Jeff Miller
Chairman of the Board of Directors, President, & Chief Executive Officer at Halliburton
Thank you, David, and good morning, everyone. I'll begin today's discussion with our highlights from the third quarter. We delivered total company revenue of $5.7 billion and adjusted operating margin of 17%. International revenue was $3.3 billion and grew by 4% year over year, led by Middle East/Asia, which delivered an increase of 9%. North America revenue was $2.4 billion, a decrease of 9% year over year. Finally, during the third quarter, we generated $841 million of cash flow from operations, $543 million of free cash flow, and repurchased approximately $200 million of our common stock.
The August cybersecurity event has not had a material effect on our financial condition or operating results. However, that event, together with the effect of storms in the Gulf of Mexico, did reduce our adjusted earnings for the quarter by roughly $0.02 per share due to lost or delayed revenue. The cybersecurity event also had an impact on our free cash flow during the quarter due to delayed billing and collections and caused us to pause our share repurchase program while we assessed the impact of the event. Importantly, our full year expectations for free cash flow and cash return to shareholders remain unchanged, and we expect both to accelerate in the fourth quarter.
Before we move on, I would like to take a moment and thank our employees for their extraordinary work while we navigated the cybersecurity event this quarter. Our employees maintained operational continuity under challenging conditions, and I celebrate their effort and grit as they worked through the event. I would also like to extend my thanks and appreciation to our customers for their support and close collaboration through this time.
Turning to our geographic results, I'll begin with the international markets where Halliburton's revenue grew 4% year over year, led by the Middle East/Asia region. For the full year, I expect international revenue growth to be in line with the overall market and below our prior guidance. I am pleased with our performance and the continued growth of our business. Next year, directionally, we see international growth in the low- to mid-single digits.
I'm encouraged by projects I see in the pipeline and I am confident that Halliburton will deliver on these opportunities and create value for both us and our customers. My confidence comes from the strength of our largest international business lines, the depth of our technology portfolio, the breadth of our global reach and the power of our value proposition.
Halliburton's largest international business lines, cementing, completion tools and drilling fluids form the backbone of oil and gas development spending globally, and each is a leader in their market. We've earned these leadership positions through our legacy of execution, consistent service quality and our digital and technology developments.
The transformation of our Sperry Drilling business clearly demonstrates the impact technology developments have on our business. The success of our organically developed iCruise and iStar directional drilling and logging tools, LOGIX automation and remote operation platform, and ultra-deep resistivity and look-ahead tools create a step change in Halliburton's international competitiveness and return profile. Year to date, Sperry has delivered the highest international revenue growth of any major product line.
Further, Halliburton today is present in all major international basins as well as select frontier areas with promising future development potential. Our international business operates both on- and off-shore with roughly 50% of our revenue outside of North America land earned from offshore operations. Finally, our value proposition to collaborate and engineer solutions to maximize asset value for our customers drives our unique approach to creating value for our customers and Halliburton.
Our collaborative approach wins with our customers and is exemplified by our alliances in the North Sea and elsewhere. These alliances have pioneered new ways of working to consistently deliver industry-leading performance on integrated projects. I am confident in our international business. I am confident because of the strength of our technology portfolio, our unique value proposition, our clear strategy, our experienced workforce and deep customer relationships. I expect that Halliburton's international franchise will continue to deliver growth and returns.
Today. I would like to spend some time describing a few areas where I expect outsized international growth for Halliburton in 2025 and beyond. These are unconventionals, artificial lift and Intervention. Two things are clear to me. One, unconventional developments are becoming more important and I expect they will grow faster than other market segments over the next few years. Two, Halliburton is the clear leader in unconventionals both in technology and execution, and I expect Halliburton to play the same leadership role internationally as we have in the U.S.
We see evidence of this in the Middle East, where Halliburton was awarded a multi-year unconventional drilling services contract and started up an unconventional hydraulic fracturing fleet, both of which grow Halliburton's market share in a strategically important customer asset. Elsewhere in the region, we see several other growth opportunities for Halliburton in emerging unconventional plays.
Turning to Halliburton's international artificial lift business, we saw over 30% year-on-year revenue growth this quarter and we expect to continue to outgrow the market on the strength of our leading technology portfolio. One such technology is our TrueSync hybrid motor, which combines the reliability of an induction motor with the efficiency of a permanent magnet motor. Initially deployed in North America, we anticipate strong international demand, especially in Latin America and the Middle East where its economic benefits can be realized at scale.
Another key technology is our Intelevate service, which uses AI to process real-time data and remotely manage pumps for optimal performance. We saw a 50% increase in international wells monitored since the start of the year. In North America, Halliburton performed over 160,000 remote interventions this year and we expect Intelevate to deliver similar value internationally as we expand our installed ESP base.
Well intervention is another segment I believe will outgrow the overall market. We have seen this already with our production solutions product line, which this year alone has grown at twice the rate of our overall international business. Well intervention has long been an area of focus for Halliburton's organic investment and technology development. For example, Halliburton in alliance with TechnipFMC achieved the world's first riserless coiled tubing intervention service. This technology means Halliburton's full suite of subsea well intervention services can be deployed without the requirement for a riser-equipped deepwater rig. Customers can now intervene in thousands of marginal or end-of-life offshore wells that otherwise could not be economically serviced. These are a few examples that describe the unique above-market growth opportunities we see for Halliburton.
To summarize international markets, I am confident in the strength of our international business. I believe our technology portfolio, value proposition and strategy will drive profitable growth in 2025.
Turning to North America, our third quarter revenue declined 4% compared to the second quarter, primarily due to lower hydraulic fracturing activity in U.S. land. I expect the combination of seasonality and budget exhaustion will result in a full year revenue decline at the low end of our prior guidance. Our strategy to maximize value in North America remains unchanged and I expect we will continue to outperform our competitors.
Here's how I expect to maximize value in North America as I look to 2025. In our completion business, maximizing value means unique technology, leading service quality and efficiencies, and disciplined capital deployment. The success of this strategy is clear. And today, I am pleased that 90% of our fracturing fleets are committed for work in 2025 with multiple opportunities for the remaining 10%. Further, the unique completion technologies we deploy in this market are key differentiators for Halliburton and our customers. Together, they comprise the Zeus platform, electric pumping units, Octiv Auto Frac and Sensori subsurface measurement. Each of these technologies is commercial and we are seeing accelerated adoption into customer workflows.
This quarter, we signed contracts for two new e-fleets and also secured extensions on several existing fleets at prices commensurate with the leading performance of our platform. We believe the performance of our e-fleets and their integration with other unique components of the Zeus platform will continue to drive demand for this equipment, which we expect exceeds 50% of our active fleet next year.
Turning to Octiv Auto Frac. Customers have contracted this automation technology at a remarkable pace. Since launch in Q3, we've deployed Auto Frac on 20% of our e-fleets and expect to expand to 50% in the next two months. In 2025, we expect the vast majority of our e-fleets to operate with Auto Frac contracts. I am also pleased with the deployment progress of Sensori fracture diagnostics, which provide the building blocks for improved per foot recovery for our customers. During the third quarter, we embedded Halliburton's Sensori fracture monitoring technology into a number of our customers' well completion workflows and expect to further expand our customer base for this unique technology in the fourth quarter.
Looking ahead, I expect the Zeus platform and its constituent technologies to see continued adoption. I believe these technologies working together seamlessly in an automated real-time environment will create a path to greater fracture consistency, ever higher levels of efficiency and, ultimately, improved recovery. The potential value creation related to these technologies is significant. We are working today with several market-leading operators to advance this integrated application of the Zeus platform. I believe we are just at the beginning of what this technology will accomplish.
Shifting to Drilling and Evaluation. Our North America drilling services business demonstrated nearly 20% year-on-year growth this quarter despite a rig count decline of 5% over the same period. I expect this unique growth to continue in 2025. In unconventional basins, our iCruise rotary steerable tool and LOGIX drilling automation platform reliably deliver curve and lateral sections in a single run. We delivered revenue growth this year in each of our commercial models, rental, sales and full service, and I expect further expansion next year.
In Canada, Halliburton's leading portfolio of well-ranging technologies such as our Aurora magnetic ranging service is the preferred solution for steam-assisted gravity drainage wells. Expanded mid-stream infrastructure has improved market access for oil producers in Canada, which creates a strong future runway for these technologies.
In Alaska, our EarthStar ultra-deep resistivity tool and reservoir mapping service deliver unmatched performance and unique insights for customers drilling extended-reach wells on the North Slope. We see significant growth opportunities for our logging-while-drilling and directional drilling services as activity increases in multiple projects in the area over the next few years. Across a broad spectrum of North America drilling applications, Halliburton's technology delivers performance, precision and unique insights for our customers that have driven meaningful share growth and strong returns, and I expect further revenue growth in 2025.
To finish my thoughts on North America, our strategy to maximize value is unchanged. This strategy means we focus on returns, not share. We deliver leading service quality and efficiency and we develop differentiated technologies that create value for our customers and Halliburton. I believe Halliburton's execution of this strategy has transformed the resilience and profitability of our North America business.
Let me close with this, I see solid opportunities across business lines and geographies for Halliburton. As we execute on our strategies, profitable international growth and maximize value In North America, we will target opportunities to deliver unique value, allocate capital to the highest return opportunities and prioritize free cash flow generation and shareholder returns.
With that, I'll now turn the call over to Eric to provide more details on our financial results. Eric?
