Item 8. Financial Statements and Supplementary Data.

			PAGE
Financial Statements
Management’s Report on Internal Control Over Financial Reporting			38
Reports of Independent Registered Public Accounting Firm			39
Consolidated Statements of Operations for the years ended December 31, 2022, 2021 and 2020			42
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2022, 2021 and 2020			43
Consolidated Balance Sheets at December 31, 2022 and 2021			44
Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020			45
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2022, 2021 and 2020			46
Notes to Consolidated Financial Statements
Note 1. Description of Company and Significant Accounting Policies			47
Note 2. Impairments and Other Charges			50
Note 3. Business Segment and Geographic Information			50
Note 4. Revenue			52
Note 5. Receivables			53
Note 6. Leases			54
Note 7. Inventories			56
Note 8. Property, Plant and Equipment			56
Note 9. Debt			57
Note 10. Commitments and Contingencies			57
Note 11. Income Taxes			58
Note 12. Shareholders’ Equity			60
Note 13. Stock-based Compensation			61
Note 14. Income per Share			64
Note 15. Financial Instruments and Risk Management			64
Note 16. Retirement Plans			66
Note 17. New Accounting Pronouncements			68

HAL 2022 FORM 10-K | 37

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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, 2022 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, 2022, our internal control over financial reporting is effective. The effectiveness of Halliburton’s internal control over financial reporting as of December 31, 2022 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/ Eric J. Carre
Jeffrey A. Miller						Eric J. Carre
Chairman of the Board, President and						Executive Vice President and
Chief Executive Officer						Chief Financial Officer

HAL 2022 FORM 10-K | 38

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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, 2022 and 2021, 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, 2022, 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, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2022, 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, 2022, 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 7, 2023 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

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 Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates 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 a critical audit matter 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 matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

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 future taxable income. As of December 31, 2022, the Company had gross deferred tax assets of $3.7 billion and a related valuation allowance of $0.8 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 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.

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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 foreign tax credits.

/s/ KPMG LLP

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

Houston, Texas

February 7, 2023

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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 and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2022, 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, 2022, 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, 2022 and 2021, 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, 2022, and the related notes (collectively, the consolidated financial statements), and our report dated February 7, 2023 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 7, 2023

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			HALLIBURTON COMPANY Consolidated Statements of Operations
						Year Ended December 31
Millions of dollars and shares except per share data						2022			2021			2020
Revenue:
Services						$	14,749		$	10,989		$	10,203
Product sales						5,548			4,306			4,242
Total revenue						20,297			15,295			14,445
Operating costs and expenses:
Cost of services						12,381			9,745			9,458
Cost of sales						4,603			3,534			3,442
Impairments and other charges						366			12			3,799
General and administrative						240			204			182
Total operating costs and expenses						17,590			13,495			16,881
Operating income (loss)						2,707			1,800			(2,436)
Interest expense, net of interest income of $117, $60, and $38						(375)			(469)			(505)
Loss on early extinguishment of debt						(42)			—			(168)
Other, net						(180)			(79)			(111)
Income (loss) before income taxes						2,110			1,252			(3,220)
Income tax benefit (provision)						(515)			216			278
Net income (loss)						$	1,595		$	1,468		$	(2,942)
Net income attributable to noncontrolling interest						(23)			(11)			(3)
Net income (loss) attributable to company						$	1,572		$	1,457		$	(2,945)
Basic net income per share						$	1.74		$	1.63		$	(3.34)
Diluted net income per share						$	1.73		$	1.63		$	(3.34)
Basic weighted average common shares outstanding						904			892			881
Diluted weighted average common shares outstanding						908			892			881
			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						2022			2021			2020
Net income (loss)						$	1,595		$	1,468		$	(2,942)
Other comprehensive income (loss), net of income taxes:
Defined benefit and other post retirement plans adjustment						(54)			179			(24)
Other						7			—			24
Other comprehensive income (loss), net of income taxes						(47)			179			—
Comprehensive income (loss)						$	1,548		$	1,647		$	(2,942)
Comprehensive income attributable to noncontrolling interest						(23)			(11)			(3)
Comprehensive income (loss) attributable to company shareholders						$	1,525		$	1,636		$	(2,945)
			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						2022			2021
Assets
Current assets:
Cash and equivalents						$	2,346		$	3,044
Receivables (net of allowances for credit losses of $731 and $754)						4,627			3,666
Inventories						2,923			2,361
Other current assets						1,056			872
Total current assets						10,952			9,943
Property, plant, and equipment (net of accumulated depreciation of $11,660 and $11,442)						4,348			4,326
Goodwill						2,829			2,843
Deferred income taxes						2,636			2,695
Operating lease right-of-use assets						913			934
Other assets						1,577			1,580
Total assets						$	23,255		$	22,321
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable						$	3,121		$	2,353
Accrued employee compensation and benefits						634			493
Taxes other than income						349			292
Income Taxes Payable						294			261
Current portion of operating lease liabilities						224			240
Other current liabilities						723			667
Total current liabilities						5,345			4,306
Long-term debt						7,928			9,127
Operating lease liabilities						791			845
Employee compensation and benefits						408			492
Other liabilities						806			823
Total liabilities						15,278			15,593
Shareholders’ equity:
Common stock, par value $2.50 per share (authorized 2,000 shares, issued 1,066 and 1,066 shares)						2,664			2,665
Paid-in capital in excess of par value						50			32
Accumulated other comprehensive loss						(230)			(183)
Retained earnings						10,572			9,710
Treasury stock, at cost (164 and 170 shares)						(5,108)			(5,511)
Company shareholders’ equity						7,948			6,713
Noncontrolling interest in consolidated subsidiaries						29			15
Total shareholders’ equity						7,977			6,728
Total liabilities and shareholders’ equity						$	23,255		$	22,321
			See notes to consolidated financial statements.

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			HALLIBURTON COMPANY Consolidated Statements of Cash Flows
						Year Ended December 31
Millions of dollars						2022			2021			2020
Cash flows from operating activities:
Net income (loss)						$	1,595		$	1,468		$	(2,942)
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation, depletion, and amortization						940			904			1,058
Impairments and other charges						366			12			3,799
Deferred income tax provision (benefit)						70			(486)			(444)
Cash impact of impairments and other charges - severance payments						—			(47)			(350)
Changes in assets and liabilities:
Receivables						(1,151)			(500)			1,394
Accounts payable						852			795			(934)
Inventories						(642)			(10)			340
Other operating activities						212			(225)			(40)
Total cash flows provided by operating activities						2,242			1,911			1,881
Cash flows from investing activities:
Capital expenditures						(1,011)			(799)			(728)
Proceeds from sales of property, plant, and equipment						200			257			286
Proceeds from a structured real estate transaction						—			87			—
Other investing activities						(156)			(79)			(44)
Total cash flows used in investing activities						(967)			(534)			(486)
Cash flows from financing activities:
Payments on long-term borrowings						(1,242)			(700)			(1,654)
Dividends to shareholders						(435)			(161)			(278)
Stock repurchase program						(250)			—			(100)
Proceeds from issuance of common stock						229			79			87
Proceeds from issuance of long-term debt, net						—			—			994
Other financing activities						(100)			(56)			(56)
Total cash flows used in financing activities						(1,798)			(838)			(1,007)
Effect of exchange rate changes on cash						(175)			(58)			(93)
Increase/(decrease) in cash and equivalents						(698)			481			295
Cash and equivalents at beginning of year						3,044			2,563			2,268
Cash and equivalents at end of year						$	2,346		$	3,044		$	2,563
Supplemental disclosure of cash flow information:
Cash payments during the period for:
Interest						$	487		$	517		$	509
Income taxes						$	354		$	214		$	300
			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, 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
Comprehensive income (loss):
Net income						—			—			—			1,457			—			11			1,468
Other comprehensive income						—			—			—			—			179			—			179
Cash dividends ($0.18 per share)						—			—			—			(161)			—			—			(161)
Stock plans						(1)			32			510			(277)			—			—			264
Other						—			—			—			—			—			(5)			(5)
Balance at December 31, 2021						$	2,665		$	32		$	(5,511)		$	9,710		$	(183)		$	15		$	6,728
Comprehensive income (loss):
Net income						—			—			—			1,572			—			23			1,595
Other comprehensive loss						—			—			—			—			(47)			—			(47)
Cash dividends ($0.48 per share)						—			—			—			(435)			—			—			(435)
Stock plans						(1)			18			653			(275)			—			—			395
Stock repurchase program						—			—			(250)			—			—			—			(250)
Other						—			—			—			—			—			(9)			(9)
Balance at December 31, 2022						$	2,664		$	50		$	(5,108)		$	10,572		$	(230)		$	29		$	7,977
			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, unless we elect the fair value option. If we do not have significant influence and the investment has no readily determinable fair value, we elect the measurement alternative. 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. Research and development costs are expensed as incurred and were $345 million in 2022, $321 million in 2021, and $309 million in 2020.

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 or 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, 2020:			$	1,973		$	831		$	2,804
Current year acquisitions			12			—			12
Other			27			—			27
Balance at December 31, 2021:			$	2,012		$	831		$	2,843
Current year acquisitions			8			—			8
Other			—			(22)			(22)
Balance at December 31, 2022:			$	2,020		$	809		$	2,829

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, 2022, 2021, and 2020, we determined that the fair value of each reporting unit exceeded its net book value and, therefore, no goodwill impairments were deemed necessary.

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.

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 following table presents various pre-tax charges we recorded during the years ended December 31, 2022, 2021, and 2020 which are reflected within "Impairments and other charges" on our consolidated statements of operations.

			Year Ended December 31
Millions of dollars			2022			2021			2020
Receivables			$	202		$	—		$	—
Long-lived asset impairments			100			—			2,629
Inventory costs and write-downs			70			—			505
Catch-up depreciation			—			36			—
Severance costs			—			15			384
Gain on real estate transaction			—			(74)			—
Other			(6)			35			281
Total impairments and other charges			$	366		$	12		$	3,799

During the year ended December 31, 2022, due to Russia's invasion of Ukraine and resulting sanctions imposed on Russia, we made the decision to sell our Russian operations and completed the sale in the third quarter of 2022. We wrote down the disposal group to fair value less costs to sell, which resulted in a pre-tax charge of $344 million. Of this pre-tax charge, approximately $131 million was attributable to our Completion and Production segment, approximately $178 million was attributable to our Drilling and Evaluation segment, and $35 million was selling costs and was attributable to Corporate and other. We no longer conduct operations in Russia. Additionally, during the first quarter of 2022, we recorded a pre-tax charge of $22 million primarily related to the write down of all our assets in Ukraine. Included in this charge is a $16 million allowance for credit loss as we do not expect to collect our receivables in Ukraine. Long-lived asset impairments include impairments of property, plant, and equipment.

For the year ended December 31, 2021, $12 million of impairments and other charges was recorded due to the decision to discontinue the proposed sale of our Pipeline and Process Services business and as a result we recorded a $36 million charge for accumulated unrecognized depreciation and amortization expense during the period the associated assets were classified as held for sale. Additionally, we finalized a structured transaction relating to most of our owned United States real estate. As a result of the transaction, we derecognized $358 million of assets previously held for sale included in Other current assets and recognized an investment in an unconsolidated subsidiary of $349 million included in Other Assets, which resulted in a gain of $74 million, due to specific assets with a carrying amount less than the fair value.

For the year ended December 31, 2020, the $2.6 billion of long-lived asset impairments 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" was $616 million for a fair value adjustment on real estate properties held for sale, primarily related to a contemplated structured transaction for our North America real estate assets due to specific assets with a fair value less than the carrying amount. Inventory costs and write-downs for 2020 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.

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						2022			2021			2020
Revenue:
Completion and Production						$	11,582		$	8,410		$	7,839
Drilling and Evaluation						8,715			6,885			6,606
Total revenue						$	20,297		$	15,295		$	14,445
Operating income:
Completion and Production						$	2,037		$	1,238		$	995
Drilling and Evaluation						1,292			801			569
Total operations						3,329			2,039			1,564
Corporate and other (a)						(256)			(227)			(201)
Impairments and other charges (b)						(366)			(12)			(3,799)
Total operating income (loss)						$	2,707		$	1,800		$	(2,436)
Interest expense, net of interest income						$	(375)		$	(469)		$	(505)
Loss on early extinguishment of debt						(42)			—			(168)
Other, net						(180)			(79)			(111)
Income (loss) before income taxes						$	2,110		$	1,252		$	(3,220)
Capital expenditures:
Completion and Production						$	589		$	402		$	314
Drilling and Evaluation						420			392			410
Corporate and other						2			5			4
Total capital expenditures						$	1,011		$	799		$	728
Depreciation, depletion, and amortization:
Completion and Production						$	520		$	502		$	615
Drilling and Evaluation						406			388			430
Corporate and other						14			14			13
Total depreciation, depletion, and amortization						$	940		$	904		$	1,058
(a)			Includes certain expenses not attributable to a business segment, such as costs related to support functions, corporate executives, and 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, 2022, amount includes approximately $136 million attributable to Completion and Production, $195 million attributable to Drilling and Evaluation, and a $35 million attributable to Corporate and other. -For the year ended December 31, 2021, amount includes approximately $42 million attributable to Completion and Production, $9 million attributable to Drilling and Evaluation, and a $39 million net gain attributable to Corporate and other. -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.

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

						December 31
Millions of dollars						2022			2021
Total assets:
Completion and Production (a)						$	9,311		$	8,186
Drilling and Evaluation (a)						7,199			6,606
Corporate and other (b)						6,745			7,529
Total assets						$	23,255		$	22,321
(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)			Includes primarily cash and equivalents and deferred tax assets.

Operations by geographic region

The following tables present information by geographic area. In 2022, 2021, and 2020, based on the location of services provided and products sold, 45%, 40%, and 38%, 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, 2022 and December 31, 2021, 54% and 50%, respectively, of our property, plant, and equipment was located in the United States.

			Year Ended December 31
Millions of dollars			2022			2021			2020
Revenue:
North America			$	9,597		$	6,371		$	5,731
Latin America			3,197			2,362			1,668
Europe/Africa/CIS			2,691			2,719			2,813
Middle East/Asia			4,812			3,843			4,233
Total revenue			$	20,297		$	15,295		$	14,445

			December 31
Millions of dollars			2022			2021
Net property, plant, and equipment:
North America			$	2,424		$	2,238
Latin America			520			510
Europe/Africa/CIS			435			584
Middle East/Asia			969			994
Total net property, plant, and equipment			$	4,348		$	4,326

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. Most 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, 45%, 40%, and 38% of our consolidated revenue was from the United States for the years ended December 31, 2022, 2021, and 2020, respectively. No other country accounted for more than 10% of our revenue.

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

The following table presents information on our disaggregated revenue.

			Year Ended December 31
Millions of dollars			2022			2021			2020
Revenue by segment:
Completion and Production			$	11,582		$	8,410		$	7,839
Drilling and Evaluation			8,715			6,885			6,606
Total revenue			$	20,297		$	15,295		$	14,445
Revenue by geographic region:
North America			$	9,597		$	6,371		$	5,731
Latin America			3,197			2,362			1,668
Europe/Africa/CIS			2,691			2,719			2,813
Middle East/Asia			4,812			3,843			4,233
Total revenue			$	20,297		$	15,295		$	14,445

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, 2022, 38% of our net trade receivables were from customers in the United States and 11% were from customers in Mexico. As of December 31, 2021, 34% of our net trade receivables were from customers in the United States and 11% were from customers in Mexico. Receivables from our primary customer in Mexico accounted for approximately 9% and 10% of our total receivables as of December 31, 2022 and December 31, 2021, respectively. While we have experienced payment delays in Mexico, these amounts are not in dispute and we have not historically had, and we do not expect, any material write-offs due to collectability from this customer. No other country or single customer accounted for more than 10% of our receivables at those dates.

Although the market environment has been improving, we continue to have risk of delayed customer payments and payment defaults associated with customer liquidity issues. 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 and estimates, includes analysis of our customers’ historical time to pay, financial condition and various financial metrics, debt structure, credit ratings, and production profile, as well as political and economic factors in countries of operations and other customer-specific factors.

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

The table below presents a rollforward of our allowance for credit losses for 2020, 2021 and 2022.

			Millions of dollars			Balance at Beginning of Period			Provision (a)			Other (b)			Balance at End of Period (c)
			Year ended December 31, 2020			$	776		$	58		$	(10)		$	824
			Year ended December 31, 2021			824			(19)			(51)			754
			Year ended December 31, 2022			754			2			(25)			731
(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.

Note 6. Leases

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 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, 2022, 2021, and 2020, along with other supplemental information about our existing leases:

			Year Ended December 31
Millions of dollars			2022			2021			2020
Components of lease expense:
Finance lease cost:
Amortization of right-of-use assets			$	20		$	20		$	19
Interest on lease liabilities			38			38			32
Operating lease cost			301			274			296
Short-term lease cost			31			27			31
Sublease income			(3)			(4)			(4)
Total lease cost			$	387		$	355		$	374

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

			As of December 31
Millions of dollars			2022			2021
Components of balance sheet:
Operating leases:
Operating lease right-of-use assets (non-current)			$	913		$	934
Current portion of operating lease liabilities			224			240
Operating lease liabilities (non-current)			791			845
Finance leases:
Other assets (non-current)			$	124		$	85
Other current liabilities			26			26
Other liabilities (non-current)			115			85

During the year ended December 31, 2021, we completed a structured transaction relating to most of our owned United States real estate, which resulted in an increase of our operating right-of-use assets and operating lease liabilities of $276 million. See Note 2 to the consolidated financial statements for further discussion on the structured transaction.

			Year Ended December 31
Millions of dollars except years and percentages			2022			2021			2020
Other supplemental information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases			$	332		$	307		$	299
Operating cash flows for finance leases			38			38			32
Financing cash flows for finance leases			26			24			21
Right-of-use assets obtained in exchange for lease obligations:
Operating leases			$	249		$	433		$	447
Finance leases			62			6			39
Weighted-average remaining lease term:
Operating leases			9.5 years			9.8 years			8.6 years
Finance leases			5.9 years			6.3 years			6.4 years
Weighted-average discount rate for operating leases			5.2		%	4.9		%	4.1		%

The following table summarizes the maturity of our operating and finance leases as of December 31, 2022:

Millions of dollars			Operating Leases			Finance Leases
2023			$	270		$	63
2024			185			60
2025			133			52
2026			99			50
2027			85			18
Thereafter			561			15
Total lease payments			1,333			258
Less imputed interest			(318)			(117)
Total lease payments, net of imputed interest			$	1,015		$	141

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

Note 7. Inventories

Inventories consisted of the following:

			December 31
Millions of dollars			2022			2021
Finished products and parts			$	1,859		$	1,380
Raw materials and supplies			953			890
Work in process			111			91
Total inventories			$	2,923		$	2,361

All amounts in the table above are reported net of obsolescence reserves of $104 million at December 31, 2022 and $114 million at December 31, 2021.

During the year ended December 31, 2022, we recorded $70 million of impairment charges related to inventory. These charges were primarily attributable to our exit from Russia. See Note 2 to the consolidated financial statements for further discussion on impairments and other charges.

Note 8. Property, Plant, and Equipment

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

			December 31
Millions of dollars			2022			2021
Land			$	117		$	120
Buildings and property improvements			1,671			1,608
Machinery, equipment, and other			14,220			14,040
Total			16,008			15,768
Less accumulated depreciation			11,660			11,442
Net property, plant, and equipment			$	4,348		$	4,326

During the year ended December 31, 2022, we recorded $100 million of impairment charges on property, plant, and equipment primarily related to our exit from Russia. During the year ended December 31, 2021, no impairment charges were recorded on property, plant, and equipment. See Note 2 to the consolidated financial statements for further discussion on impairments and other charges.

Classes of assets are depreciated over the following useful lives:

			Buildings and Property Improvements
			2022			2021
1 - 10 years			16%			17%
11 - 20 years			40%			39%
21 - 30 years			26%			24%
31 - 40 years			18%			20%

			Machinery, Equipment, and Other
			2022			2021
1 - 5 years			49%			49%
6 - 10 years			41%			41%
11 - 20 years			10%			10%

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

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			2022			2021
5.0% senior notes due November 2045			$	2,000		$	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			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
4.5% senior notes due November 2041			500			500
3.8% senior notes due November 2025			400			1,000
7.6% senior debentures due August 2096			294			300
6.75% notes due February 2027			104			104
Other			6			11
Unamortized debt issuance costs and discounts			(76)			(77)
Total			7,928			9,138
Short-term borrowings and current maturities of long-term debt			—			(11)
Total long-term debt			$	7,928		$	9,127

Senior debt

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 and 7.6% senior debentures due August 2096 may not be redeemed prior to maturity.

3.8% senior notes due November 2025 redemption

In February of 2022, we redeemed $600 million aggregate principal amount of our 3.8% senior notes due in November 2025. The early redemption of the notes resulted in a loss of $42 million, consisting of premiums and unamortized expenses. The loss is included in "Loss on early extinguishment of debt" in our consolidated statements of operations for the year ended December 31, 2022. We used cash on hand to fund the aggregate redemption price of the notes in the amount of $641 million, which included the principal amount, the make-whole premium, and accrued interest. The remaining $400 million aggregate principal amount of our 3.8% senior notes remains outstanding.

3.5% senior notes due August 2023 redemption

In September of 2022, we redeemed the entire $600 million outstanding principal amount of our 3.5% senior notes due August 2023 at par. We used cash on hand to fund the redemption amount of $603 million, which included the principal amount and accrued interest.

Revolving credit facilities

On April 27, 2022, we entered into a $3.5 billion five-year revolving credit facility which replaced our $3.5 billion revolving credit facility established in March of 2019. The revolving credit facility is for general working capital purposes and expires on April 27, 2027. The full amount of the revolving credit facility was available as of December 31, 2022.

Debt maturities

Our long-term debt matures as follows: no amounts in 2023 or 2024, $400 million in 2025, no amounts in 2026, $104 million in 2027, 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, intellectual property, commercial, tax, and other 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 legal or governmental proceeding, claim or investigation, and no assurance can be given as to the outcome of these proceedings.

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

Guarantee arrangements

In the normal course of business, we have in place agreements with financial institutions under which approximately $2.1 billion of letters of credit, bank guarantees, or surety bonds were outstanding as of December 31, 2022. 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			2022			2021			2020
Current income taxes:
Federal			$	(17)		$	6		$	1
Foreign			(417)			(270)			(167)
State			(11)			(6)			—
Total current			(445)			(270)			(166)
Deferred income taxes:
Federal			(159)			533			372
Foreign			103			(47)			2
State			(14)			—			70
Total deferred			(70)			486			444
Income tax (provision) benefit			$	(515)		$	216		$	278

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			2022			2021			2020
United States			$	992		$	283		$	(3,031)
Foreign			1,118			969			(189)
Total income (loss) from continuing operations before income taxes			$	2,110		$	1,252		$	(3,220)

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
			2022			2021			2020
United States statutory rate			21.0		%	21.0		%	21.0		%
Valuation allowance against tax assets			(2.9)			(44.5)			0.9
Impact of foreign income taxed at different rates			3.0			2.5			(1.1)
State income taxes			0.8			0.1			—
Impact of impairments and other charges			0.7			—			(12.3)
Adjustments of prior year taxes			0.2			1.3			0.7
Other items, net			1.6			2.4			(0.6)
Total effective tax rate on continuing operations			24.4		%	(17.2)		%	8.6		%

During the year ended December 31, 2022, we recorded a total income tax provision of $515 million on pre-tax income of $2.1 billion, resulting in an effective tax rate of 24.4%. The effective tax rate for 2022 was primarily impacted by our geographic mix of earnings, tax adjustments related to the reassessment of prior year tax accruals, and changes of valuation allowance on some of our deferred tax assets.

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

During the year ended December 31, 2021, we recorded a total income tax benefit of $216 million on pre-tax income of $1.3 billion, resulting in an effective tax rate of -17.2%. The effective tax rate for 2021 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 decrease in our valuation allowances results from increased future years’ forecasted taxable income before the expiration of foreign tax credits and net operating losses as a direct result of improved energy market conditions that led to the release of approximately $519 million valuation allowance on foreign tax credits.

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

			December 31
Millions of dollars			2022			2021
Gross deferred tax assets:
Foreign tax credit carryforwards			$	961		$	1,041
Intangible assets			856			924
Net operating loss carryforwards			694			736
Accrued liabilities			259			292
Research and development tax credit carryforwards			219			203
Employee compensation and benefits			170			166
Other			515			457
Total gross deferred tax assets			3,674			3,819
Gross deferred tax liabilities:
Operating lease right-of-use assets			153			160
Depreciation and amortization			61			131
Other			39			9
Total gross deferred tax liabilities			253			300
Valuation allowances			821			885
Net deferred income tax asset			$	2,600		$	2,634

During the year ended December 31, 2022, we decreased our valuation allowance on deferred tax assets by $64 million attributable to a $221 million decrease associated with foreign deferred tax assets and a $157 million increase primarily associated with foreign tax credits.

At December 31, 2022, we had $730 million of domestic and foreign tax-effected net operating loss carryforwards, with approximately $36 million estimated to be utilized against our unrecognized tax benefits. In addition, we had approximately $1 billion of foreign tax credits carryforwards, the majority of which will begin expiring in tax years after 2024. The ultimate realization of these 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
2023-2027			$	2		$	67		$	524		$	—		$	593
2028-2032			8			66			488			—			562
2033-2042			33			93			—			219			345
Non-Expiring			20			441			—			—			461
			$	63		$	667		$	1,012		$	219		$	1,961

We have not provided incremental United States income taxes or foreign withholding taxes on undistributed foreign subsidiaries' earnings after December 31, 2017. We generally do not provide for taxes related to undistributed earnings because such earnings either would not be taxable when remitted or they are considered to be indefinitely reinvested.

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

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, 2020						$	425					$	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					$	71
Change in prior year tax positions						14						4
Change in current year tax positions						14						2
Cash settlements with taxing authorities						(10)						—
Lapse of statute of limitations						(21)						(5)
Balance at December 31, 2021						$	352		(a)			$	72
Change in prior year tax positions						(36)						(5)
Change in current year tax positions						13						2
Cash settlements with taxing authorities						(6)						(2)
Lapse of statute of limitations						(12)						(3)
Balance at December 31, 2022						$	311		(a)(b)			$	64
(a)			Includes $51 million as of December 31, 2022 and $20 million as of December 31, 2021 in foreign unrecognized tax benefits that would give rise to a United States tax credit. As of December 31, 2022 and December 31, 2021, a net $208 million and $272 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 $27 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 2010. 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 2021 are currently under review or remain open for review by the U.S. Internal Revenue Service.

Note 12. Shareholders’ Equity

Shares of common stock

The following table summarizes total shares of common stock outstanding:

			December 31
Millions of shares			2022			2021
Issued			1,066			1,066
In treasury			(164)			(170)
Total shares of common stock outstanding			902			896

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. We purchased 6.8 million shares of our common stock under the program during the year ended December 31, 2022. There were no repurchases made under the program during the year ended December 31, 2021. Approximately $4.9 billion remained authorized for repurchases as of December 31, 2022. From the inception of this program in February 2006 through December 31, 2022, we repurchased approximately 231 million shares of our common stock for a total cost of approximately $9.3 billion.

Paid-in Capital in Excess of Par Value

During 2022 and 2021, 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 would have resulted in a balance below zero. Therefore, for the years ended December 31, 2022 and 2021, we reduced retained earnings by $275 million and $277 million, respectively. Additional issuances from treasury shares could similarly impact additional paid in capital and retained earnings.

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

Preferred stock

Our preferred stock consists of five million total authorized shares at December 31, 2022, of which none are issued.

Accumulated other comprehensive loss

Accumulated other comprehensive loss consisted of the following:

						December 31
Millions of dollars						2022			2021
Cumulative translation adjustment						$	(84)		$	(85)
Defined benefit and other postretirement liability adjustments (a)						(101)			(47)
Other						(45)			(51)
Total accumulated other comprehensive loss						$	(230)		$	(183)
(a)			Included net actuarial losses for our international pension plans of $98 million at December 31, 2022 and $49 million at December 31, 2021.

Note 13. Stock-based Compensation

The following table summarizes stock-based compensation costs for the years ended December 31, 2022, 2021, and 2020.

.

			Year Ended December 31
Millions of dollars			2022			2021			2020
Stock-based compensation cost			$	219		$	214		$	218
Tax benefit			(33)			(32)			(35)
Stock-based compensation cost, net of tax			$	186		$	182		$	183

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 264 million shares of common stock have been reserved for issuance to employees and non-employee directors. At December 31, 2022, approximately 20 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

There were no stock options granted during 2022 and there are no plans to grant stock options in 2023. All stock options under the Stock Plan were 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.

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

The following table represents our stock options activity during 2022.

			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, 2022			24.2			$	40.42
Exercised			(5.3)			28.63
Forfeited/expired			(0.7)			38.93
Outstanding at December 31, 2022			18.2			$	43.88		3.5			$	55.8
Exercisable at December 31, 2022			17.6			$	44.59		3.4			$	46.2

The total intrinsic value of options exercised was $43 million in 2022, $315,000 in 2021, and $7,000 in 2020. As of December 31, 2022, there was no unrecognized compensation cost, net of estimated forfeitures, related to nonvested stock options.

Cash received from issuance of common stock was $229 million of which $148 million related to proceeds from exercises of stock options during 2022. Cash received from issuance of common stock was $79 million during 2021 and $87 million during 2020, of which $4 million related to proceeds from exercises of stock options in 2021. All other cash received from issuance of common stock during 2022, 2021 and 2020 relates to cash proceeds from the issuance of shares under our employee stock purchase plan.

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
			2022			2021			2020
Expected term (in years)			0.00			0.00			5.39
Expected volatility			—			—			33%
Expected dividend yield			—			—			2.92 - 3.23%
Risk-free interest rate			—			—			1.43 - 1.69%
Weighted average grant-date fair value of option			—			—			$5.41
There were no stock options granted for the years ended December 31, 2022 and 2021.

Restricted stock

Restricted shares issued under the Stock Plan are restricted as to sale or disposition. These restrictions generally lapse periodically 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 2022, 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.

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

The following table represents our restricted stock awards and restricted stock units granted, vested, and forfeited during 2022.

.

			Number of Shares (in millions)			Weighted Average Grant-Date Fair Value per Share
Nonvested shares at January 1, 2022			22.7			$	23.16
Granted			7.6			31.40
Vested			(7.3)			27.14
Forfeited			(0.9)			23.89
Nonvested shares at December 31, 2022			22.1			$	24.83

The weighted average grant-date fair value of shares granted was $31.40 during 2022, $20.94 during 2021, and $16.53 during 2020. The total fair value of shares vested was $248 million during 2022, $117 million during 2021, and $79 million during 2020. As of December 31, 2022, there was $351 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 in 2020, 2021, and 2022 is equal to 90% 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, 104 million shares of common stock have been reserved for issuance, of which 73 million shares have been sold through the ESPP since the inception of the plan through December 31, 2022 and 31 million shares are available for future issuance. The stock to be offered may be authorized but unissued common shares or treasury shares.

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
			2022			2021			2020
Expected volatility			46		%	69		%	68		%
Expected dividend yield			1.67		%	0.84		%	4.89		%
Risk-free interest rate			1.42		%	0.05		%	0.65		%
Weighted average grant-date fair value per share			$	5.63		$	5.01		$	3.18

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

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			2022			2021			2020
Basic weighted average common shares outstanding			904			892			881
Dilutive effect of awards granted under our stock incentive plans			4			—			—
Diluted weighted average common shares outstanding			908			892			881
Antidilutive shares:
Options with exercise price greater than the average market price			15			22			27
Options which are antidilutive due to net loss position			—			—			1
Total antidilutive shares			15			22			28

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, 2022															December 31, 2021
Millions of dollars			Level 1			Level 2			Total fair value			Carrying value						Level 1			Level 2			Total fair value			Carrying value
Total debt			$	6,539		$	917		$	7,456		$	7,928					$	10,518		$	527		$	11,045		$	9,138

The total fair value of our debt decreased during 2022 as a result of the early redemption of senior notes and higher debt yields. The carrying value of our debt decreased as a result of the early redemption of senior notes. 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 third party market transactions on our debt are executed. We have no debt categorized within level 3 on the fair value hierarchy.

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, 2022 or December 31, 2021. The counterparties to our derivatives are primarily global commercial and investment banks.

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

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, cost considerations, or immaterial exposures (non-hedged currencies). We attempt to minimize foreign currency exposure in non-hedged currencies and recognize that pricing for the services and products offered in these countries should account for the cost of exchange rate devaluations.

The notional amounts of open foreign exchange derivatives were $650 million at December 31, 2022 and $637 million at December 31, 2021. 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, 2022 and December 31, 2021 is included in both “Other current assets” and in "Other current liabilities" 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 debt and investment portfolios. We had fixed rate long-term debt totaling $7.9 billion at December 31, 2022 and $9.1 billion at December 31, 2021. We maintain an interest rate management strategy that is intended to mitigate the exposure to changes in interest rates.

Credit risk

Financial instruments that potentially subject us to concentrations of credit risk are primarily cash equivalents and net trade receivables. It is our practice to place our cash equivalents in high quality investments with various institutions. Our net trade receivables are from a broad and diverse group of customers and are generally not collateralized. As of December 31, 2022, 38% of our net trade receivables were from customers in the United States and 11% were from customers in Mexico. As of December 31, 2021, 34% of our net trade receivables were from customers in the United States and 11% were from customers in Mexico. 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.

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

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 $160 million in 2022, $136 million in 2021, and $100 million in 2020. The increase in expense from 2021 to 2022 was due to headcount increase for the year ended December 31, 2022.

- our defined benefit plans, which include both overfunded and underfunded pension plans, define an amount of pension benefit to be provided, usually as a function of age, years of service and/or compensation. The underfunded 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, 2022, the projected benefit obligation was $669 million and the fair value of plan assets was $665 million, which resulted in an underfunded obligation of $4 million. At December 31, 2021, the projected benefit obligation was $1.1 billion and the fair value of plan assets was $1.2 billion, which resulted in an overfunded obligation of $80 million. The accumulated benefit obligation for our international plans was $601 million at December 31, 2022 and $1.0 billion at December 31, 2021. The decrease in projected benefit obligation and accumulated benefit obligation from 2021 to 2022 was due to assumptions change, mainly an increase in discount rate.

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

			December 31
Millions of dollars			2022			2021
Amounts recognized on the Consolidated Balance Sheets
Other Assets			$	151		$	265
Accrued employee compensation and benefits			7			7
Employee compensation and benefits			145			178
Pension plans in which projected benefit obligation exceeded plan assets
Projected benefit obligation			$	159		$	199
Fair value of plan assets			7			14
Pension plans in which accumulated benefit obligation exceeded plan assets
Accumulated benefit obligation			$	91		$	114
Fair value of plan assets			7			9

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 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.

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Table of Contents			Item 8 | Notes to Consolidated Financial Statements

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						$	26		$	100		$	—		$	—		$	126
Bond funds (c)						—			242			—			100			342
Alternatives funds (d)						—			—			—			145			145
Real estate funds (e)						—			—			—			31			31
Other investments (f)						1			18			2			—			21
Fair value of plan assets at December 31, 2022						$	27		$	360		$	2		$	276		$	665
Cash and equivalents						$	—		$	251		$	—		$	—		$	251
Equity funds (b)						—			120			—			—			120
Bond funds (c)						—			405			—			143			548
Alternatives funds (d)						—			—			—			176			176
Real estate funds (e)						—			23			—			23			46
Other investments (f)						3			21			3			—			27
Fair value of plan assets at December 31, 2021						$	3		$	820		$	3		$	342		$	1,168
(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 74% of our international pension plans’ projected benefit obligation at December 31, 2022 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 $14 million in 2022, $25 million in 2021, and $30 million in 2020.

Actuarial assumptions

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

			2022			2021
Discount rate			5.7%			2.3%
Rate of compensation increase			5.5%			5.3%

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:

			2022			2021			2020
Discount rate			2.3%			1.8%			2.5%
Expected long-term return on plan assets			3.0%			2.7%			3.5%
Rate of compensation increase			5.3%			5.9%			6.0%

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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 $18 million to our international pension plans in 2023.

Benefit payments. Expected benefit payments over the next 10 years for our international pension plans are as follows: $43 million in 2023, $41 million in 2024, $44 million in 2025, $46 million in 2026, $49 million in 2027, and an aggregate $275 million in years 2028 through 2032.

Note 17. New Accounting Pronouncements

In September 2022, the Financial Accounting Standards Board issued ASU 2022-04, "Disclosure of Supplier Finance Program Obligations", which is intended to enhance the transparency surrounding the use of supplier finance programs. Supplier finance programs may also be referred to as reverse factoring, payables finance, or structured payables arrangements. The amendments require a buyer that uses supplier finance programs to make annual disclosures about the program’s key terms, the balance sheet presentation of related amounts, the confirmed amount outstanding at the end of the period, and associated rollforward information. Only the amount outstanding at the end of the period must be disclosed in interim periods. We expect to adopt the new disclosures, other than the rollforward disclosure, as required at the beginning of fiscal 2023. The rollforward disclosures will be adopted as required at the beginning of 2024. The adoption of this guidance will result in additional disclosures relating to our supplier financing programs and related obligations.

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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.