, the gross amount of property, plant and equipment as of December 31, 2020 was $15.4 billion and related accumulated depreciation was $11.0 billion. When events or changes in circumstances indicate that long-lived assets may be impaired, an evaluation is performed. The Company compares estimated future undiscounted cash flows expected to result from the use and eventual disposition of the asset group to its carrying amount. If the asset group's undiscounted cash flows are less than their carrying amount, then they determine the asset group's fair value. The fair value of an asset group is determined by using a discounted cash flow analysis, and an impairment is recognized in the event the fair value is less than the carrying value. The Company recognized an impairment charge of $2.3 billion for the year ended December 31, 2020.

We identified the assessment of the Company’s estimate of the fair value of property, plant and equipment as a critical audit matter for certain asset groups. There was a high degree of subjectivity in evaluating the significant assumptions used in determining the discounted cash flows used to estimate the fair value of certain asset groups, specifically the revenue growth rates, expected profitability margin and the discount rate used.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s process to estimate the discounted cash flows of certain asset groups, including controls related to the significant assumptions. We evaluated the Company’s development of the revenue growth rates and expected profitability margin assumptions by identifying and assessing the sources of data that management used in their assessment. We evaluated the revenue growth rates and expected profitability margin for consistency with relevant historical data, changes in the business, and external industry data, as applicable. In addition, we involved valuation professionals with specialized skills and knowledge to assist with evaluating the selected discount rate by comparing it against a discount rate range that was independently developed using publicly available market data for comparable companies.

/s/ KPMG LLP

We have served as the Company’s auditor since 2002.

Houston, Texas

February 5, 2021

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Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

Halliburton Company:

Opinion on Internal Control Over Financial Reporting

We have audited Halliburton Company's and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income (loss), shareholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes (collectively, the consolidated financial statements), and our report dated February 5, 2021 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG LLP

Houston, Texas

February 5, 2021

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HALLIBURTON COMPANY Consolidated Statements of Operations
			Year Ended December 31
Millions of dollars and shares except per share data			2020			2019			2018
Revenue:
Services			$	10,203		$	16,884		$	18,444
Product sales			4,242			5,524			5,551
Total revenue			14,445			22,408			23,995
Operating costs and expenses:
Cost of services			9,458			15,684			16,591
Cost of sales			3,442			4,439			4,418
Impairments and other charges			3,799			2,506			265
General and administrative			182			227			254
Total operating costs and expenses			16,881			22,856			21,528
Operating income (loss)			(2,436)			(448)			2,467
Interest expense, net of interest income of $38, $23, and $44			(505)			(569)			(554)
Loss on early extinguishment of debt			(168)			—			—
Other, net			(111)			(105)			(99)
Income (loss) before income taxes			(3,220)			(1,122)			1,814
Income tax benefit (provision)			278			(7)			(157)
Net income (loss)			$	(2,942)		$	(1,129)		$	1,657
Net income attributable to noncontrolling interest			(3)			(2)			(1)
Net income (loss) attributable to company			$	(2,945)		$	(1,131)		$	1,656
Basic and diluted income (loss) per share attributable to company shareholders:
Net income (loss) per share			$	(3.34)		$	(1.29)		$	1.89
Basic weighted average common shares outstanding			881			875			875
Diluted weighted average common shares outstanding			881			875			877
See notes to consolidated financial statements.

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HALLIBURTON COMPANY Consolidated Statements of Comprehensive Income (Loss)
			Year Ended December 31
Millions of dollars			2020			2019			2018
Net income (loss)			$	(2,942)		$	(1,129)		$	1,657
Other comprehensive income (loss), net of income taxes:
Defined benefit and other post retirement plans adjustment			(24)			(11)			131
Other			24			3			(17)
Other comprehensive income (loss), net of income taxes			—			(8)			114
Comprehensive income (loss)			$	(2,942)		$	(1,137)		$	1,771
Comprehensive income attributable to noncontrolling interest			(3)			(2)			(1)
Comprehensive income (loss) attributable to company shareholders			$	(2,945)		$	(1,139)		$	1,770
See notes to consolidated financial statements.

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HALLIBURTON COMPANY Consolidated Balance Sheets
			December 31
Millions of dollars and shares except per share data			2020			2019
Assets
Current assets:
Cash and equivalents			$	2,563		$	2,268
Receivables (net of allowances for credit losses of $824 and $776)			3,071			4,577
Inventories			2,349			3,139
Assets held for resale			550			180
Other current assets			942			1,048
Total current assets			9,475			11,212
Property, plant and equipment (net of accumulated depreciation of $11,039 and $12,630)			4,325			7,310
Goodwill			2,804			2,812
Deferred income taxes			2,166			1,683
Operating lease right-of-use assets			786			931
Other assets			1,124			1,429
Total assets			$	20,680		$	25,377
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable			$	1,573		$	2,432
Current maturities of long-term debt			695			11
Accrued employee compensation and benefits			517			604
Taxes other than income			292			310
Current portion of operating lease liabilities			251			208
Other current liabilities			1,093			1,313
Total current liabilities			4,421			4,878
Long-term debt			9,132			10,316
Operating lease liabilities			758			825
Employee compensation and benefits			562			525
Other liabilities			824			808
Total liabilities			15,697			17,352
Shareholders’ equity:
Common stock, par value $2.50 per share (authorized 2,000 shares, issued 1,066 and 1,068 shares)			2,666			2,669
Paid-in capital in excess of par value			—			143
Accumulated other comprehensive loss			(362)			(362)
Retained earnings			8,691			11,989
Treasury stock, at cost (181 and 190 shares)			(6,021)			(6,427)
Company shareholders’ equity			4,974			8,012
Noncontrolling interest in consolidated subsidiaries			9			13
Total shareholders’ equity			4,983			8,025
Total liabilities and shareholders’ equity			$	20,680		$	25,377
See notes to consolidated financial statements.

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HALLIBURTON COMPANY Consolidated Statements of Cash Flows
			Year Ended December 31
Millions of dollars			2020			2019			2018
Cash flows from operating activities:
Net income (loss)			$	(2,942)		$	(1,129)		$	1,657
Adjustments to reconcile net income (loss) to cash flows from operating activities
Impairments and other charges			3,799			2,506			265
Cash impact of impairments and other charges - severance payments			(350)			(144)			—
Depreciation, depletion, and amortization			1,058			1,625			1,606
Deferred income tax benefit			(444)			(396)			(267)
Accrued employee benefits			(160)			(38)			(69)
Changes in assets and liabilities:
Receivables			1,394			636			(186)
Accounts payable			(934)			(595)			483
Inventories			340			(202)			(681)
Other operating activities			120			182			349
Total cash flows provided by operating activities			1,881			2,445			3,157
Cash flows from investing activities:
Capital expenditures			(728)			(1,530)			(2,026)
Proceeds from sales of property, plant and equipment			286			190			218
Payments to acquire businesses, net of cash acquired			—			—			(187)
Other investing activities			(44)			(105)			2
Total cash flows used in investing activities			(486)			(1,445)			(1,993)
Cash flows from financing activities:
Payments on long-term borrowings			(1,654)			(13)			(445)
Proceeds from issuance of long-term debt, net			994			—			—
Dividends to shareholders			(278)			(630)			(630)
Stock repurchase program			(100)			(100)			(400)
Proceeds from issuance of common stock			87			118			195
Other financing activities			(56)			(70)			(139)
Total cash flows used in financing activities			(1,007)			(695)			(1,419)
Effect of exchange rate changes on cash			(93)			(45)			(74)
Increase (decrease) in cash and equivalents			295			260			(329)
Cash and equivalents at beginning of year			2,268			2,008			2,337
Cash and equivalents at end of year			$	2,563		$	2,268		$	2,008
Supplemental disclosure of cash flow information:
Cash payments during the period for:
Interest			$	509		$	534		$	556
Income taxes			$	300		$	363		$	178
See notes to consolidated financial statements.

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HALLIBURTON COMPANY Consolidated Statements of Shareholders' Equity
			Company Shareholders’ Equity
Millions of dollars			Common Stock			Paid-in Capital in Excess of Par Value			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interest in Consolidated Subsidiaries			Total
Balance at December 31, 2017			$	2,673		$	207		$	(6,757)		$	12,668		$	(469)		$	27		$	8,349
Comprehensive income (loss):
Net income			—			—			—			1,656			—			1			1,657
Other comprehensive income			—			—			—			—			114			—			114
Cash dividends ($0.72 per share)			—			—			—			(630)			—			—			(630)
Stock plans			(2)			4			413			—			—			—			415
Stock repurchase program			—			—			(400)			—			—			—			(400)
Other			—			—			—			45			—			(6)			39
Balance at December 31, 2018			$	2,671		$	211		$	(6,744)		$	13,739		$	(355)		$	22		$	9,544
Comprehensive income (loss):
Net income (loss)			—			—			—			(1,131)			—			2			(1,129)
Other comprehensive loss			—			—			—			—			(8)			—			(8)
Cash dividends ($0.72 per share)			—			—			—			(630)			—			—			(630)
Stock plans			(2)			(67)			417			—			—			—			348
Stock repurchase program			—			—			(100)			—			—			—			(100)
Other			—			(1)			—			11			1			(11)			—
Balance at December 31, 2019			$	2,669		$	143		$	(6,427)		$	11,989		$	(362)		$	13		$	8,025
Comprehensive income (loss):
Net income (loss)			—			—			—			(2,945)			—			3			(2,942)
Cash dividends ($0.315 per share)			—			—			—			(278)			—			—			(278)
Stock plans			(3)			(143)			506			(75)			—			—			285
Stock repurchase program			—			—			(100)			—			—			—			(100)
Other			—			—			—			—			—			(7)			(7)
Balance at December 31, 2020			$	2,666		$	—		$	(6,021)		$	8,691		$	(362)		$	9		$	4,983
See notes to consolidated financial statements.

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

HALLIBURTON COMPANY

Notes to Consolidated Financial Statements

Note 1. Description of Company and Significant Accounting Policies

Description of Company

Halliburton Company is one of the world's largest providers of products and services to the energy industry. Its predecessor was established in 1919 and incorporated under the laws of the State of Delaware in 1924. 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. We serve major, national, and independent oil and natural gas companies throughout the world and operate under two divisions, which form the basis for the two operating segments we report, the Completion and Production segment and the Drilling and Evaluation segment.

Use of estimates

Our financial statements are prepared in conformity with United States generally accepted accounting principles, requiring us to make estimates and assumptions that affect:

- the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements; and

- the reported amounts of revenue and expenses during the reporting period.

We believe the most significant estimates and assumptions are associated with the forecasting of our income tax (provision) benefit and the valuation of deferred taxes, legal reserves, long-lived asset valuations, and allowance for credit losses. Ultimate results could differ from our estimates.

Basis of presentation

The consolidated financial statements include the accounts of our company and all of our subsidiaries that we control or variable interest entities for which we have determined that we are the primary beneficiary. All material intercompany accounts and transactions are eliminated. Investments in companies in which we do not have a controlling interest, but over which we do exercise significant influence, are accounted for using the equity method of accounting. If we do not have significant influence, we use the cost method of accounting. In addition, certain reclassifications of prior period balances have been made to conform to the current period presentation.

Revenue recognition

Our services and products are generally sold based upon purchase orders or contracts with our customers that include fixed or determinable prices but do not include right of return provisions or other significant post-delivery obligations. The vast majority of our service and product contracts are short-term in nature. We recognize revenue based on the transfer of control or our customers' ability to benefit from our services and products in an amount that reflects the consideration we expect to receive in exchange for those services and products. We also assess our customers' ability and intention to pay, which is based on a variety of factors, including our historical payment experience with, and the financial condition of our customers. Rates for services are typically priced on a per day, per meter, per man-hour, or similar basis. See Note 4 for further information on revenue recognition.

Research and development

We maintain an active research and development program. The program improves products, processes, and engineering standards and practices that serve the changing needs of our customers, such as those related to high pressure and high temperature environments, and also develops new products and processes. Research and development costs are expensed as incurred and were $309 million in 2020, $404 million in 2019, and $390 million in 2018.

Cash equivalents

We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Inventories

Inventories are stated at the lower of cost and net realizable value. Cost represents invoice or production cost for new items and original cost. Production cost includes material, labor, and manufacturing overhead. Our inventory is recorded on the weighted average cost method. We regularly review inventory quantities on hand and record provisions for excess or obsolete inventory based primarily on historical usage, estimated product demand, and technological developments.

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

Allowance for credit losses

We establish an allowance for credit losses through a review of several factors, including historical collection experience, current aging status of the customer accounts, and current financial condition of our customers. Losses are charged against the allowance when the customer accounts are determined to be uncollectible.

Property, plant and equipment

Other than those assets that have been written down to their fair values due to impairment, property, plant, and equipment are reported at cost less accumulated depreciation, which is generally provided on the straight-line method over the estimated useful lives of the assets. Accelerated depreciation methods are often used for tax purposes, when permitted. Upon sale or retirement of an asset, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is recognized. Planned major maintenance costs are generally expensed as incurred. Expenditures for additions, modifications, and conversions are capitalized when they increase the value or extend the useful life of the asset.

Goodwill and other intangible assets

We record as goodwill the excess purchase price over the fair value of the tangible and identifiable intangible assets acquired in a business acquisition. Changes in the carrying amount of goodwill are detailed below by reportable segment.

Millions of dollars			Completion and Production			Drilling and Evaluation			Total
Balance at December 31, 2018:			$	2,055		$	770		$	2,825
Current year acquisitions			6			5			11
Purchase price adjustments for previous acquisitions			(1)			(1)			(2)
Other			(21)			(1)			(22)
Balance at December 31, 2019:			$	2,039		$	773		$	2,812
Other			(66)			58			(8)
Balance at December 31, 2020:			$	1,973		$	831		$	2,804

The reported amounts of goodwill for each reporting unit are reviewed for impairment on an annual basis, during the third quarter, and more frequently when circumstances indicate an impairment may exist. As a result of our goodwill impairment assessments performed in the years ended December 31, 2020, 2019, and 2018, we determined that the fair value of each reporting unit exceeded its net book value and, therefore, no goodwill impairments were deemed necessary. For further information on our goodwill impairment assessments, see "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates.”

We amortize other identifiable intangible assets with a finite life on a straight-line basis over the period which the asset is expected to contribute to our future cash flows, ranging from one year to twenty-eight years. The components of these other intangible assets generally consist of patents, license agreements, non-compete agreements, trademarks, and customer lists and contracts.

Evaluating impairment of long-lived assets

When events or changes in circumstances indicate that long-lived assets other than goodwill may be impaired, an evaluation is performed. For assets classified as held for use, we first group individual assets based on the lowest level for which identifiable cash flows are largely independent of the cash flows from other assets. We then compare estimated future undiscounted cash flows expected to result from the use and eventual disposition of the asset group to its carrying amount. If the asset group's undiscounted cash flows are less than its carrying amount, we then determine the asset group's fair value by using a discounted cash flow analysis and recognize any resulting impairment. When an asset is classified as held for sale, the asset’s book value is evaluated and adjusted to the lower of its carrying amount or fair value less cost to sell. In addition, depreciation and amortization is ceased while it is classified as held for sale. See Note 2 for further information on impairments and other charges recorded in 2020.

Income taxes

We recognize the amount of taxes payable or refundable for the year. In addition, deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been recognized in the financial statements or tax returns. A valuation allowance is provided for deferred tax assets if it is more likely than not that these items will not be realized.

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that we will realize the benefits of these deductible differences, net of the existing valuation allowances.

We recognize interest and penalties related to unrecognized tax benefits within the provision for income taxes on continuing operations in our consolidated statements of operations.

Derivative instruments

At times, we enter into derivative financial transactions to hedge existing or projected exposures to changing foreign currency exchange rates and interest rates. We do not enter into derivative transactions for speculative or trading purposes. We recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges are adjusted to fair value and reflected through the results of operations. If the derivative is designated as a hedge, depending on the nature of the hedge, changes in the fair value of derivatives are either offset against:

- the change in fair value of the hedged assets, liabilities or firm commitments through earnings; or

- recognized in other comprehensive income until the hedged item is recognized in earnings.

The ineffective portion of a derivative’s change in fair value is recognized in earnings. Recognized gains or losses on derivatives entered into to manage foreign currency exchange risk are included in “Other, net” on the consolidated statements of operations. Gains or losses on interest rate derivatives are included in “Interest expense, net.”

Foreign currency translation

Foreign entities whose functional currency is the United States dollar translate monetary assets and liabilities at year-end exchange rates, and nonmonetary items are translated at historical rates. Revenue and expense transactions are translated at the average rates in effect during the year, except for those expenses associated with nonmonetary balance sheet accounts, which are translated at historical rates. Gains or losses from remeasurement of monetary assets and liabilities due to changes in exchange rates are recognized in our consolidated statements of operations in “Other, net” in the year of occurrence.

Stock-based compensation

Stock-based compensation cost is measured at the date of grant, based on the calculated fair value of the award and is recognized as expense over the employee’s service period, which is generally the vesting period of the equity grant. Additionally, compensation cost is recognized based on awards ultimately expected to vest, therefore, we have reduced the cost for estimated forfeitures based on historical forfeiture rates. Forfeitures are estimated at the time of grant and revised in subsequent periods to reflect actual forfeitures. See Note 13 for additional information related to stock-based compensation.

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

Note 2. Impairments and Other Charges

The oil and gas industry experienced an unprecedented disruption during 2020 as a result of a combination of factors, including the substantial decline in global demand for oil caused by the COVID-19 pandemic and subsequent mitigation efforts. This disruption created a substantial surplus of oil and a decline in oil prices. West Texas Intermediate (WTI) oil spot prices decreased during the first quarter of 2020 from a high of $63 per barrel in early January of 2020 to approximately $21 per barrel by the end of the first quarter of 2020. Although oil prices recovered moderately to approximately $48 per barrel by the end of December 2020, WTI oil spot prices averaged approximately $43 per barrel during the fourth quarter of 2020 and $39 per barrel during the year 2020, which was approximately 25% and 31%, respectively, less than the average price per barrel during the same periods in 2019. As a result, oil and gas activity declined significantly during 2020, with the global rig count sinking to the lowest level since 1973. The U.S. and international average rig counts dropped 54% and 25%, respectively, during 2020, contributing to a global rig count decline of 38% since December 31, 2019. In the first and second quarters of 2020, we determined these events constituted triggering events that required us to review the recoverability of our long-lived assets and perform an interim goodwill impairment assessment as of March 31, 2020 and May 1, 2020.

We determined the fair value of our long-lived assets based on a discounted cash flow analysis, with the exception of real estate facilities which are classified as held for sale for which fair value was based on third party sales price estimates. We determined the fair value for each reporting unit in our goodwill impairment assessment using both a discounted cash flow analysis and a multiples-based market approach for comparable companies. Given the current volatile market environment, we utilized third-party valuation advisors to assist us with these valuations. These analyses included significant judgment, including management’s short-term and long-term forecast of operating performance, discount rates based on our weighted average cost of capital, revenue growth rates, profitability margins, capital expenditures, the timing of future cash flows based on an eventual recovery of the oil and gas industry, and in the case of long-lived assets, the remaining useful life and service potential of the asset. These impairment assessments incorporate inherent uncertainties, including projected commodity pricing, supply and demand for our services and future market conditions, which are difficult to predict in volatile economic environments and could result in impairment charges in future periods if actual results materially differ from the estimated assumptions utilized in our forecasts. Based upon our impairment assessments, we determined the carrying amount of some of our long-lived assets exceeded their respective fair values. As a result of our goodwill impairment assessments, we determined that the fair value of each reporting unit exceeded its net book value and, therefore, no goodwill impairments were deemed necessary.

As a result of the events described above, we recorded impairments and other charges of approximately $3.8 billion during the year ended December 31, 2020. The following table presents various pre-tax charges we recorded during the years ended December 31, 2020, 2019, and 2018 which are reflected within "Impairments and other charges" on our consolidated statements of operations.

			Year Ended December 31
Millions of dollars			2020			2019			2018
Long-lived asset impairments			$	2,629		$	1,603		$	—
Inventory costs and write-downs			505			458			—
Severance			384			172			—
Joint ventures			—			154			—
Venezuela investment write-down			—			—			265
Other			281			119			—
Total impairments and other charges			$	3,799		$	2,506		$	265

Of the $3.8 billion of impairments and other charges recorded during the year ended December 31, 2020, approximately $2.4 billion was attributable to our Completion and Production segment and approximately $1.4 billion was attributable to our Drilling and Evaluation segment. Long-lived asset impairments include impairments of property, plant, and equipment, intangible assets, and real estate facilities. The $2.6 billion of long-lived asset impairments during 2020 consisted of the following: $1.0 billion attributable to hydraulic fracturing equipment, the majority of which was located in North America; $297 million related to drilling-related services equipment; $191 million related to right-of-use assets, primarily operating leases; $131 million related to intangible assets; and $394 million associated with other fixed asset impairments. Also included in Long-lived asset impairments is $616 million related to real estate properties, primarily related to a fair value adjustment for a contemplated structured transaction for most of our remaining North America real estate owned assets classified as held for sale, and to approximately 50% of North American facilities being closed, sold, consolidated, or reduced in size during 2020.

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

For the year ended December 31, 2019, the $1.6 billion of long-lived asset impairments consisted of the following: $759 million attributable to hydraulic fracturing equipment, the majority of which was located in North America; $243 million related to legacy drilling equipment; $215 million related to real estate owned and classified as held for sale; $139 million related to right-of-use assets associated with operating leases; $98 million related to intangible assets; and $148 million of other fixed asset impairments. We also rationalized our portfolio of existing joint ventures and recorded resulting charges within "Joint ventures" in the table above.

Inventory costs and write-downs in the table above primarily represent disposal of excess inventory, including drilling fluids and other chemicals, and write-downs in which some of our inventory cost exceeded its market value.

For the year ended December 31, 2018, the $265 million impairment related to a write-down of all of our remaining investment in Venezuela.

Given the dynamic nature of the COVID-19 pandemic and related market conditions, we cannot reasonably estimate the period that these events will persist or the full extent of the impact they will have on our business. If market conditions continue to deteriorate, including crude oil prices further declining or remaining at low levels for a sustained period, we may record further asset impairments, which may include an impairment of the carrying value of our goodwill.

Note 3. Business Segment and Geographic Information

We operate under two divisions, which form the basis for the two operating segments we report: the Completion and Production segment and the Drilling and Evaluation segment. Our equity in earnings and losses of unconsolidated affiliates that are accounted for using the equity method of accounting are included within cost of services and cost of sales on our statements of operations, which is part of operating income of the applicable segment.

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

Operations by business segment

The following tables present financial information on our business segments.

			Year Ended December 31
Millions of dollars			2020			2019			2018
Revenue:
Completion and Production			$	7,839		$	14,031		$	15,973
Drilling and Evaluation			6,606			8,377			8,022
Total revenue			$	14,445		$	22,408		$	23,995
Operating income:
Completion and Production			$	995		$	1,671		$	2,278
Drilling and Evaluation			569			642			745
Total operations			1,564			2,313			3,023
Corporate and other (a)			(201)			(255)			(291)
Impairments and other charges (b)			(3,799)			(2,506)			(265)
Total operating income (loss)			$	(2,436)		$	(448)		$	2,467
Interest expense, net of interest income			$	(505)		$	(569)		$	(554)
Loss on early extinguishment of debt			(168)			—			—
Other, net			(111)			(105)			(99)
Income (loss) before income taxes			$	(3,220)		$	(1,122)		$	1,814
Capital expenditures:
Completion and Production			$	314		$	800		$	1,364
Drilling and Evaluation			410			728			657
Corporate and other			4			2			5
Total			$	728		$	1,530		$	2,026
Depreciation, depletion and amortization:
Completion and Production			$	615		$	1,049		$	1,058
Drilling and Evaluation			430			552			512
Corporate and other			13			24			36
Total			$	1,058		$	1,625		$	1,606

(a) Includes certain expenses not attributable to a business segment, such as costs related to support functions and corporate executives, operating lease assets, and also includes amortization expense associated with intangible assets recorded as a result of acquisitions.

(b) Impairments and other charges are as follows:

-For the year ended December 31, 2020, amount includes approximately $2.4 billion attributable to Completion and Production, $1.4 billion attributable to Drilling and Evaluation, and $62 million attributable to Corporate and other.

-For the year ended December 31, 2019, amount includes approximately $1.6 billion attributable to Completion and Production, $849 million attributable to Drilling and Evaluation, and $56 million attributable to Corporate and other.

-For the years ended December 31, 2018, we recorded aggregate charges of $265 million to write-down our investment in Venezuela.

			December 31
Millions of dollars			2020			2019
Total assets:
Completion and Production (a)			$	7,924		$	11,894
Drilling and Evaluation (a)			6,371			8,059
Corporate and other (b)			6,385			5,424
Total			$	20,680		$	25,377

(a) Assets associated with specific segments primarily include receivables, inventories, property, plant, and equipment, operating lease right-of-use assets, equity in and advances to related companies, and goodwill.

(b) Corporate and other primarily include cash and equivalents and deferred tax assets.

HAL 2020 FORM 10-K | 49

Operations by geographic region

The following tables present information by geographic area. In 2020, 2019, and 2018, based on the location of services provided and products sold, 38%, 51%, and 58%, respectively, of our consolidated revenue was from the United States. No other country accounted for more than 10% of our revenue or property, plant, and equipment during the periods presented. As of December 31, 2020 and December 31, 2019, 49% and 59% of our property, plant, and equipment was located in the United States.

			Year Ended December 31
Millions of dollars			2020			2019			2018
Revenue:
North America			$	5,731		$	11,884		$	14,431
Latin America			1,668			2,364			2,065
Europe/Africa/CIS			2,813			3,285			2,945
Middle East/Asia			4,233			4,875			4,554
Total			$	14,445		$	22,408		$	23,995

			December 31
Millions of dollars			2020			2019
Net property, plant and equipment:
North America			$	2,211		$	4,666
Latin America			544			754
Europe/Africa/CIS			602			772
Middle East/Asia			968			1,118
Total			$	4,325		$	7,310

Note 4. Revenue

Revenue is recognized based on the transfer of control or our customers' ability to benefit from our services and products in an amount that reflects the consideration we expect to receive in exchange for those services and products. The vast majority of our service and product contracts are short-term in nature. In recognizing revenue for our services and products, we determine the transaction price of purchase orders or contracts with our customers, which may consist of fixed and variable consideration. We also assess our customers' ability and intention to pay, which is based on a variety of factors, including our historical payment experience with, and the financial condition of our customers. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 20 to 60 days. Other judgments involved in recognizing revenue include an assessment of progress towards completion of performance obligations for certain long-term contracts, which involve estimating total costs to determine our progress towards contract completion, and calculating the corresponding amount of revenue to recognize.

Disaggregation of revenue

We disaggregate revenue from contracts with customers into types of services or products, consistent with our two reportable segments, in addition to geographical area. Based on the location of services provided and products sold, 38%, 51%, and 58% of our consolidated revenue was from the United States for the years ended December 31, 2020, 2019, and 2018, respectively. No other country accounted for more than 10% of our revenue. The following table presents information on our disaggregated revenue.

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

			Year Ended December 31
Millions of dollars			2020			2019			2018
Revenue by segment:
Completion and Production			$	7,839		$	14,031		$	15,973
Drilling and Evaluation			6,606			8,377			8,022
Total revenue			$	14,445		$	22,408		$	23,995
Revenue by geographic region:
North America			$	5,731		$	11,884		$	14,431
Latin America			1,668			2,364			2,065
Europe/Africa/CIS			2,813			3,285			2,945
Middle East/Asia			4,233			4,875			4,554
Total revenue			$	14,445		$	22,408		$	23,995

Contract balances

We perform our obligations under contracts with our customers by transferring services and products in exchange for consideration. The timing of our performance often differs from the timing of our customer’s payment, which results in the recognition of receivables and deferred revenue. Deferred revenue represents advance consideration received from customers for contracts where revenue is recognized on future performance of service. Deferred revenue, as well as revenue recognized during the period relating to amounts included as deferred revenue at the beginning of the period, was not material to our consolidated financial statements.

Transaction price allocated to remaining performance obligations

Remaining performance obligations represent firm contracts for which work has not been performed and future revenue recognition is expected. We have elected the practical expedient permitting the exclusion of disclosing remaining performance obligations for contracts that have an original expected duration of one year or less. We have some long-term contracts related to software and integrated project management services such as lump sum turnkey contracts. For software contracts, revenue is generally recognized over time throughout the license period when the software is considered to be a right to access our intellectual property. For lump sum turnkey projects, we recognize revenue over time using an input method, which requires us to exercise judgment. Revenue allocated to remaining performance obligations for these long-term contracts is not material.

Note 5. Receivables

As of December 31, 2020, 32% of our net trade receivables were from customers in the United States. As of December 31, 2019, 36% of our net trade receivables were from customers in the United States. No other country or single customer accounted for more than 10% of our net trade receivables at these dates.

We routinely monitor the financial stability of our customers and employ an extensive process to evaluate the collectability of outstanding receivables. This process, which involves judgment utilizing significant assumptions, includes analysis of our customers’ historical time to pay, financial condition and various financial metrics, debt structure, credit agency ratings, and production profile, as well as political and economic factors in countries of operations and other customer-specific factors.

The table below presents a rollforward of our global allowance for credit losses for 2018, 2019 and 2020.

Millions of dollars			Balance at Beginning of Period			Provision (a)			Other (b)			Balance at End of Period (c)
Year ended December 31, 2018			$	725		$	57		$	(44)		$	738
Year ended December 31, 2019			738			50			(12)			776
Year ended December 31, 2020			776			58			(10)			824

(a) Represents increases to allowance for credit losses charged to costs and expenses, net of recoveries.

(b) Includes write-offs, balance sheet reclassifications, and other activity.

(c) The allowance for credit losses in all years is primarily comprised of a full reserve against accounts receivable with our primary customer in Venezuela.

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

Note 6. Leases

We adopted a comprehensive new lease accounting standard effective January 1, 2019. The details of the significant changes to our accounting policies resulting from the adoption of the new standard are set out below. We adopted the standard using the optional modified retrospective transition method; accordingly, the comparative information as of December 31, 2018 and for the year ended December 31, 2018 has not been adjusted and continues to be reported under the previous lease standard. Under the new lease standard, assets and liabilities that arise from all leases are required to be recognized on the balance sheet for lessees. Previously, only capital leases, which are now referred to as finance leases, were recorded on the balance sheet. The adoption of this standard resulted in the recognition of approximately $1.0 billion of operating lease right-of-use assets and operating lease liabilities on our consolidated balance sheet as of January 1, 2019. The adoption of this standard did not materially impact our consolidated results of operations for the year ended December 31, 2019.

Beginning January 1, 2019, for all leases with a term in excess of 12 months, we recognized a lease liability equal to the present value of the lease payments and a right-of-use asset representing our right to use the underlying asset for the lease term. For operating leases, lease expense for lease payments is recognized on a straight-line basis over the lease term and accretion of the lease liability, while finance leases include both an operating expense and an interest expense component. For all leases with a term of 12 months or less, we elected the practical expedient to not recognize lease assets and liabilities. We recognize lease expense for these short-term leases on a straight-line basis over the lease term.

We are a lessee for numerous operating leases, primarily related to real estate, transportation, and equipment. The vast majority of our operating leases have remaining lease terms of 10 years or less, some of which include options to extend the leases, and some of which include options to terminate the leases. We generally do not include renewal or termination options in our assessment of the leases unless extension or termination for certain assets is deemed to be reasonably certain. The accounting for some of our leases may require judgment, which includes determining whether a contract contains a lease, determining the incremental borrowing rates to utilize in our net present value calculation of lease payments for lease agreements which do not provide an implicit rate, and assessing the likelihood of renewal or termination options. We also have some lease agreements with lease and non-lease components, which are generally accounted for as a single lease component. For certain equipment leases, such as offshore vessels and drilling rigs, we account for the lease and non-lease components separately.

The following tables illustrate the financial impact of our leases as of and for the years ended December 31, 2020 and December 31, 2019, along with other supplemental information about our existing leases:

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

			Year Ended December 31
Millions of dollars			2020			2019
Components of lease expense:
Finance lease cost:
Amortization of right-of-use assets			$	19		$	19
Interest on lease liabilities			32			51
Operating lease cost			296			355
Short-term lease cost			31			110
Sublease income			(4)			(5)
Total lease cost			$	374		$	530

For the year ended December 31, 2018, total rentals on our operating leases under the previous lease standard, net of sublease rentals, was $680 million.

			As of December 31
Millions of dollars			2020			2019
Components of balance sheet:
Operating leases:
Operating lease right-of-use assets (non-current)			$	786		$	931
Current portion of operating lease liabilities			251			208
Operating lease liabilities (non-current)			758			825
Finance leases:
Other assets (non-current)			$	113		$	123
Other current liabilities			24			19
Other liabilities (non-current)			118			124

During the years ended December 31, 2020 and December 31, 2019, impairment charges were recorded related to operating and finance lease right-of-use assets totaling $191 million and $139 million, respectively. See Note 2 to the consolidated financial statements for further discussion on impairments and other charges.

			Year Ended December 31
Millions of dollars except years and percentages			2020			2019
Other supplemental information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases			$	299		$	316
Operating cash flows from finance leases			32			51
Financing cash flows from finance leases			21			24
Right-of-use assets obtained in exchange for lease obligations:
Operating leases (a)			$	447		$	1,362
Finance leases			39			74
Weighted-average remaining lease term:
Operating leases			8.6 years			9.5 years
Finance leases			6.4 years			5.4 years
Weighted-average discount rate for operating leases			4.1		%	4.4		%

(a) The 2019 balance primarily consists of operating lease right-of-use assets exchanged for lease obligations upon implementation of the new lease accounting standard on January 1, 2019.

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

The following table summarizes the maturity of our operating and finance leases as of December 31, 2020:

Millions of dollars			Operating Leases			Finance Leases
2021			$	287		$	63
2022			233			63
2023			146			62
2024			94			49
2025			70			38
Thereafter			428			55
Total lease payments			1,258			330
Less imputed interest			(249)			(188)
Total			$	1,009		$	142

Note 7. Inventories

Inventories consisted of the following:

			December 31
Millions of dollars			2020			2019
Finished products and parts			$	1,330		$	1,865
Raw materials and supplies			952			1,147
Work in process			67			127
Total			$	2,349		$	3,139

All amounts in the table above are reported net of obsolescence reserves of $150 million at December 31, 2020 and $149 million at December 31, 2019.

During the year ended December 31, 2020, we recorded $505 million of impairment charges related to inventory. These charges primarily consisted of the disposal of excess inventory, including drilling fluids and other chemicals, and write-downs in which some of our inventory cost exceeded its market value.

Note 8. Property, Plant, and Equipment

Property, plant, and equipment were composed of the following:

			December 31
Millions of dollars			2020			2019
Land			$	120		$	202
Buildings and property improvements			1,652			3,167
Machinery, equipment, and other			13,592			16,571
Total			15,364			19,940
Less accumulated depreciation			11,039			12,630
Net property, plant, and equipment			$	4,325		$	7,310

During the year ended December 31, 2020, a $2.3 billion impairment charge was recorded related to property, plant, and equipment. See Note 2 to the consolidated financial statements for further discussion on impairments and other charges.

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

Classes of assets are depreciated over the following useful lives:

			Buildings and Property Improvements
			2020			2019
1 - 10 years			13%			12%
11 - 20 years			41%			41%
21 - 30 years			21%			22%
31 - 40 years			25%			25%

			Machinery, Equipment, and Other
			2020			2019
1 - 5 years			49%			43%
6 - 10 years			41%			47%
11 - 20 years			10%			10%

Note 9. Debt

Our total debt, including short-term borrowings and current maturities of long-term debt, consisted of the following:

			December 31
Millions of dollars			2020			2019
5.0% senior notes due November 2045			$	2,000		$	2,000
3.8% senior notes due November 2025			1,000			2,000
4.85% senior notes due November 2035			1,000			1,000
7.45% senior notes due September 2039			1,000			1,000
2.92% senior notes due March 2030			1,000			—
4.75% senior notes due August 2043			900			900
6.7% senior notes due September 2038			800			800
3.5% senior notes due August 2023			600			1,100
4.5% senior notes due November 2041			500			500
3.25% senior notes due November 2021			500			500
7.6% senior debentures due August 2096			300			300
8.75% senior debentures due February 2021			185			185
6.75% notes due February 2027			104			104
Other			20			28
Unamortized debt issuance costs and discounts			(82)			(90)
Total			9,827			10,327
Short-term borrowings and current maturities of long-term debt			(695)			(11)
Total long-term debt			$	9,132		$	10,316

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

$1.0 billion issuance

On March 3, 2020, we issued $1.0 billion aggregate principal amount of 2.92% senior notes due March 2030. Subsequently, on March 5, 2020, we completed a tender offer to purchase $1.5 billion aggregate principal amount of senior notes using proceeds from the debt issuance and cash on hand. In the tender offer, we purchased $500 million aggregate principal amount of our 3.50% senior notes due August 2023 and $1.0 billion aggregate principal amount of our 3.80% senior notes due November 2025. This early debt repurchase resulted in a $168 million loss on extinguishment, which included a tender premium, unamortized discounts and costs on the retired notes, and other tender fees. These costs are included in "Loss on early extinguishment of debt" on our consolidated statements of operations for the year ended December 31, 2020.

Senior debt

The $1.0 billion of senior notes issued in March rank equally with our existing and future senior unsecured indebtedness, have semiannual interest payments and have no sinking fund requirements. We may redeem all of our senior notes from time to time or all of the notes of each series at any time at the applicable redemption prices, plus accrued and unpaid interest. Our 6.75% notes due February 2027, 7.6% senior debentures due August 2096 and 8.75% senior debentures due February 2021 may not be redeemed prior to maturity.

Revolving credit facilities

We have a revolving credit facility with a capacity of $3.5 billion, which expires in March 2024. The facility is for working capital or general corporate purposes. The full amount of the revolving credit facility was available as of December 31, 2020.

Debt maturities

Our long-term debt matures as follows: $695 million in 2021, $9 million in 2022, $602 million in 2023, no amounts in 2024, $1.0 billion in 2025, and the remainder thereafter.

Note 10. Commitments and Contingencies

The Company is subject to various legal or governmental proceedings, claims or investigations, including personal injury, property damage, environmental, and tax-related matters, arising in the ordinary course of business, the resolution of which, in the opinion of management, will not have a material adverse effect on our consolidated results of operations or consolidated financial position. There is inherent risk in any litigation, claim or investigation and no assurance can be given as to the outcome of these proceedings.

Guarantee arrangements

In the normal course of business, we have agreements with financial institutions under which approximately $1.9 billion of letters of credit, bank guarantees, or surety bonds were outstanding as of December 31, 2020. Some of the outstanding letters of credit have triggering events that would entitle a bank to require cash collateralization. None of these off balance sheet arrangements either has, or is likely to have, a material effect on our consolidated financial statements.

Note 11. Income Taxes

The components of the (provision) benefit for income taxes on continuing operations were:

			Year Ended December 31
Millions of dollars			2020			2019			2018
Current income taxes:
Federal			$	1		$	32		$	19
Foreign			(167)			(426)			(428)
State			—			(9)			(15)
Total current			(166)			(403)			(424)
Deferred income taxes:
Federal			372			383			286
Foreign			2			(36)			9
State			70			49			(28)
Total deferred			444			396			267
Income tax (provision) benefit			$	278		$	(7)		$	(157)

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

The United States and foreign components of income (loss) from continuing operations before income taxes were as follows:

			Year Ended December 31
Millions of dollars			2020			2019			2018
United States			$	(3,031)		$	(1,517)		$	1,097
Foreign			(189)			395			717
Total			$	(3,220)		$	(1,122)		$	1,814

Reconciliations between the actual (provision) benefit for income taxes on continuing operations and that computed by applying the United States statutory rate to income (loss) from continuing operations before income taxes were as follows:

			Year Ended December 31
			2020			2019			2018
United States statutory rate			21.0		%	21.0		%	21.0		%
Impact of impairments and other charges			(12.3)			(20.9)			—
Impact of foreign income taxed at different rates			(1.1)			0.8			(3.0)
Valuation allowance against tax assets			0.9			(10.7)			(16.2)
Adjustments of prior year taxes			0.7			13.0			2.0
State income taxes			—			(1.3)			1.9
Venezuela adjustment			—			—			5.7
Impact of U.S. tax reform			—			—			(2.6)
Other items, net			(0.6)			(2.5)			(0.1)
Total effective tax rate on continuing operations			8.6		%	(0.6)		%	8.7		%

During the year ended December 31, 2020, we recorded a total income tax benefit of $278 million on a pre-tax loss of $3.2 billion, resulting in an effective tax rate of 8.6%. The effective tax rate for 2020 was primarily impacted by our geographic mix of earnings, tax adjustments related to the reassessment of prior year tax accruals and valuation allowances on some of our deferred tax assets. The increase in our valuation allowances results from our decreased forecasted ability to generate sufficient taxable income before the expiration of foreign tax credits and net operating losses as a direct result of deteriorated market conditions that led to impairment charges of $3.8 billion in 2020 and $2.5 billion in 2019. See Note 2 for further information.

The primary components of our deferred tax assets and liabilities were as follows:

			December 31
Millions of dollars			2020			2019
Gross deferred tax assets:
Net operating loss carryforwards			$	1,691		$	1,301
Foreign tax credit carryforwards			945			877
Research and development tax credit carryforwards			196			198
Employee compensation and benefits			237			215
Accrued liabilities			263			316
Other			469			382
Total gross deferred tax assets			3,801			3,289
Gross deferred tax liabilities:
Depreciation and amortization			7			373
Operating lease right-of-use assets			86			109
Other			155			58
Total gross deferred tax liabilities			248			540
Valuation allowances			1,394			1,082
Net deferred income tax asset			$	2,159		$	1,667

At December 31, 2020, we had $1.8 billion of domestic and foreign tax-effected net operating loss carryforwards, with approximately $133 million estimated to be utilized against our unrecognized tax benefits. The ultimate realization of these

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deferred tax assets depends on our ability to generate sufficient taxable income in the appropriate taxing jurisdiction. Our deferred tax assets from net operating losses, foreign tax credits, and research and development credits will expire as follows:

Millions of dollars			U.S. Net Operating Loss			Foreign Net Operating Loss			Foreign Tax Credits			Research and Development Credit			Total
2021-2025			$	2		$	186		$	533		$	—		$	721
2026-2030			7			125			557			—			689
2031-2041			665			92			—			196			953
Non-Expiring			312			435			—			—			747
			$	986		$	838		$	1,090		$	196		$	3,110

During the year ended December 31, 2020, we increased our valuation allowance on deferred tax assets by $312 million related to $16 million associated with foreign deferred tax assets and $296 million associated with foreign tax credits.

In accordance with the Tax Cuts and Jobs Act of 2017, a company’s foreign earnings accumulated under the legacy tax laws are deemed to be repatriated into the United States. We have provided federal and state income tax related to this deemed repatriation. We have not provided incremental United States income taxes and foreign withholding taxes on undistributed earnings of foreign subsidiaries as of December 31, 2020. The Company generally does not provide for taxes related to its undistributed earnings because such earnings either would not be taxable when remitted or they are considered to be indefinitely reinvested.

The following table presents a rollforward of our unrecognized tax benefits and associated interest and penalties.

Millions of dollars			Unrecognized Tax Benefits						Interest and Penalties
Balance at January 1, 2018			$	333					$	60
Change in prior year tax positions			32						11
Change in current year tax positions			63						—
Cash settlements with taxing authorities			(7)						(2)
Lapse of statute of limitations			(4)						(2)
Balance at December 31, 2018			$	417					$	67
Change in prior year tax positions			25						11
Change in current year tax positions			29						—
Cash settlements with taxing authorities			(4)						—
Lapse of statute of limitations			(42)						(8)
Balance at December 31, 2019			$	425		(a)			$	70
Change in prior year tax positions			(66)						6
Change in current year tax positions			16						—
Cash settlements with taxing authorities			(3)						—
Lapse of statute of limitations			(17)						(5)
Balance at December 31, 2020			$	355		(a)(b)			$	71

(a) Includes $18 million as of December 31, 2020 and $25 million as of December 31, 2019 in foreign unrecognized tax benefits that would give rise to a United States tax credit. As of December 31, 2020 and December 31, 2019, a net $224 million and $271 million without a net operating loss carryforward offset, respectively, of unrecognized tax benefits would positively impact the effective tax rate and be recognized as additional tax benefits in our statement of operations if resolved in our favor.

(b) Includes $17 million that could be resolved within the next 12 months.

Our tax returns are subject to review 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 2009. The only significant operating jurisdiction that has tax filings under review or subject to examination by the tax authorities is the United States. The United States federal income tax filings for tax years 2016 through 2019 are currently under review or remain open for review by the U.S. Internal Revenue Service.

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

Note 12. Shareholders’ Equity

Shares of common stock

The following table summarizes total shares of common stock outstanding:

			December 31
Millions of shares			2020			2019
Issued			1,066			1,068
In treasury			(181)			(190)
Total shares of common stock outstanding			885			878

Our Board of Directors has authorized a program to repurchase a specified dollar amount of our common stock from time to time. The program does not require a specific number of shares to be purchased and the program may be effected through solicited or unsolicited transactions in the market or in privately negotiated transactions. The program may be terminated or suspended at any time. During the year ended December 31, 2020 we repurchased approximately 7.4 million shares of our common stock for a total cost of $100 million. There were 4.5 million repurchases made under the program during the year ended December 31, 2019. Approximately $5.1 billion remained authorized for repurchases as of December 31, 2020. From the inception of this program in February 2006 through December 31, 2020, we repurchased approximately 224 million shares of our common stock for a total cost of approximately $9.0 billion.

Paid-in Capital in Excess of Par Value

During 2020, we issued common stock from treasury shares under our employee stock purchase plan awards and for restricted stock grants. As a result, additional paid in capital was reduced below zero, which resulted in a reduction of retained earnings by $75 million. Additional issuances from treasury shares could similarly impact additional paid in capital and retained earnings.

Preferred stock

Our preferred stock consists of five million total authorized shares at December 31, 2020, of which none are issued.

Accumulated other comprehensive loss

Accumulated other comprehensive loss consisted of the following:

			December 31
Millions of dollars			2020			2019
Defined benefit and other postretirement liability adjustments (a)			$	(226)		$	(214)
Cumulative translation adjustment			(83)			(82)
Other			(53)			(66)
Total accumulated other comprehensive loss			$	(362)		$	(362)

(a) Included net actuarial losses for our international pension plans of $212 million at December 31, 2020 and $189 million at December 31, 2019.

Note 13. Stock-based Compensation

The following table summarizes stock-based compensation costs for the years ended December 31, 2020, 2019 and 2018.

			Year Ended December 31
Millions of dollars			2020			2019			2018
Stock-based compensation cost			$	218		$	257		$	274
Tax benefit			(35)			(48)			(51)
Stock-based compensation cost, net of tax			$	183		$	209		$	223

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

Our Stock and Incentive Plan, as amended (Stock Plan), provides for the grant of any or all of the following types of stock-based awards:

- stock options, including incentive stock options and nonqualified stock options;

- restricted stock awards;

- restricted stock unit awards;

- stock appreciation rights; and

- stock value equivalent awards.

There are currently no stock appreciation rights, stock value equivalent awards, or incentive stock options outstanding. Under the terms of the Stock Plan, approximately 247 million shares of common stock have been reserved for issuance to employees and non-employee directors. At December 31, 2020, approximately 23 million shares were available for future grants under the Stock Plan. The stock to be offered pursuant to the grant of an award under the Stock Plan may be authorized but unissued common shares or treasury shares.

In addition to the provisions of the Stock Plan, we also have stock-based compensation provisions under the Restricted Stock Plan for Non-Employee Directors and the Employee Stock Purchase Plan (ESPP).

Each of the active stock-based compensation arrangements is discussed below.

Stock options

The majority of our options are generally issued during the second quarter of the year. All stock options under the Stock Plan are granted at the fair market value of our common stock at the grant date. Employee stock options generally vest ratably over a period of three years and expire 10 years from the grant date. Compensation expense for stock options is generally recognized on a straight line basis over the entire vesting period.

The following table represents our stock options activity during 2020.

			Number of Shares (in millions)			Weighted Average Exercise Price per Share			Weighted Average Remaining Contractual Term (years)			Aggregate Intrinsic Value (in millions)
Outstanding at January 1, 2020			25.3			$	41.58
Granted			2.2			24.59
Forfeited/expired			(1.6)			37.87
Outstanding at December 31, 2020			25.9			$	40.36		5.4			$	—
Exercisable at December 31, 2020			19.7			$	44.29		4.5			$	—

The total intrinsic value of options exercised was $7 million in 2020, $2 million in 2019 and $25 million in 2018. As of December 31, 2020, there was $20 million of unrecognized compensation cost, net of estimated forfeitures, related to nonvested stock options, which is expected to be recognized over a weighted average period of approximately two years.

Cash received from issuance of common stock was $87 million of which none related to proceeds from exercises of stock option during 2020. Cash received from issuance of common stock was $118 million during 2019 and $195 million during 2018, of which $6 million and $88 million related to proceeds from exercises of stock options in 2019 and 2018, respectively. The remainder relates to cash proceeds from the issuance of shares related to our employee stock purchase plan.

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

The fair value of options at the date of grant was estimated using the Black-Scholes option pricing model. The expected volatility of options granted was a blended rate based upon implied volatility calculated on actively traded options on our common stock and upon the historical volatility of our common stock. The expected term of options granted was based upon historical observation of actual time elapsed between date of grant and exercise of options for all employees. The assumptions and resulting fair values of options granted were as follows:

			Year Ended December 31
			2020			2019			2018
Expected term (in years)			5.39			5.31			5.27
Expected volatility			33%			31%			28%
Expected dividend yield			2.92 - 3.23%			2.25 - 3.88%			1.37 - 2.29%
Risk-free interest rate			1.43 - 1.69%			1.35 - 2.51%			2.27 - 2.84%
Weighted average grant-date fair value of option			$5.41			$5.91			$11.56

Restricted stock

Restricted shares issued under the Stock Plan are restricted as to sale or disposition. These restrictions lapse periodically generally over a period of five years. Restrictions may also lapse for early retirement and other conditions in accordance with our established policies. Upon termination of employment, shares on which restrictions have not lapsed must be returned to us, resulting in restricted stock forfeitures. The fair market value of the stock on the date of grant is amortized and charged to income on a straight-line basis over the requisite service period for the entire award.

In 2020, we also granted performance based restricted stock units, with the actual number of shares earned to be determined at the end of a three year performance period based on our achievement of certain predefined targets. These targets are based upon our average return on capital employed as compared to certain competitors and a modifier based upon stock performance compared to the Oilfield Services Index (OSX). A Monte Carlo simulation that uses a probabilistic approach was performed by an actuary to measure grant date fair value. The fair value of these performance based restricted stock units is recognized on a straight-line basis over the three year performance cycle.

The following table represents our restricted stock awards and restricted stock units granted, vested, and forfeited during 2020.

			Number of Shares (in millions)			Weighted Average Grant-Date Fair Value per Share
Nonvested shares at January 1, 2020			18.1			$	34.72
Granted			8.2			16.53
Vested			(5.4)			36.97
Forfeited			(1.9)			33.66
Nonvested shares at December 31, 2020			19.0			$	26.26

The weighted average grant-date fair value of shares granted was $16.53 during 2020, $24.75 during 2019, and $47.43 during 2018. The total fair value of shares vested was $79 million during 2020, $107 million during 2019, and $219 million during 2018. As of December 31, 2020, there was $330 million of unrecognized compensation cost, net of estimated forfeitures, related to nonvested restricted stock, which is expected to be recognized over a weighted average period of three years.

Employee Stock Purchase Plan

Under the ESPP, eligible employees may have up to 10% of their earnings withheld, subject to some limitations, to be used to purchase shares of our common stock. The ESPP contains four three-month offering periods commencing on January 1, April 1, July 1 and October 1 of each year. The price at which common stock may be purchased under the ESPP is equal to 90% (85% for 2019 and 2018) of the lower of the fair market value of the common stock on the commencement date or last trading day of each offering period. Under the ESPP, 74 million shares of common stock have been reserved for issuance, of which 65 million shares have been sold through the ESPP since the inception of the plan through December 31, 2020 and 9 million shares are available for future issuance. The stock to be offered may be authorized but unissued common shares or treasury shares.

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

The fair value of ESPP shares was estimated using the Black-Scholes option pricing model. The expected volatility was a one-year historical volatility of our common stock. The assumptions and resulting fair values were as follows:

			Year Ended December 31
			2020			2019			2018
Expected volatility			68		%	34		%	25		%
Expected dividend yield			4.89		%	3.06		%	1.62		%
Risk-free interest rate			0.65		%	2.20		%	1.92		%
Weighted average grant-date fair value per share			$	3.18		$	5.22		$	8.86

Note 14. Income per Share

Basic income or loss per share is based on the weighted average number of common shares outstanding during the period. Diluted income per share includes additional common shares that would have been outstanding if potential common shares with a dilutive effect had been issued. Antidilutive securities represent potentially dilutive securities which are excluded from the computation of diluted income or loss per share as their impact was antidilutive.

A reconciliation of the number of shares used for the basic and diluted income per share computations is as follows:

			Year Ended December 31
Millions of shares			2020			2019			2018
Basic weighted average common shares outstanding			881			875			875
Dilutive effect of awards granted under our stock incentive plans			—			—			2
Diluted weighted average common shares outstanding			881			875			877
Antidilutive shares:
Options with exercise price greater than the average market price			27			24			14
Options which are antidilutive due to net loss position			1			1			—
Total antidilutive shares			28			25			14

Note 15. Financial Instruments and Risk Management

The carrying amount of cash and equivalents, receivables and accounts payable, as reflected in the consolidated balance sheets, approximates fair value due to the short maturities of these instruments.

The carrying amount and fair value of our total debt, including short-term borrowings and current maturities of long term debt, is as follows:

			December 31, 2020															December 31, 2019
Millions of dollars			Level 1			Level 2			Total fair value			Carrying value						Level 1			Level 2			Total fair value			Carrying value
Total debt			$	10,856		$	700		$	11,556		$	9,827					$	11,093		$	868		$	11,961		$	10,327

The total fair value of our debt decreased during 2020, primarily due to the early repurchase of senior notes partially offset by lower average yields. See Note 9 for further information.

Our debt categorized within level 1 on the fair value hierarchy is calculated using quoted prices in active markets for identical liabilities with transactions occurring on the last two days of period-end. Our debt categorized within level 2 on the fair value hierarchy is calculated using significant observable inputs for similar liabilities where estimated values are determined from observable data points on our other bonds and on other similarly rated corporate debt or from observable data points of transactions occurring prior to two days from period-end and adjusting for changes in market conditions. Differences between the periods presented in our level 1 and level 2 classification of our long-term debt relate to the timing of when transactions are executed. We have no debt categorized within level 3 on the fair value hierarchy based on unobservable inputs.

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

We are exposed to market risk from changes in foreign currency exchange rates and interest rates. We selectively manage these exposures through the use of derivative instruments, including forward foreign exchange contracts, foreign exchange options and interest rate swaps. The objective of our risk management strategy is to minimize the volatility from fluctuations in foreign currency and interest rates. We do not use derivative instruments for trading purposes. The fair value of our forward contracts, options and interest rate swaps was not material as of December 31, 2020 or December 31, 2019. The counterparties to our derivatives are primarily global commercial and investment banks.

Foreign currency exchange risk

We have operations in many international locations and are involved in transactions denominated in currencies other than the United States dollar, our functional currency, which exposes us to foreign currency exchange rate risk. Techniques in managing foreign currency exchange risk include, but are not limited to, foreign currency borrowing and investing, and the use of currency exchange instruments. We attempt to selectively manage significant exposures to potential foreign currency exchange losses based on current market conditions, future operating activities, and the associated cost in relation to the perceived risk of loss. The purpose of our foreign currency risk management activities is to minimize the risk that our cash flows from the purchase and sale of products and services in foreign currencies will be adversely affected by changes in exchange rates.

We use forward contracts and options to manage our exposure to fluctuations in the currencies of certain countries in which we do business internationally. These instruments are not treated as hedges for accounting purposes, generally have an expiration date of one year or less, and are not exchange traded. While these instruments are subject to fluctuations in value, the fluctuations are generally offset by the value of the underlying exposures being managed. The use of some of these instruments may limit our ability to benefit from favorable fluctuations in foreign currency exchange rates.

Derivatives are not utilized to manage exposures in some currencies due primarily to the lack of available markets or cost considerations (non-traded currencies). We attempt to manage our working capital position to minimize foreign currency exposure in non-traded currencies and recognize that pricing for the services and products offered in these countries should account for the cost of exchange rate devaluations. We have historically incurred transaction losses in non-traded currencies.

The notional amounts of open foreign exchange derivatives were $817 million at December 31, 2020 and $513 million at December 31, 2019. The notional amounts of these instruments do not generally represent amounts exchanged by the parties, and thus are not a measure of our exposure or of the cash requirements related to these contracts. The fair value of our foreign exchange derivatives as of December 31, 2020 and December 31, 2019 is included in “Other current assets” in our consolidated balance sheets and was immaterial. The fair value of these instruments is categorized within level 2 on the fair value hierarchy and was determined using a market approach with certain inputs, such as notional amounts hedged, exchange rates, and other terms of the contracts that are observable in the market or can be derived from or corroborated by observable data.

Interest rate risk

We are subject to interest rate risk on our existing long-term debt. Our short-term borrowings do not give rise to significant interest rate risk due to their short-term nature. We had fixed rate long-term debt totaling $9.8 billion at December 31, 2020 and $10.3 billion at December 31, 2019. We maintain an interest rate management strategy that is intended to mitigate the exposure to changes in interest rates in the aggregate for our debt portfolio. We use interest rate swaps to effectively convert a portion of our fixed rate debt to floating LIBOR-based rates. Our interest rate swaps, which expire when the underlying debt matures, are designated as fair value hedges of the underlying debt and are determined to be highly effective. These derivative instruments are marked to market with gains and losses recognized currently in interest expense to offset the respective gains and losses recognized on changes in the fair value of the hedged debt.

As of December 31, 2020, we had an interest rate swap relating to one of our debt instruments with a total notional amount of $100 million. The fair value of this interest rate swap as of December 31, 2020 and December 31, 2019 is included in “Other assets” in our consolidated balance sheets and was immaterial. The fair value of this interest rate swap is categorized within level 2 on the fair value hierarchy and was determined using a market approach with inputs, such as the notional amount, LIBOR rate spread, and settlement terms that are observable in the market or can be derived from or corroborated by observable data.

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

Credit risk

Financial instruments that potentially subject us to concentrations of credit risk are primarily cash equivalents and trade receivables. It is our practice to place our cash equivalents in high quality investments with various institutions. Our trade receivables are from a broad and diverse group of customers and are generally not collateralized. As of December 31, 2020, 32% of our net trade receivables were from customers in the United States. As of December 31, 2019, 36% of our net trade receivables were from customers in the United States. We maintain an allowance for credit losses based upon several factors, including historical collection experience, current aging status of the customer accounts and financial condition of our customers. See Note 5 for further information.

We do not have any significant concentrations of credit risk with any individual counterparty to our derivative contracts. We select counterparties to those contracts based on our belief that each counterparty’s profitability, balance sheet, and capacity for timely payment of financial commitments is unlikely to be materially adversely affected by foreseeable events.

Note 16. Retirement Plans

Our company and subsidiaries have various plans that cover a significant number of our employees. These plans include defined contribution plans, defined benefit plans, and other postretirement plans:

- our defined contribution plans provide retirement benefits in return for services rendered. These plans provide an individual account for each participant and have terms that specify how contributions to the participant’s account are to be determined rather than the amount of pension benefits the participant is to receive. Contributions to these plans are based on a percentage of pre-tax income, after-tax income, or discretionary amounts determined on an annual basis. Our expense for the defined contribution plans totaled $100 million in 2020, $206 million in 2019, and $193 million in 2018. The decrease in expense from 2019 to 2020 was due to significant headcount reductions during the year ended December 31, 2020, coupled with the suspension of discretionary contributions in 2020.

- our defined benefit plans, which include both funded and unfunded pension plans, define an amount of pension benefit to be provided, usually as a function of age, years of service and/or compensation. The unfunded obligations and net periodic benefit cost of our United States defined benefit plans were not material for the periods presented; and

- our postretirement plans other than pensions are offered to specific eligible employees. The accumulated benefit obligations and net periodic benefit cost for these plans were not material for the periods presented.

Funded status

For our international pension plans, at December 31, 2020, the projected benefit obligation was $1.2 billion and the fair value of plan assets was $1.1 billion, which resulted in an unfunded obligation of $152 million. At December 31, 2019, the projected benefit obligation was $1.1 billion and the fair value of plan assets was $1.0 billion, which resulted in an unfunded obligation of $111 million. The accumulated benefit obligation for our international plans was $1.1 billion at December 31, 2020 and $1.0 billion at December 31, 2019.

The following table presents additional information about our international pension plans.

			December 31
Millions of dollars			2020			2019
Amounts recognized on the Consolidated Balance Sheets
Other Assets			$	45		$	85
Accrued employee compensation and benefits			8			7
Employee compensation and benefits			189			189
Pension plans in which projected benefit obligation exceeded plan assets
Projected benefit obligation			$	228		$	214
Fair value of plan assets			31			18
Pension plans in which accumulated benefit obligation exceeded plan assets
Accumulated benefit obligation			$	126		$	121
Fair value of plan assets			25			18

Fair value measurements of plan assets

The fair value of our plan assets categorized within level 1 on the fair value hierarchy is based on quoted prices in active markets for identical assets. The fair value of our plan assets categorized within level 2 on the fair value hierarchy is

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

based on significant observable inputs for similar assets. The fair value of our plan assets categorized within level 3 on the fair value hierarchy is based on significant unobservable inputs.

The following table sets forth the fair values of assets held by our international pension plans by level within the fair value hierarchy.

Millions of dollars			Level 1			Level 2			Level 3			Net Asset Value (a)			Total
Cash and equivalents			$	—		$	136		$	—		$	—		$	136
Equity funds (b)			—			170			—			—			170
Bond funds (c)			—			319			—			149			468
Alternatives funds (d)			—			4			—			163			167
Real estate funds (e)			—			68			—			28			96
Other investments (f)			5			21			14			—			40
Fair value of plan assets at December 31, 2020			$	5		$	718		$	14		$	340		$	1,077
Cash and equivalents			$	—		$	151		$	—		$	—		$	151
Equity funds (b)			—			118			—			—			118
Bond funds (c)			—			292			—			99			391
Alternatives funds (d)			—			—			—			197			197
Real estate funds (e)			—			74			—			29			103
Other investments (f)			6			21			15			—			42
Fair value of plan assets at December 31, 2019			$	6		$	656		$	15		$	325		$	1,002

(a) Represents investments measured at fair value using the Net Asset Value (NAV) per share practical expedient and thus has not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the total value of our international pension plans assets.

(b) Strategy of equity funds is to invest in diversified funds of global common stocks.

(c) Strategy of bond funds is to invest in diversified funds of fixed income securities of varying geographies and credit quality.

(d) Strategy of alternative funds is to invest in a fund of diversifying investments, including but not limited to reinsurance, commodities, and currencies.

(e) Strategy of real estate funds is to invest in diversified funds of real estate investment trusts and private real estate.

(f) Other investments primarily include investments in insurance contracts, balanced funds, and government bonds.

Risk management practices for these plans include diversification by issuer, industry and geography, as well as the use of multiple asset classes and investment managers within each asset class. Our investment strategy for our United Kingdom pension plan, which constituted 81% of our international pension plans’ projected benefit obligation at December 31, 2020 and is no longer accruing service benefits, aims to achieve full funding of the benefit obligation, with the plan's assets increasingly composed of investments whose cash flows match the projected liabilities of the plan.

Net periodic benefit cost

Net periodic benefit cost for our international pension plans was $30 million in 2020, $23 million in 2019, and $32 million in 2018.

Actuarial assumptions

Certain weighted-average actuarial assumptions used to determine benefit obligations of our international pension plans at December 31 were as follows:

			2020			2019
Discount rate			1.8%			2.5%
Rate of compensation increase			5.9%			6.0%

Certain weighted-average actuarial assumptions used to determine net periodic benefit cost of our international pension plans for the years ended December 31 were as follows:

			2020			2019			2018
Discount rate			2.5%			3.3%			2.8%
Expected long-term return on plan assets			3.5%			4.4%			4.1%
Rate of compensation increase			6.0%			5.8%			5.5%

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

Assumed long-term rates of return on plan assets, discount rates for estimating benefit obligations, and rates of compensation increases vary by plan according to local economic conditions. Where possible, discount rates were determined based on the prevailing market rates of a portfolio of high-quality debt instruments with maturities matching the expected timing of the payment of the benefit obligations. Expected long-term rates of return on plan assets were determined based upon an evaluation of our plan assets and historical trends and experience, taking into account current and expected market conditions.

Other information

Contributions. Funding requirements for each plan are determined based on the local laws of the country where such plan resides. In certain countries the funding requirements are mandatory, while in other countries they are discretionary. We currently expect to contribute $17 million to our international pension plans in 2021.

Benefit payments. Expected benefit payments over the next 10 years for our international pension plans are as follows: $46 million in 2021, $44 million in 2022, $45 million in 2023, $45 million in 2024, $47 million in 2025, and an aggregate $266 million in years 2026 through 2030.

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Table of Contents						Item 8 | Quarterly Financial Data

HALLIBURTON COMPANY Quarterly Financial Data (Unaudited)
			Quarter
Millions of dollars except per share data			First			Second			Third			Fourth			Year
2020
Revenue			$	5,037		$	3,196		$	2,975		$	3,237		$	14,445
Operating income (loss)			(571)			(1,911)			142			(96)			(2,436)
Net loss			(1,015)			(1,681)			(19)			(227)			(2,942)
Net loss attributable to company			(1,017)			(1,676)			(17)			(235)			(2,945)
Basic and diluted net loss per share			(1.16)			(1.91)			(0.02)			(0.27)			(3.34)
Cash dividends paid per share			0.18			0.045			0.045			0.045			0.315
2019
Revenue			$	5,737		$	5,930		$	5,550		$	5,191		$	22,408
Operating income (loss)			365			303			536			(1,652)			(448)
Net income (loss)			152			77			296			(1,654)			(1,129)
Net income (loss) attributable to company			152			75			295			(1,653)			(1,131)
Basic and diluted net income (loss) per share			0.17			0.09			0.34			(1.88)			(1.29)
Cash dividends paid per share			0.18			0.18			0.18			0.18			0.72
Note: Results for 2020 and 2019 include charges related to asset impairments and other charges. See Note 2 to the consolidated financial statements for further information.

HAL 2020 FORM 10-K | 67

Table of Contents			Item 9 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.