hal-20220630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______to_______

Commission File Number 001-03492

HALLIBURTON COMPANY

(Exact name of registrant as specified in its charter)


Delaware			75-2677995
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)


3000 North Sam Houston Parkway East,	Houston,	Texas	77032
(Address of principal executive offices)			(Zip Code)

(281) 871-2699

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $2.50 per share	HAL	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated Filer

☐

Non-accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ☒ No

As of July 15, 2022, there were 906,944,331 shares of Halliburton Company common stock, $2.50 par value per share, outstanding.

HALLIBURTON COMPANY

Index


		Page No.
PART I.	FINANCIAL INFORMATION	1

Item 1.	Financial Statements	1
	Condensed Consolidated Statements of Operations	1
	Condensed Consolidated Statements of Comprehensive Income	2
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Condensed Consolidated Financial Statements	5
	Note 1. Basis of Presentation	5
	Note 2. Impairments and Other Charges	5
	Note 3. Business Segment Information	6
	Note 4. Revenue	6
	Note 5. Inventories	8
	Note 6. Debt	8
	Note 7 . Income Taxes	8
	Note 8 . Shareholders' Equity	9
	Note 9 . Commitments and Contingencies	10
	Note 10 . Income per Share	10
	Note 1 1 . Fair Value of Financial Instruments	10



Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	12
	Executive Overview	12
	Liquidity and Capital Resources	15
	Business Environment and Results of Operations	17
	Results of Operations in 2022 Compared t o 2021 (QTD)	19
	Results of Operations in 202 2 Compared to 202 1 (YTD)	21
	Forward-Looking Information	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	23

PART II.	OTHER INFORMATION	24

Item 1.	Legal Proceedings	24
Item 1(a).	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	26
Item 4.	Mine Safety Disclosures	26
Item 5.	Other Information	26
Item 6.	Exhibits	27

SIGNATURES		28


Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

HALLIBURTON COMPANY

Condensed Consolidated Statements of Operations

(Unaudited)


		Three Months Ended June 30				Six Months Ended June 30
Millions of dollars and shares except per share data		2022		2021		2022		2021
Revenue:
Services		$	3,686	$	2,683	$	6,759	$	5,146
Product sales		1,388		1,024		2,599		2,012
Total revenue		5,074		3,707		9,358		7,158
Operating costs and expenses:
Cost of services		3,123		2,370		5,833		4,621
Cost of sales		1,166		852		2,155		1,634
Impairments and other charges		344		—		366		—
General and administrative		67		51		119		99
Total operating costs and expenses		4,700		3,273		8,473		6,354
Operating income		374		434		885		804
Interest expense, net of interest income of $24, $14, $43, and $24		(101)		(120)		(208)		(245)
Loss on early extinguishment of debt		—		—		(42)		—
Other, net		(42)		(19)		(72)		(41)
Income before income taxes		231		295		563		518
Income tax provision		(114)		(65)		(182)		(117)


Net income		$	117	$	230	$	381	$	401
Net income attributable to noncontrolling interest		(8)		(3)		(9)		(4)
Net income attributable to company		$	109	$	227	$	372	$	397













Basic and diluted net income per share		$	0.12	$	0.26	$	0.41	$	0.45

Basic weighted average common shares outstanding		904		890		902		889
Diluted weighted average common shares outstanding		909		890		906		889
	See notes to condensed consolidated financial statements.

HAL Q2 2022 FORM 10-Q | 1


Table of Contents

HALLIBURTON COMPANY

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


		Three Months Ended June 30				Six Months Ended June 30
Millions of dollars		2022		2021		2022		2021
Net income		$	117	$	230	$	381	$	401




Other comprehensive income (loss), net of income taxes		(1)		2		4		2
Comprehensive income		$	116	$	232	$	385	$	403
Comprehensive income attributable to noncontrolling interest		(8)		(3)		(9)		(4)
Comprehensive income attributable to company shareholders		$	108	$	229	$	376	$	399
	See notes to condensed consolidated financial statements.

HAL Q2 2022 FORM 10-Q | 2


Table of Contents

HALLIBURTON COMPANY

Condensed Consolidated Balance Sheets

(Unaudited)


Millions of dollars and shares except per share data		June 30, 2022		December 31, 2021
Assets
Current assets:
Cash and equivalents		$	2,226	$	3,044
Receivables (net of allowances for credit losses of $746 and $754)		4,390		3,666
Inventories		2,654		2,361


Other current assets		992		872
Total current assets		10,262		9,943
Property, plant, and equipment (net of accumulated depreciation of $11,354 and $11,442)		4,165		4,326
Goodwill		2,828		2,843
Deferred income taxes		2,703		2,695
Operating lease right-of-use assets		894		934
Other assets		1,593		1,580
Total assets		$	22,445	$	22,321
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable		$	2,794	$	2,353
Accrued employee compensation and benefits		513		493
Taxes other than income		337		292
Current portion of operating lease liabilities		227		240
Income tax payable		205		261

Other current liabilities		690		667
Total current liabilities		4,766		4,306
Long-term debt		8,525		9,127
Operating lease liabilities		786		845
Employee compensation and benefits		466		492
Other liabilities		754		823
Total liabilities		15,297		15,593
Shareholders’ equity:
Common stock, par value $2.50 per share (authorized 2,000 shares, issued 1,066 and 1,066 shares)		2,665		2,665
Paid-in capital in excess of par value		—		32
Accumulated other comprehensive loss		(179)		(183)
Retained earnings		9,617		9,710
Treasury stock, at cost (159 and 170 shares)		(4,973)		(5,511)
Company shareholders’ equity		7,130		6,713
Noncontrolling interest in consolidated subsidiaries		18		15
Total shareholders’ equity		7,148		6,728
Total liabilities and shareholders’ equity		$	22,445	$	22,321
	See notes to condensed consolidated financial statements.

HAL Q2 2022 FORM 10-Q | 3


Table of Contents

HALLIBURTON COMPANY

Condensed Consolidated Statements of Cash Flows

(Unaudited)


		Six Months Ended June 30
Millions of dollars		2022		2021
Cash flows from operating activities:
Net income		$	381	$	401
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation, depletion, and amortization		470		449


Impairments and other charges		366		—

Changes in assets and liabilities:
Receivables		(930)		(306)
Accounts payable		491		323
Inventories		(371)		(6)
Other operating activities		(81)		(249)
Total cash flows provided by operating activities		326		612
Cash flows from investing activities:
Capital expenditures		(410)		(295)

Proceeds from sales of property, plant, and equipment		116		105


Other investing activities		(54)		(31)
Total cash flows used in investing activities		(348)		(221)
Cash flows from financing activities:
Payments on long-term borrowings		(642)		(192)
Dividends to shareholders		(217)		(80)


Other financing activities		116		4
Total cash flows used in financing activities		(743)		(268)
Effect of exchange rate changes on cash		(53)		(28)
Increase/(Decrease) in cash and equivalents		(818)		95
Cash and equivalents at beginning of period		3,044		2,563
Cash and equivalents at end of period		$	2,226	$	2,658
Supplemental disclosure of cash flow information:
Cash payments during the period for:
Interest		$	244	$	261
Income taxes		$	190	$	123
	See notes to condensed consolidated financial statements.

HAL Q2 2022 FORM 10-Q | 4


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 2021 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 June 30, 2022 and the results of our operations for the three and six months ended June 30, 2022 and 2021, and our cash flows for the six months ended June 30, 2022 and 2021. 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 and six months ended June 30, 2022 may not be indicative of results for the full year.

Note 2. Impairments and Other Charges

The following table presents various pre-tax charges we recorded during the three and six months ended June 30, 2022, primarily due to the ongoing conflict between Russia and Ukraine. These charges are reflected within "Impairments and other charges" on our condensed consolidated statements of operations.


	Three Months Ended June 30		Six Months Ended June 30
Millions of dollars	2022			2022
Receivables	$	186		$	202
Property, plant, and equipment, net	100			100
Inventory	70			70
Other	(12)			(6)
Total impairments and other charges	$	344		$	366

During the second quarter of 2022, due to Russia's invasion of Ukraine and resulting sanctions imposed on Russia, we made the decision to sell our Russian operations. We executed a non-binding letter of intent with our Russian employee group in May of 2022 for the divestiture of the Russian operations and are in the process of negotiating definitive documentation related to this divestiture. The net assets to be sold (i.e., the disposal group) met the held for sale criteria and as a result, we wrote down the disposal group to fair value less costs to sell, resulting in a pre-tax charge of $344 million. The resulting value of the disposal group held for sale was $1. The anticipated divestiture is not presented as discontinued operations in our condensed consolidated statements of operations because it does not represent a strategic shift in our business. Of these impairments and other charges, 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.

HAL Q2 2022 FORM 10-Q | 5


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

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 as part of our decision to cease our operations 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.

Note 3. 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.

The following table presents information on our business segments.


	Three Months Ended June 30			Six Months Ended June 30
Millions of dollars	2022		2021	2022	2021
Revenue:
Completion and Production	$	2,911	$

SEC Form 10-Q filed by Halliburton Company