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Good day, ladies and gentlemen. And thank you for standing by. Welcome to the second quarter 2026 Halliburton Company Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question at this time, you will need to press *11 on your telephone keypad. As a reminder, this conference call is being recorded. At this time, I would like to turn the conference over to Mr. David Coleman, Senior Director, Investor Relations. Sir, please begin.
Hello, and thank you for joining the Halliburton Second Quarter 2026 Conference Call. We will make the recording of today's webcast available for seven days on Halliburton's website after this call. Joining me today are Jeffrey Allen Miller, Chairman, President and CEO; Shannon Slocum, Executive Vice President and COO; and Eric J. Carre, Executive Vice President and CFO. Today's comments may include forward-looking statements that reflect Halliburton's views about future events. These matters involve risks and uncertainties that could cause our actual results to differ materially from our forward-looking statements. These risks are discussed in Halliburton's Form 10-K for the year ended 12/31/2025, Form 10-Q for the quarter ended 03/31/2026, current reports on Form 8-K, and other Securities and Exchange Commission filings. We undertake no obligation to revise or update publicly any forward-looking statements for any reason, except as required by law. Our comments today also include non-GAAP financial measures. Additional details and reconciliation to the most directly comparable GAAP financial measures are included in our second quarter earnings release and in the Quarterly Results Presentation on our website. Now I will turn the call over to Jeffrey.
Thank you, David, and good morning, everyone. I am pleased with Halliburton's second quarter performance. Our international business delivered its highest second quarter revenue in more than a decade, despite the disruption in the Middle East. Our North America business delivered sequential improvement, and my outlook for our business is positive. Here are a few highlights from the second quarter. We delivered total company revenue of $5.7 billion and adjusted operating margin of 12%. International revenue was $3.4 billion, an increase of 6% year over year. North America revenue was $2.3 billion, flat year over year. During the second quarter, we generated $824 million of cash flow from operations, $668 million of free cash flow, and repurchased approximately $200 million of our common stock. Now let's turn to our macro outlook. On our last call, I shared my belief that the situation in the Middle East would have long-lasting implications for the global energy sector. What is ever more clear to me is how important energy is to a functioning global economy. The events we have seen since then only reinforce that view. Two points frame my view of the road ahead. First, energy security remains a central issue for both producing and consuming nations. To achieve it, countries must rebuild inventories, refill and expand strategic reserves, and diversify supply. I expect this work will take years, not quarters. Second, reliable and affordable energy are prerequisites for prosperity and quality of life. As the global economy expands, demand for that energy grows with it. I believe the path forward runs squarely through a healthy oilfield services industry. Here is what I see today. In international markets, customer engagement is high. I see growing demand for our services and technology in every region we serve. Durable, long-cycle investment is increasing in unconventional, offshore, and intervention markets, and Halliburton wins in all three. In North America, activity responded positively as we expected. Over the long term, North America remains critical to global energy security. I expect the market will require more advanced technology and greater service intensity to simply sustain, much less grow production. I believe the global outlook I just described and our differentiated technology and value proposition set the stage for Halliburton's future revenue growth and margin expansion. With that, I will turn the call over to Shannon.
Thanks, Jeffrey. Before I get into our operational results, I want to thank each of our employees who work in more than 70 countries around the world for their focus on our customers, safety performance, and execution. Let me start with international, where opportunities for Halliburton around the world are the strongest I have seen in many years. In the second quarter, Halliburton recorded international revenue of $3.4 billion and secured a number of significant awards. I will start with the Middle East. I recently returned from the region where I met with our customers and our operations teams. Activity is recovering from the conflict flows, but the pace of recovery is still dependent on the day-to-day events in the region. Let me share a few observations from my visit. Land well construction activity was largely steady across the region in the second quarter, with the exception of pockets of disruption in Iraq and Bahrain. When production comes back online, I expect a tailwind for artificial lift and intervention businesses. Offshore activity increased in the quarter, though it is not yet back to pre-conflict levels. The offshore situation remains particularly fluid, with operators assessing reactivations alongside recent security conditions. Iraq deserves a specific mention. Yesterday, we announced a significant integrated field management service award. This is a foundational project that I expect will transform our business in-country. It redefines our opportunity set and puts our latest digital technology offerings to work at scale. While the conflict dominates the discussion today, I see a bright future for Halliburton in the Middle East. Our recent wins in onshore well construction, integrated offshore projects, and the resumption of our unconventional frac operations further strengthen my view. Next, let's turn to our business outside the Middle East, where we expect year-over-year growth in the low double digits. Our growth engines—production services, drilling, unconventionals, and lift—are key to delivering on the outlook. Here are a few recent developments. First, in production services, the commissioning phase began for our newest North Sea ST-E-N vessel; first operations of its multiyear contract are expected at year-end. This deployment strengthens our leading global ST-E-M business and importantly represents the first offshore implementation of Octave, our automated pumping control system. Second, in directional drilling, Sikal, our recent acquisition, is fully integrated with our Logix automation platform, and together they deliver Halliburton's closed-loop drilling solution. This integrated solution gives us a significant runway to scale on offshore rigs worldwide. Our system delivers more precise well placement, better reservoir contact, and faster drilling times. We saw this firsthand in Norway with back-to-back record wells for Aker BP this quarter. I am confident this technology and the opportunity to further deploy it will deliver meaningful, profitable growth for Halliburton. Finally, in international unconventionals, we saw further progress in multiple regions. In Algeria, we secured Sonatrach's first unconventional award, a multi-well integrated drilling and completions program. We are off to a strong start and have already delivered the longest lateral drilled in-country to date. This project highlights the breadth and depth of our entire unconventional portfolio—both drilling and completions—and puts Halliburton in front of the next wave of development. In Argentina, our first Zeus fleet has been mobilized and is planned to start up in the fourth quarter. This deployment exemplifies Halliburton's unique capability to bring leading unconventional technology to international customers. I see a clear runway for Halliburton to build on this position in this growing market. Our international strategy is advancing. We differentiate on technology. We deliver on execution. And we collaborate closely with our customers. When I look at our growth engines and the pipeline of opportunities ahead, I believe that our international business delivers meaningful, profitable growth for Halliburton. Now to North America, where Halliburton delivered second quarter revenue of $2.3 billion. Second quarter activity built on the momentum we saw in the first quarter, with stronger activity, modest pricing gains, and further technology adoption. Drilling activity was strong; our Drilling and Evaluation division grew 9% year over year. In completions, our focus remains on returns, not share, and our option to redeploy equipment to international markets sets a high bar for any North America fleet reactivation. Halliburton's maximize-value strategy in North America leads with technology. Automation, electrification, and real-time subsurface data give our customers the tools to maximize recovery in their assets. Let me give you a proof point. This quarter, we deployed the latest version of Zeus IQ. This release has near-well and cross-well subsurface measurements, spans data inputs, and gives customers well-by-well treatment control and simul-frac operations. In plain terms, better fracture placement means more value for our customers. Let me close on North America with this: the market is in recovery, and I am encouraged by the shift in trajectory. Activity is up, pricing is improving, and our playbook works. I expect continued progress throughout the year. Our priorities are clear. We focus on returns for Halliburton, and we deploy technology that improves performance and recovery for our customers. Big picture: I like Halliburton's strength globally. With a balanced portfolio that spans international and North America, onshore and offshore, mature and new plays, I am excited about our contract awards and our opportunity pipeline. I am confident these will translate into revenue growth and margin expansion. With that, I will turn the call over to Eric to provide more details on our financial results. Eric?
Thank you, Shannon, and good morning. Our Q2 reported net income per diluted share was $0.64. Adjusted net income per diluted share was $0.55. Total company revenue for Q2 2026 was $5.7 billion, an increase of 6% when compared to Q1 2026. Adjusted operating income was $683 million and adjusted operating margin was 12%. Our Q2 cash flow from operations was $824 million and free cash flow was $668 million. During Q2, we repurchased approximately $200 million of our common stock. Now turning to the segment results. Beginning with our Completion and Production division, revenue in Q2 was $3.2 billion, an increase of 6% compared to Q1. Operating income was $474 million, an increase of 8% when compared to Q1. Operating income margin was 15%. These results were primarily driven by increased stimulation activity in the Western Hemisphere and improved well intervention services in Asia. Partially offsetting these increases were lower specialty chemical activity in North America, resulting from the sale of our chemical business, decreased cementing activity in Latin America, and lower activity across multiple product service lines in the Middle East. In our Drilling and Evaluation division, revenue in Q2 was $2.5 billion, an increase of 5% when compared to Q1. Operating income was $338 million, a decrease of 4% when compared to Q1. Operating income margin was 13%. Revenue improvements were primarily driven by increased drilling-related services and higher wireline activity in North America and Europe-Africa. Partially offsetting these increases were lower software sales globally, decreased project management activity in Latin America, and lower wireline activity in the Middle East. Operating income decreased due to the seasonal roll-off of software sales. Now let's move on to geographic results. Our Q2 international revenue increased 5% sequentially. Europe-Africa revenue in Q2 was $1 billion, an increase of 19% sequentially. These results were primarily driven by improved activity across multiple product service lines in the North Sea, increased well construction activity in Namibia and Egypt, higher completion tool sales in the East Med, and increased project management activity in Angola. Middle East-Asia revenue in Q2 was $1.3 billion, a decrease of 2% sequentially. These results were primarily driven by lower activity across multiple product service lines in Kuwait, Iraq, and Qatar due to the conflict in the Middle East. Latin America revenue in Q2 was $1.1 billion, a 3% increase sequentially. These results were primarily driven by increased stimulation activity in Argentina and Mexico, and improved completion tool sales in Mexico. In North America, Q2 revenue was $2.3 billion, a 7% increase sequentially. This increase was primarily driven by higher stimulation and well construction activity in U.S. land, and higher fluids activity in the Gulf of Mexico. Moving on to other items. In Q2, our corporate and other expense was $83 million. We expect our Q3 corporate expenses to be about $80 million. In Q2, we spent $46 million on SAP S/4 migration, which is included in our results. For Q3, we expect SAP expenses to be about $45 million. Net interest expense for the quarter was $83 million. For Q3, we expect net interest expense to increase about $5 million. Other, net expense in Q2 was $31 million. We expect Q3 expense to be about $35 million. Our normalized effective tax rate for Q2 was 18.3%. Based on our anticipated geographic earnings mix, we expect our Q3 effective tax rate to be approximately 19%. Capital expenditure for Q2 was $235 million. For the full year 2026, we expect capital expenditures to be about $1.1 billion. Now let me provide you with comments on our Q3 expectations. In our Completion and Production division, we anticipate sequential revenue to be flat to down 2%, and margins to improve 125 to 175 basis points. In our Drilling and Evaluation division, we expect sequential revenue to be down 3% to 5%, and margins to improve 25 to 75 basis points. I will now turn the call back to Jeffrey.
Thanks, Eric. Here are the important takeaways from today's call. I believe the global outlook for Halliburton is strong and will lead to revenue growth and margin expansion. In the international markets, I am excited about Halliburton's contract awards and pipeline of future opportunities. Outside the Middle East, we expect our international business to grow low double digits this year. In North America, I am encouraged by the recovery we saw this quarter, and we will execute on our strategy to maximize value. Finally, I expect that our consistent focus on returns and capital discipline will drive long-term success for Halliburton and its shareholders. Let's open it up for questions.
分析師問答
Ladies and gentlemen, if you have a question or comment at this time, please press *11 on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, simply press *11 again. Again, if you have a question or comment at this time, please press *11 on your telephone keypad. Our first question or comment comes from the line of Arun Jayaram from Evercore. Your line is now open.
Hi. Good morning. Jeffrey, last quarter, I think you showed quite a bit of foresight by talking about the end of white space and the pickup of inbound activity in North American completions specifically. I was wondering if you could talk about how that evolved during the quarter, and how much of that is feeding into the margin outlook you have in the second half of the year, particularly in C&P?
Thank you, Arun. Look, as I described, we see a positive margin trajectory as white space is filled. We have seen rig adds and white space filled, and it is a very constructive environment. We are seeing price increases, and it is a steady march; it does not all happen at once. Anecdotally, we can describe price increases, but our primary focus is across the entire fleet, and I am very confident that we are seeing that trajectory continue into Q3. So white space built up. Looking forward to Q3 and Q4, I'm pleased with that. We are again focused on margin expansion across the entire fleet, not just one at a time. In some cases, when we work on price, that includes moving some equipment overseas to get better margins. When we think about maximizing value in North America, that includes getting better price and also maximizing the value of the entire fleet, which may include putting equipment to work where it has the highest margins.
That is great. Appreciate that. And then I was also wondering if you could follow up on last quarter when you itemized the impact of what we are seeing in the Middle East and talked about a $0.07 to $0.09 kind of headwind. Could you mark us to market on what you saw in the business and how you have thought about the dislocations as it pertains to the second half?
Yeah, Arun, Shannon here. I'll have Eric provide a little color on the guide, but let me talk about activity in general in the Middle East. It has been highly fluid. Customers are thinking about their long-term view. They are looking at capacity, risk, and really understanding how quickly they can bring activity back. In Q2, we saw a positive progression in the Middle East. Then over the last week or so, we have seen a bit of a step back with escalations. So we've had some starting up and then some pulling back. But it's important to emphasize the bigger picture: regardless of the pace of return, Halliburton will be ready. We have the operational footprint intact. Also important to note, the business we are winning in the Middle East is work that will get done. We talked about going back to work in Jafurah in unconventionals, the integrated work offshore, and the resumptions of our unconventional frac operation. The integrated work we have won offshore and, again, a really exciting project in Iraq with IFMS. The pace is highly dependent and fluid, but we are winning work that will mean something to Halliburton in the future.
Yes, Arun. Regarding what is built into the guide, our assumptions are for steady activity compared to where we are today. So we have not put in our guidance any recovery to pre-war levels, neither have we built in any major disruption. It is basically steady from where we are, but it is very difficult to forecast, as you understand.
Thank you.
Our next question or comment comes from the line of David Anderson from Barclays. Mr. Anderson, your line is now open.
Thank you, and good morning. You had a number of really nice wins in this quarter, and Europe-Africa outperformed as well. I was wondering if you could talk about your offshore business and how you see that performing over the next 12 to 18 months. Should we start to see an inflection by the fourth quarter? And what are some of the key drivers? You are talking about technology a lot as an enabler here, so could you expand a little bit more on how that is driving growth going forward?
Yes, David. I really like our position. A broader industry comment first: big deepwater markets like the Caribbean, the revitalization of tieback work in the deepwater Gulf of Mexico, Brazil, West Africa, Norway, and the East Med are all really busy markets for us. While we are seeing a tightening—rigs being tendered and a tightening of FPSOs in that market—I do not see that as a likely Q4 event; I see it more as a 2027 event, probably later half of 2027. But importantly, we are winning in all those markets. We just announced a sizable win with TotalEnergies in Suriname. We have a great footprint in Guyana, West Africa, Namibia, Nigeria, and Ivory Coast, and we are winning there, including Norway and the North Sea. So I really like the direction we are going offshore, and, again, we are winning in that space.
Maybe a technical comment, David: a lot of the wins you are seeing are built on two things—our value proposition to collaborate and engineer solutions to maximize asset value for our customers, and the technology advances we've made over the last few years, particularly with closed-loop geosteering. You saw us acquire Sikal; that's an important step toward better uptake of that technology and broadens our ability to implement it on more rigs than before. So I'm very positive about the technical side and how we're working with customers to deliver real results.
Appreciate those comments, Jeffrey. Maybe if we could shift to the international side—international unconventionals are becoming a bigger part of your portfolio. Vaca Muerta is clearly in growth mode; you talked about Algeria, I think you are also in UAE. Could you walk us through those various opportunities and your strategy? Also, what is the impact on C&P margins—does the ramp-up weigh down margins as you build up in different countries and are not yet at scale?
Yes. I'll comment on some of the activities and ask Eric to give more on the guidance. Argentina with YPF is a big win—a multiyear, multibillion-dollar deal with Zeus. Going back to Aramco and Jafurah, and if you look at the big markets—Argentina, Algeria, Kuwait, Saudi, UAE—we have frac spreads in all those locations doing unconventional work. What is important across these international unconventionals is a deliberate focus on using our scale with emphasis on returns, and putting technology at play globally. We compete on technology, not on brute horsepower. That has been the recipe for scaling globally.
Let me take the last bit regarding margins. Yes, there is some mobilization that goes on around these businesses, but it is part of our growth engines, and with scale comes margin expansion.
Our next question or comment comes from the line of Arun Jayaram from JPMorgan. Mr. Arun, your line is now open.
Good morning, team. Jeffrey, I was wondering if you could comment on whether Halliburton is taking market share in international markets, as highlighted by a number of awards in the Middle East and LATAM. Could you break down what's driving some of those share gains? Shannon mentioned these opportunities are margin accretive—can you touch upon that as we frame the second half of the year and into 2027?
Yes. Short answer is yes: we see these wins as future work that will be accretive to our business. A couple of drivers: the market is tight—there's not an overbuild—and that is a good thing for margin expansion. The macro outlook we are seeing should continue. Our value proposition and how we engage with customers on projects matters. We knew some of these projects were coming down the pipe. If you look at Halliburton's global portfolio, there are no real holes in it technically, and we compete in 70 countries. The combination of value proposition and technology has been a difference maker for us over the last 12 months.
Got it. And then maybe just to follow up on North America: you mentioned intention to perhaps mobilize equipment out of North America to meet international opportunities. Is that a reflection that you see better margin opportunities for unconventionals outside of North America?
It really comes down to price first. We are actively working our entire fleet and getting price in North America. But we have zero hesitation in moving equipment around the world—whether in C&P or D&E—to a place that generates returns for Halliburton. When there are opportunities, we will do that. That's what you've been seeing with C&P frac in Argentina and in the Middle East and Algeria and UAE. These places offer better margins and returns for Halliburton, and we will allocate equipment accordingly.
Great. Thanks a lot.
Our next question or comment comes from the line of Saurabh Pant from Bank of America. Your line is now open.
Hi. Good morning, Jeffrey and Eric. Eric, quick clarification: revenue guidance for Q3 calls for both segments—C&P flat to down 2%, D&E down 3 to 5%—and you said Middle East is steady. How should we think about the Q2 to Q3 revenue decline? Is it timing? Is it related to the chemical business sale? Maybe give a little color.
I'll give color on the guide. Starting with the D&E division, revenue is primarily affected by a drop in revenue in our drilling fluids and testing business—drilling fluids in the Gulf of Mexico and in Europe and across most international regions. There's nothing structural; it's simply rig moves and end of programs. Part of that is offset by the seasonal pickup of our software business in Q3. On the margin side, the improvement is due to mix: drilling fluid was a very large contributor to Q2. In Q3, we'll see less drilling fluids and more software sales, which run at structurally high margins, which explains the guidance. On the C&P side, top-line revenue: as you mentioned, we sold our chemical business, so we will not have that revenue in Q3. We expect to be slightly down in Latin America and Europe-Africa, which had a fantastic Q2 of 19%. Some of that is offset by the recovery of our Middle East business. On the margin side, the main drivers of improvement are North America land frac business seeing improved margins, the lift business, recovery of completion tool delivery in the Gulf of Mexico, and the Middle East recovery, as in D&E. Those are the main elements of our Q3 guidance.
Got it, Eric. That is helpful. Jeffrey, Shannon, another topic: Landmark, digital, software—there's been a lot of success. You acquired Sikal last quarter and today you announced acquisition of Informatics. Can you talk about the Landmark business and the opportunities over the next few years?
We really like our approach to digital broadly—both the software business and the automation business. From a software perspective, our absolute focus on open architecture is very attractive to customers. Strategically, AI, open architecture, deep science, and deep data management are the four areas I feel most confident about. We've had several strategic wins over the last year, and I expect those not only to grow but to strengthen over time. From an automation perspective, Zeus IQ, Logix, and Sikal are acquisitions and products that help our customers drill more precise wells or improve recovery in hydraulic fracturing for unconventional completions. Those automation and analytics products—Zeus IQ and Logix—have been a big part of recent awards. We are seeing that manifest in the contracts we are winning; it's a differentiator and gives me confidence these contracts will be accretive over time.
Thank you. Thank you.
Our next question or comment comes from the line of James West from Melius Research. Your line is now open.
Thanks. Good morning. Jeffrey, you guys have stuck to your knitting in North America as perhaps the only fully integrated service provider left in the market, and you've used it as a cash-flow-generating machine. That has led to significant growth internationally as you deploy capital and technology and take share as others have failed. Could you talk about that strategy and how you see its evolution in international regions that are now coming to you? The amount of awards in the last two weeks has been impressive—wanted to touch on how deliberate that strategy has been.
It is a deliberate strategy. We have market-leading capability and technology that is sought after internationally, and as that market grows, we intend to lead it. Unconventionals have proven to be a successful way to deliver oil and gas, and now the rest of the world is doing more of it; we plan to lead there. We're still focused on North America and see a solid trajectory there. We have leading margins in North America today and plan to keep those. As we push price up, there will be some bumping around in the market. That bumping around is part of bringing up equipment as we push pricing. We also have opportunities around the world to put equipment to work. I wouldn't describe this as a pivot; it's a conscious, deliberate strategy to take advantage of our competitive advantage globally while continuing to drive better performance in North America. The two are not mutually exclusive, but you will see some repositioning as we apply price pressure and redeploy equipment.
Okay, got it. As we think about moving equipment abroad, how should we think about the margin opportunity set? Eric gave guidance for next quarter showing significant sequential margin improvement. How do we think about the competitive landscape internationally when you move equipment? You're getting better pricing but also not needing as much incremental capital because you have the steel ready to go.
I'll talk a bit about margins, and then Shannon can talk about the competitive environment. Directionally, you heard the Q3 guide: margins are up in both C&P and D&E. We think that trend will continue into Q4 and into 2027, although you have to account for typical seasonality in Q4. We believe margins will continue to improve, with some Middle East unknowns around that.
James, on moving equipment, we consider efficiencies and logistics challenges, scope of work, duration, volumes pumped, stages, access to sand and water, and everything that goes with it. The decision comes down to: do we have term, and do we make better margins if we put it in country X, Y, or Z? We make those decisions every quarter. There are different levels of maturity for unconventionals around the world; for mature markets we move quickly, and for others we consider well-by-well versus long-term programs. We base decisions on those factors.
Got it. Thanks, guys.
Our next question or comment comes from the line of Derek Podhaizer from Piper Sandler. Mr. Podhaizer, your line is now open.
Hey. Good morning, everyone. You mentioned North America land helping improve C&P margins. The guide at the midpoint was about 150 basis points of improvement. Top line seems impacted by the chemical business sale. You talked about Latin America, Europe-Africa having a stellar quarter. Could you give more color on what you are seeing activity-wise impacting U.S. land frac revenue in Q2? The theme was absorbing the white space—are you still seeing that in Q3? Any indication on pricing to help reactivate some sideline equipment, or is international unconventional more attractive for deploying idled equipment? Some more color on U.S. land frac specifically impacting C&P would be helpful.
This is Shannon. We are seeing a positive margin trajectory in C&P and also in D&E. White space in Q2 was taken up and we're seeing the same in Q3. Importantly, we're seeing significant rig adds—over 30 rigs being added to North America. That not only supports our D&E business but raises the bar for activity moving forward. Capacity in the market is limited; there's very little slack. So while it doesn't happen overnight, it's a steady march. We look across our entire fleet, not just one fleet, when evaluating reactivation and pricing.
And maybe moving over to Jafurah: you won an award there deploying a frac fleet for the basin. Is this committed work? Is there upside to the fleet you're deploying there? Can you talk about some of the technology you could add into Jafurah as it scales over time? It's an exciting award—more color on that would be appreciated.
Yes, I'm really excited about it. It is committed scope—terms we're satisfied with, volumes and wells per pad. A big driver is the long-term work in gas and the ability to scale there, particularly unconventionals. We are bringing our automation, subsurface and surface technology to the kingdom. We see it as a long-term program for us moving forward.
Our next question or comment comes from the line of Neil Mehta from Goldman Sachs. Mr. Mehta, your line is now open.
Thank you. Jeffrey, Shannon, could you unpack the opportunity set in Iraq? We've seen large customers lean into it and there were big announcements last week. How do you think about margin and profitability associated with the opportunity set, and how are you thinking about the aboveground geopolitical and security concerns in the region historically?
Today, things are obviously fluid in Iraq. I was there a couple weeks ago and spent some time with leaders over the last week. I'm encouraged by the direction of policy within the country—there's a desire for companies like Halliburton to come to work in-country. As far as the war impact, activity is still below prewar levels, but I'm really excited about the integrated field management award we received. It encompasses everything Halliburton does—from field development planning and production optimization to well construction and digital and some EPC elements. It is a contract that is good for Iraq and foundational for us in Iraq—a program we think we can scale and build on. Broadly, it's great for Iraq and very good for our Middle East business.
And a quick follow-up for Eric on share repurchase: 2026 has been volatile, including in your share price. How do you think about the buyback pace? Do you keep roughly the $200 million run rate or are you opportunistic if shares are trading lower?
We haven't changed our philosophy around buybacks, Neil. We were a bit more conservative at the beginning of the year due to a different environment. Now our thinking is to reestablish pretty much the run rate we've had for the last couple of years. You can expect buybacks to pick up, but we'll continue to do this on a continuous basis rather than jumping into the market at once.
Our next question or comment comes from the line of Doug Becker from Capital One. Mr. Becker, your line is now open.
Thank you. It seems like the international growth engines are revving up. Back in January last year, you mentioned international growth engines could add $2.5 billion to $3 billion annual revenue in three to five years. Is that still a reasonable target, or is there upside? Could you give a sense of how each of the four engines is progressing relative to your expectations?
Doug, we think we are ahead of schedule on that $2.5 billion to $3 billion by 2028 target and see upside to that number. We really like our position offshore and on the drilling side. The acquisition of Sikal has strengthened our offshore technology advantage. Unconventionals—YPF, Aramco work—are good business for us. The technology we deploy internationally will give us more legs in the future. On intervention and lift, we have a significant footprint in intervention—slickline, coiled tubing—and we are excited about the trajectory of our artificial lift business globally. So yes, we see upside on that number.
That is encouraging. Eric, for the second quarter C&P margin, guidance implied 50 to 100 basis points sequential improvement; you were a little below that. How much of the difference was related to the chemical business sale versus lower Middle East activity?
Both divisions were a little higher than guidance on revenue, and on the lower end on margins overall. For C&P, we had higher maintenance costs and mobilization of equipment that hit the numbers. We had delays in the Gulf of Mexico—which is structurally a high-margin business—and it was essentially product-line mix that drove the results. There isn't a lot more to read into it beyond those factors.
Our next question or comment comes from the line of Scott Gruber from Citigroup. Mr. Gruber, your line is now open.
Thanks. Good morning. I wanted to stay on the near-term margin guide. Eric, you mentioned mobilization impact in C&P. Broadly, given the pace of growth and new contract wins, are mobilization and start-up costs a significant weight on margins today? Are those costs fading or still impacting normalization?
I can't give you an exact number for mobilization impact because mobilization or movement of equipment happens at all times as we optimize asset utilization. The contract wins we've had have elevated that number a little bit, so there are some headwinds related to mobilization, but I cannot quantify it exactly.
And on the medium to longer-term outlook for improvement: you mentioned new work is margin accretive. Typically, incrementals for Halliburton are in the 30% to 35% range. With new contracts propelled by new technologies, mobilization and start-up costs settling down, and potential normalization in the Middle East, should we think about a couple years of above-normal incrementals—2027 and 2028—or is that too optimistic?
Your incremental expectations are not wrong; those are my expectations as well. We are getting underway. I like the trajectory in North America. We're winning big contracts globally. There will always be mobilization associated with those, but I still expect revenue growth and margin expansion. Those types of incrementals are not inconsistent with my expectations going forward.
Can we do better than normal on incrementals given technology and the Middle East coming back?
Yes, it is possible. The Middle East is a bit of an odd mix right now—we have a pipeline of work that we know will be done and will start late this year into next year across different parts of the world. So while there are near-term dynamics—slower Middle East, improving North America—we do see upside to incrementals.
Our next question or comment comes from the line of Marc Bianchi from TD Cowen. Mr. Bianchi, your line is now open.
Hey. Thank you. Can you share the impact of the Middle East on the business in the second quarter?
It pretty much landed where we thought it would land. It's difficult to quantify because you can't easily say what activity would have been without the conflict. But in terms of how we were thinking the quarter would evolve, the results from the Middle East were pretty much in line with our expectations.
And on the comment that international business ex-Middle East will grow low double digits, what do you think the broader market is doing? Can we infer you are growing above the broader market because of the contracts you've announced?
Yes, I do believe we will outgrow the broader market. The growth engines are driving this and are areas where we have clear competitive advantage. They are outgrowing the broader market, and I expect Halliburton to be at the very high end of that growth. The growth in our position in deepwater continues to strengthen, much of it outside the U.S., and our strength in the Middle East as it returns is a meaningful step forward—all on the back of our technology and value proposition, which I believe are differentiated.
That concludes our Q&A session at this time. I would now like to turn the conference back over to management for any closing remarks.
Before we wrap up today's call, let me close with this. I believe the global outlook for Halliburton is strong and our differentiated technology and value proposition set the stage for Halliburton's future revenue growth and margin expansion. I look forward to speaking with you next quarter. Let's close out the call.
Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day. Speakers, standby.