Jeff Miller
Chairman, President and Chief Executive Officer at Halliburton
Thank you, David, and good morning, everyone. In the second quarter, Halliburton once again delivered strong results driven by service quality, outstanding execution, and strong global demand for high-quality and high-performance oilfield services. Let's get right to the highlights. Total company revenue increased 14% year-over-year. Operating income grew 41% compared to second quarter of 2022 adjusted operating income. International revenue grew 17% year-over-year with strong activity in all markets. North America revenue grew 11% year-over-year. Our Completion and Production division revenue grew 19% year-over-year, while margins expanded by 320 basis points. Our Drilling and Evaluation division revenue grew 7% year-over-year, while margins expanded nearly 300 basis points. Finally, we generated $1.1 billion of cash from operations, $798 million of free cash flow, and repurchased approximately $250 million worth of shares during the quarter.
Halliburton delivered an impressive first half of 2023. I'd like to thank our employees for these outstanding results. Thank you for executing on our mainstays and strategy delivery.
Now let's turn to what I see in the markets and what I believe is driving this multi-year up-cycles duration. Demand for oil and gas is strong as demonstrated by demand growth of 2 million barrels per day in the first half of the year compared to the same period last year. Oil and gas continues to demonstrate its critical role in the global economy and the meeting long-term demand requires sustained capital investment. Commodity prices remain attractive. When I talk to customers, they expect to work more, not less. And many of their activity plans extend into the next decade. Customers are settling in for a long duration up-cycle. Overall I expect upstream spending to grow in 2023 and beyond. For this year, I expect international and North America customer spending growth in the high-teens and around 10% respectively, compared to last year, despite reduced rig count and completion activity in the U.S.
Now let's start with our performance in the international markets. Revenue in the second quarter grew 17% compared to the same period of last year with strong activity across both divisions. Today, more than 20% of our tender pipeline represents incremental activity which is as high as I can recall. Equally important, in addition to strong growth in the Middle East and Latin America, we see steady growth in activity across the globe. In this environment, I expect quality services and equipment to remain tight and pricing to continue to improve.
Halliburton's strategy is to deliver profitable international growth. We are clear on how we do this through differentiated technology offerings, selective contract wins, and a unique collaborative approach to working with our customers. Our differentiated technology and digital portfolio deliver high quality and high performance to our customers in all markets. Here are some examples. Our drilling and LWD technology platforms deliver better reliability, data capture, and efficiency for our customers while structurally expanding our margins. We build and deploy leading edge drilling equipment that requires less capital to build and operate compared to the prior generation of equipment. One example for a customer in the Middle East, Halliburton achieved a world record for the longest well ever drilled with a measured depth of over 51,000 feet using Halliburton's iCruise, iStar, and LOGIX technologies. Our leading position in completions technology is unlocking production for customers. We recently set another world record with the successful installation of the first 12-zone intelligent completion for a Middle East offshore customer using Halliburton's SmartWell technology on our eCompletions platform.
In our digital business, Equinor joined several other customers in selecting Landmark's DecisionSpace 365 as their standard subsurface data interpretation tool. During the second quarter, our Landmark software business closed on the acquisition of Resoptima, a leader in advanced ensemble modeling at the reservoir level. I'm excited about Resoptima's technology, both standalone and how it accelerates Landmark's roadmap for next-generation reservoir modeling technology.
Now turning to collaboration. Our value proposition to collaborate and engineer solutions to maximize asset value for our customers and our mainstay processes define how we consistently differentiate our services. This is the source of our competitive advantage. Our value proposition creates an environment where our customers and Halliburton collectively perform better. A recent example of this is Halliburton and Var Energi's announcement of a long-term strategic relationship for drilling services. I expect we will demonstrate with Var, as we have with other customers, that our collaborative approach creates significantly better operational and financial performance for both the customer and Halliburton.
Our international strategy works. Our differentiated cost-effective technologies and collaborative approach with customers empower us to strategically target work where we see a competitive advantage and a clear path to outperform financially.
Turning to North America. We delivered a solid quarter. North America revenue grew 11% versus the same period last year and margins were sequentially flat versus the last quarter. Looking ahead into the second half, I expect overall market activity in North America will be slightly lower than in the first half. More importantly, I expect Halliburton's North America margins to remain strong for the balance of the year. Our results in North America clearly demonstrate the success of our strategy -- to maximize value. We do this through capital efficiency, differentiated technology, and alignment with high-quality customers.
During our last call, I outlined the steps we took in North America land to maintain pricing and deploy service capacity to attractive return opportunities, or retire old equipment to further accelerate Halliburton's transition to our electric fleets. Executing on our strategy, during the second quarter, we deployed additional Zeus fleets on multi-year contracts, while retiring additional diesel equipment. Demand for our Zeus e-fleets is strong. In fact, during the second quarter, we signed more multi-year Zeus contracts than in any prior quarter. The multi-year duration of these contracts provides both stability and secure economic returns, which furthers my confidence in the strength of our margins. I continue to be impressed by the performance of Zeus e-fleets and the optimization and efficiencies that come with scale. Our current system is the result of multiple iterations over several years and our continuous improvement processes. Every element of the value chain, from design and manufacturing to operations and maintenance, is continuously improved. Our advances in pump technology and system design result in higher horsepower density and pump efficiency.
With Octiv, we are automating equipment operation for consistency and reliability. We work to be the best at getting better. Today, Zeus is a fully-integrated system. We deliver new equipment on time [Technical Issues] that works right out of the box. And on average this year, our e-fleets pumped over 10% more hours than our high-performance diesel fleets. For our customers, these improvements mean better performance and even lower total cost of ownership. For Halliburton, these improvements mainly further widen the moat around our growing e-fleet business. In all markets, international and North America, I believe our strategy yield improved financial results.
Let's look at the steady growth and margin expansion in D&E. This is the result of a structural change and technology overhaul that began several years ago. Our leading drilling platforms are lower cost and higher performance than the prior generation, which drives higher asset velocity and higher returns. In our testing business, our FloConnect surface well testing service provides a safe, efficient, and automated platform to our customers, while lowering our overall operating costs. In our wireline business, our Xaminer platform provides high-quality reservoir data, reduces subsurface uncertainty, and allows us to win high-value exploration work. Finally, across all product lines, automation and remote operations are beginning to transform service delivery, driving higher quality and reliability while lowering total cost of service delivery. Looking through any quarterly fluctuations and seasonality, I fully expect D&E margins will continue to expand over time. Our strategy also generates strong free cash flow and our capital return framework returns cash to our shareholders. I expect over 50% of free cash flow will be returned to shareholders this year.
I'm pleased with where we are today. In the last 18 months, we retired $1.2 billion of debt, strengthening our balance sheet; twice increased our quarterly dividend, which forms the stable foundation of our capital return framework; and finally, repurchased approximately $600 million worth of shares, including approximately $250 million this quarter. I fully expect that the execution of our strategy in this long-duration up-cycle will deliver better returns, more free cash flow, and more cash back to shareholders.
Now, I'll turn the call over to Eric to provide more details on our financial results. Eric?
