Item 1. Financial Statements

HALLIBURTON COMPANY

Condensed Consolidated Statements of Operations

(Unaudited)

						Three Months Ended March 31
Millions of dollars and shares except per share data						2023			2022
Revenue:
Services						$	4,166		$	3,073
Product sales						1,511			1,211
Total revenue						5,677			4,284
Operating costs and expenses:
Cost of services						3,399			2,710
Cost of sales						1,247			989
Impairments and other charges						—			22
General and administrative						54			52
Total operating costs and expenses						4,700			3,773
Operating income						977			511
Interest expense, net of interest income of $39 and $19						(79)			(107)
Loss on early extinguishment of debt						—			(42)
Other, net						(69)			(30)
Income before income taxes						829			332
Income tax provision						(174)			(68)
Net income						$	655		$	264
Net income attributable to noncontrolling interest						(4)			(1)
Net income attributable to company						$	651		$	263
Basic and diluted net income per share						$	0.72		$	0.29
Basic weighted average common shares outstanding						904			899
Diluted weighted average common shares outstanding						907			903
			See notes to condensed consolidated financial statements.

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Table of Contents

HALLIBURTON COMPANY

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

						Three Months Ended March 31
Millions of dollars						2023			2022
Net income						$	655		$	264
Other comprehensive income, net of income taxes						1			5
Comprehensive income						$	656		$	269
Comprehensive income attributable to noncontrolling interest						(4)			(1)
Comprehensive income attributable to company shareholders						$	652		$	268
			See notes to condensed consolidated financial statements.

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Table of Contents

HALLIBURTON COMPANY

Condensed Consolidated Balance Sheets

(Unaudited)

Millions of dollars and shares except per share data						March 31, 2023			December 31, 2022
Assets
Current assets:
Cash and equivalents						$	1,879		$	2,346
Receivables (net of allowances for credit losses of $720 and $731)						5,195			4,627
Inventories						3,133			2,923
Other current assets						1,038			1,056
Total current assets						11,245			10,952
Property, plant, and equipment (net of accumulated depreciation of $11,689 and $11,660)						4,399			4,348
Goodwill						2,829			2,829
Deferred income taxes						2,574			2,636
Operating lease right-of-use assets						940			913
Other assets						1,632			1,577
Total assets						$	23,619		$	23,255
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable						$	3,180		$	3,121
Accrued employee compensation and benefits						474			634
Taxes other than income						299			349
Income tax payable						293			294
Current portion of operating lease liabilities						227			224
Other current liabilities						793			723
Total current liabilities						5,266			5,345
Long-term debt						7,929			7,928
Operating lease liabilities						812			791
Employee compensation and benefits						377			408
Other liabilities						790			806
Total liabilities						15,174			15,278
Shareholders’ equity:
Common stock, par value $2.50 per share (authorized 2,000 shares, issued 1,065 and 1,066 shares)						2,664			2,664
Paid-in capital in excess of par value						—			50
Accumulated other comprehensive loss						(229)			(230)
Retained earnings						11,075			10,572
Treasury stock, at cost (163 and 164 shares)						(5,095)			(5,108)
Company shareholders’ equity						8,415			7,948
Noncontrolling interest in consolidated subsidiaries						30			29
Total shareholders’ equity						8,445			7,977
Total liabilities and shareholders’ equity						$	23,619		$	23,255
			See notes to condensed consolidated financial statements.

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Table of Contents

HALLIBURTON COMPANY

Condensed Consolidated Statements of Cash Flows

(Unaudited)

						Three Months Ended March 31
Millions of dollars						2023			2022
Cash flows from operating activities:
Net income						$	655		$	264
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation, depletion, and amortization						241			232
Impairments and other charges						—			22
Changes in assets and liabilities:
Receivables						(575)			(368)
Inventories						(210)			(225)
Accrued employee benefits						(189)			(87)
Accounts payable						57			207
Other operating activities						143			(95)
Total cash flows provided by (used in) operating activities						122			(50)
Cash flows from investing activities:
Capital expenditures						(268)			(189)
Proceeds from sales of property, plant, and equipment						41			56
Other investing activities						(68)			(22)
Total cash flows used in investing activities						(295)			(155)
Cash flows from financing activities:
Dividends to shareholders						(145)			(108)
Stock repurchase program						(100)			—
Payments on long-term borrowings						—			(640)
Other financing activities						(4)			80
Total cash flows used in financing activities						(249)			(668)
Effect of exchange rate changes on cash						(45)			(17)
Decrease in cash and equivalents						(467)			(890)
Cash and equivalents at beginning of period						2,346			3,044
Cash and equivalents at end of period						$	1,879		$	2,154
Supplemental disclosure of cash flow information:
Cash payments during the period for:
Interest						$	127		$	134
Income taxes						$	148		$	78
			See notes to condensed consolidated financial statements.

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Table of Contents			Part I. Item 1 | Notes to Condensed Consolidated Financial Statements

HALLIBURTON COMPANY

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements were prepared using generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Regulation S-X. Accordingly, these financial statements do not include all information or notes required by generally accepted accounting principles for annual financial statements and should be read together with our 2022 Annual Report on Form 10-K.

Our accounting policies are in accordance with United States generally accepted accounting principles. The preparation of financial statements in conformity with these accounting principles requires 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.

Ultimate results could differ from our estimates.

In our opinion, the condensed consolidated financial statements included herein contain all adjustments necessary to present fairly our financial position as of March 31, 2023 and the results of our operations for the three months ended March 31, 2023 and 2022, and our cash flows for the three months ended March 31, 2023 and 2022. Such adjustments are of a normal recurring nature. In addition, certain reclassifications of prior period balances have been made to conform to the current period presentation.

The results of our operations for the three months ended March 31, 2023 may not be indicative of results for the full year.

Note 2. Business Segment 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			Part I. Item 1 | Notes to Condensed Consolidated Financial Statements

The following table presents information on our business segments.

						Three Months Ended March 31
Millions of dollars						2023			2022
Revenue:
Completion and Production						$	3,409		$	2,353
Drilling and Evaluation						2,268			1,931
Total revenue						$	5,677		$	4,284
Operating income:
Completion and Production						$	666		$	296
Drilling and Evaluation						369			294
Total operations						1,035			590
Corporate and other (a)						(58)			(57)
Impairments and other charges (b)						—			(22)
Total operating income						$	977		$	511
Interest expense, net of interest income						(79)			(107)
Loss on early extinguishment of debt						—			(42)
Other, net						(69)			(30)
Income before income taxes						$	829		$	332
(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)			For the three months ended March 31, 2022, the amount includes a $6 million charge attributable to Completions and Production, a $17 million charge attributable to Drilling and Evaluation, and a $1 million gain attributable to Corporate and other.

Note 3. 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, 47% and 43% of our consolidated revenue was from the United States for the three months ended March 31, 2023 and 2022, respectively. No other country accounted for more than 10% of our revenue.

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Table of Contents			Part I. Item 1 | Notes to Condensed Consolidated Financial Statements

The following table presents information on our disaggregated revenue.

			Three Months Ended March 31
Millions of dollars			2023			2022
Revenue by segment:
Completion and Production			$	3,409		$	2,353
Drilling and Evaluation			2,268			1,931
Total revenue			$	5,677		$	4,284
Revenue by geographic region:
North America			$	2,765		$	1,925
Latin America			915			653
Europe/Africa/CIS			662			677
Middle East/Asia			1,335			1,029
Total revenue			$	5,677		$	4,284

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 condensed 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.

Receivables

As of March 31, 2023, 36% of our net trade receivables were from customers in the United States and 13% were from customers in Mexico. 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. Receivables from our primary customer in Mexico accounted for approximately 11% and 9% of our total receivables as of March 31, 2023 and December 31, 2022, 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 of receivables from this customer. No other country or single customer accounted for more than 10% of our net trade receivables at those dates.

We 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 a high degree of judgment utilizing significant assumptions, 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			Part I. Item 1 | Notes to Condensed Consolidated Financial Statements

Note 4. Inventories

Inventories consisted of the following:

Millions of dollars			March 31, 2023			December 31, 2022
Finished products and parts			$	1,995		$	1,859
Raw materials and supplies			1,011			953
Work in process			127			111
Total inventories			$	3,133		$	2,923

Note 5. Accounts Payable

Effective January 1, 2023, we adopted new supplier finance program disclosure requirements contained in guidance issued by the Financial Accounting Standards Board (ASU 2022-04, "Disclosure of Supplier Finance Program Obligations"), other than the roll-forward disclosure, which we will adopt at the beginning of 2024.

We have agreements with third parties that allow our participating suppliers to finance payment obligations from us with designated third-party financial institutions who act as our paying agent. We have generally extended our payment terms with suppliers to 90 days. A participating supplier may request a participating financial institution to finance one or more of our payment obligations to such supplier prior to the scheduled due date thereof at a discounted price. We are not required to provide collateral to the financial institutions.

Our obligations to participating suppliers, including amounts due and scheduled payment dates, are not impacted by the suppliers’ decisions to finance amounts due under these financing arrangements. Our outstanding payment obligation to participating suppliers was $321 million as of March 31, 2023, and $273 million as of December 31, 2022, and is included in accounts payable on the condensed consolidated balance sheets.

Note 6. Income Taxes

During the three months ended March 31, 2023, we recorded a total income tax provision of $174 million on a pre-tax income of $829 million, resulting in an effective tax rate of 21.0% for the quarter. During the three months ended March 31, 2022, we recorded a total income tax provision of $68 million on a pre-tax income of $332 million, resulting in an effective tax rate of 20.5% for the quarter.

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Table of Contents			Part I. Item 1 | Notes to Condensed Consolidated Financial Statements

Note 7. Shareholders’ Equity

The following tables summarize our shareholders’ equity activity for the three months ended March 31, 2023 and March 31, 2022, respectively:

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, 2022						$	2,664		$	50		$	(5,108)		$	10,572		$	(230)		$	29		$	7,977
Comprehensive income (loss):
Net income						—			—			—			651			—			4			655
Other comprehensive income						—			—			—			—			1			—			1
Cash dividends ($0.16 per share)						—			—			—			(145)			—			—			(145)
Stock repurchase program						—			—			(100)			—			—			—			(100)
Stock plans (a)						—			(50)			113			(3)			—			—			60
Other						—			—			—			—			—			(3)			(3)
Balance at March 31, 2023						$	2,664		$	—		$	(5,095)		$	11,075		$	(229)		$	30		$	8,445
(a)			In the first quarter of 2023, we issued common stock from treasury shares for stock options exercised, restricted stock grants, and our employee stock purchase plan. As a result, additional paid in capital was reduced to zero, which resulted in a reduction of retained earnings by $3 million. Additional issuances from treasury shares could similarly impact additional paid in capital and retained earnings.

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, 2021						$	2,665		$	32		$	(5,511)		$	9,710		$	(183)		$	15		$	6,728
Comprehensive income (loss):
Net income						—			—			—			263			—			1			264
Other comprehensive income						—			—			—			—			5			—			5
Cash dividends ($0.12 per share)						—			—			—			(108)			—			—			(108)
Stock plans (a)						—			(32)			261			(85)			—			—			144
Balance at March 31, 2022						$	2,665		$	—		$	(5,250)		$	9,780		$	(178)		$	16		$	7,033
(a)			In the first quarter of 2022, we issued common stock from treasury shares for stock options exercised, restricted stock grants, and our employee stock purchase plan. As a result, additional paid in capital was reduced to zero, which resulted in a reduction of retained earnings by $85 million. Additional issuances from treasury shares could similarly impact additional paid in capital and retained earnings.

Our Board of Directors has authorized a program to repurchase our common stock from time to time. We purchased 2.9 million shares of our common stock under the program during the three months ended March 31, 2023 for $100 million. Approximately $4.8 billion remained authorized for repurchases as of March 31, 2023. From the inception of this program in February of 2006 through March 31, 2023, we repurchased approximately 234 million shares of our common stock for a total cost of approximately $9.4 billion.

Accumulated other comprehensive loss consisted of the following:

Millions of dollars						March 31, 2023			December 31, 2022
Cumulative translation adjustments						$	(83)		$	(84)
Defined benefit and other postretirement liability adjustments						(102)			(101)
Other						(44)			(45)
Total accumulated other comprehensive loss						$	(229)		$	(230)

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Table of Contents			Part I. Item 1 | Notes to Condensed Consolidated Financial Statements

Note 8. 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.

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 March 31, 2023. 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 condensed consolidated financial statements.

Note 9. 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:

			Three Months Ended March 31
Millions of shares			2023			2022
Basic weighted average common shares outstanding			904			899
Dilutive effect of awards granted under our stock incentive plans			3			4
Diluted weighted average common shares outstanding			907			903
Antidilutive shares:
Options with exercise price greater than the average market price			14			16
Total antidilutive shares			14			16

Note 10. Fair Value of Financial Instruments

The carrying amount of cash and equivalents, receivables, and accounts payable, as reflected in the condensed 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:

			March 31, 2023															December 31, 2022
Millions of dollars			Level 1			Level 2			Total fair value			Carrying value						Level 1			Level 2			Total fair value			Carrying value
Total debt			$	6,837		$	939		$	7,776		$	7,930					$	6,539		$	917		$	7,456		$	7,928

In the first three months of 2023, the fair value of our debt increased as a result of lower debt yields.

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.

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Table of Contents			Part I. Item 1 | Notes to Condensed Consolidated Financial Statements

Note 11. Subsequent Event

Argentina Blue Chip Swap Transaction

The Central Bank of Argentina maintains currency controls that limit our ability to access U.S. dollars in Argentina and remit cash from our Argentine operations. Our functional currency in Argentina is the U.S. dollar and we remeasure our Argentine peso-denominated net assets into U.S. dollars at each balance sheet date using Argentina's official peso to U.S. dollar exchange rate then in effect. There is a foreign exchange mechanism known as Blue Chip Swaps, which effectively results in a parallel U.S. dollar exchange rate. This parallel rate, which cannot be used as the basis to remeasure our net monetary assets in U.S. dollars under U.S. GAAP, was approximately 94% higher than Argentina’s official exchange rate at March 31, 2023. During April of 2023, we began entering into Blue Chip Swap transactions in order to remit cash from our Argentine operations that could result in an estimated loss on investment of $60 million during the second quarter of 2023.

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Table of Contents						Part I. Item 2 | Executive Overview