NEX - Halliburton Reports Big Q2 2022 Beat On Much Better Revenue Strong Margins

• HAL reported much better than expected revenue, margin and EPS results for 2Q22.
• The company continues to see positive long-term growth trends for North America and International markets.
• North America is essentially sold out for services yielding net pricing gains.
• Look for better than current Street forecast guidance on the call.

This is a Z4 Energy Research pre call note.

Other 2Q22 Numbers of Note :

• Dividend: Holding at $0.12 per quarter.
• Free Cash Flow $215 mm vs -$183 mm in 1Q22.
• NAM revenue $2.4 B, up 26% sequentially.
• International Revenue $2.6 B, up 12% sequentially. Note late quarter HAL noted that only 2% of their revenue came from Russia.

Guidance: HAL doesn't guide in print. Look for 3Q segment revenue and margin guidance during the later portion of the prepared remarks during this morning's conference call.

Last Quarter's Major Takeaways:

• HAL was sold out on frac capacity and frac industry capacity as very tight.
• HAL was seeing net pricing gains in NAM as it exited 1Q22.
• Private players continues to grow activity levels in NAM.
• The company was replacing old fleets with new efleets but not increasing capacity
• Saw NAM spending up 35% and global spending up > 20%.
• International activity was robust across all segments in 1Q22.
• We expect HAL to reiterate these points on today's call.

Favorite Quotes Watch 1 - North America: "I expect Halliburton (HAL) to uniquely maximize value in this strong, steadily growing, and all but sold-out market. Pricing gains across all product service lines supported significant sequential margin expansion in the second quarter." - CEO Jeff Miller. We note that an ability to achieve net pricing gains has been a concern among investors some of whom fear inflation will eat away at incremental margins. As noted in the table above HAL, was able to achieve the upper end of its sequential margin goal for the Completion & Production segment which is heavily North American weighted for the company.

Favorite Quotes Watch 2 - International: " I expect the international markets will experience multiple years of growth, and I am confident that Halliburton is positioned to benefit more from this multi-year upcycle than ever before." - CEO Jeff Miller.

Balance Sheet:

• HAL has been paying down debt over the last several quarters. We don't expect this to change near term.
• Net debt of $6.3 vs $6.4 B at 1Q22, still elevated but manageable.

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