HAL - NYSE

Good day, and thank you for standing by. Welcome to the Halliburton Company, Second Quarter 2023 Earnings Conference Call. At this time all participants are in a listen-only mode. After the presentation there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today David Coleman, Senior Director of Investor Relations.

Hello! And thank you for joining the Halliburton Second Quarter 2023 Conference Call. We will make a recording of today's webcast available for seven days on Halliburton's website after this call. Joining me today are Jeff Miller, Chairman, President and CEO and Eric Carre, Executive Vice President and CFO. Some of today's comments may include forward-looking statements reflecting Halliburton's views about future events. These matters involve risks and uncertainties that could cause our actual results to materially differ from our forward-looking statements. These risks are discussed in Halliburton's Form 10-K for the year ended December 31, 2022, form 10-Q for the quarter ended March 31, 2023, recent 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. 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 and presentation section of our website. Now, I'll turn the call over to Jeff.

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 upcycles 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 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 upcycle. 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 a profitable international growth. We are clear in 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

Thank you, Jeff, and good morning. Before I begin the financial review, I'd like to discuss one item. In the second quarter, we kicked off our SAP S4 upgrade and recorded a $13 million expense, or about $0.01 per diluted share, in our Q2 operating results. Future expenses will be both included in our operating results and in our quarterly guidance. Here are a few more details on the upgrade. This upgrade will take place over the next 2.5 years, concluding around Q4, 2025. We expect it to provide efficiencies, cost savings, and advanced analytics that will benefit Halliburton and our customers. The total project investment should be approximately $250 million, $50 million this year, and $100 million in each of the next two years. Upon completion, we expect significant ongoing savings, which will pay back the investment in about three years. Now, let me move on to our quarterly results. Our second quarter reported net income per diluted share was $0.68. Excluding the effect of the transaction in Argentina, our adjusted net income per diluted share was $0.77. Total company revenue for the quarter was $5.8 billion, a 2% sequential increase, while operating income was $1 billion, a sequential increase of 4%. Operating margin for the company was 17.4% in the second quarter, a 329 basis points increase over second quarter of 2022 adjusted operating margin. These results were primarily driven by strong international activity across both divisions, along with improved pricing. Beginning with our completion and production division, revenue in the second quarter was $3.5 billion, a 2% sequential increase, while operating income was $707 million, an increase of 6% sequentially. C&P delivered an operating income margin of 20%. These results were due to increased activity from multiple product lines in international markets and higher artificial lift activity in North America. In our Drilling and Evaluation division, revenue in the second quarter was $2.3 billion, a sequential increase of 2%, while operating income was $376 million, a sequential increase of 2%. D&E delivered an operating income margin of 16%. These results were driven by higher drilling activity and increased fluid services in key regions including Middle East and Latin America, partially offset by seasonal roll-off of software sales across multiple regions. Now, let's move on to geographic results. Our second quarter international revenue increased 7% sequentially due to solid product sales, activity increases and pricing gains across multiple product lines. These results were impacted by lower software sales in the eastern hemisphere. In North America, revenue in the second quarter was $2.7 billion, a 2% decrease sequentially. This decline was primarily driven by decreased stimulation activity in U.S. land, partially offset by increased artificial lift activity in U.S. land and higher activity across multiple product service lines in the Gulf of Mexico. Latin America revenue in the second quarter was $994 million, a 9% increase sequentially, resulting from higher completion tool sales in Brazil and improved activity across multiple product service lines in Mexico and Argentina. Partially offsetting this increase is reduced activity in the Caribbean across multiple product service lines. Europe/Africa revenue in the second quarter was $698 million, a 5% increase sequentially. This improvement was primarily driven by increased fluid services across the region and higher completion tool sales in Angola and Norway. Middle East/Asia revenue in the second quarter was $1.4 billion, a 6% increase sequentially, largely resulting from higher completion tool sales in Saudi Arabia and higher Wireline activity, drilling services, and stimulation activity in the region. This improvement was partially offset by decreased project management activity in Saudi Arabia. Moving on to other items. In the second quarter, our corporate and other expenses was $59 million. For the third quarter, we expect our corporate expenses to increase by about $5 million to $10 million. As noted earlier, in the second quarter we spent $13 million or about $0.01 per diluted share on SAP S4 migration, which is included in our operating results. For the third quarter, we expect these expenses to be approximately $20 million or about $0.02 [ph] per diluted share. Net interest expense for the quarter was $92 million. The increase this quarter was primarily related to the reduction of interest income as a result of the Argentina transaction. For the third quarter, we expect this expense to remain approximately flat. Other net expense for the quarter was $32 million. For the third quarter, we expect this expense to remain approximately flat. Our effective tax rate for the second quarter came in at approximately 21.3%. Based on our anticipated geographic earnings mix, we expect our third quarter effective tax rate to increase by approximately 50 basis points. Capital expenditures for the second quarter were $303 million. We anticipate that for the full year, capital expenditure will be approximately 6% of our revenue. Our second quarter cash flow from operations was $1.1 billion and free cash flow was $798 million. We expect to generate free cash flow for the full year 2023; that is 30% to 40% higher than last year. Finally, we repurchased $248 million of our common stock during the second quarter. Now, turning to our near-term operational outlook. Let me provide you with some comments on how we see the third quarter unfolding. In our Completion and Production division, we anticipate sequential revenue to be essentially flat with the second quarter and margins to remain approximately flat. In our Drilling and Evaluation division, we anticipate sequential revenue to increase in the low single digits and margins to increase 25 to 75 basis points. I will now turn the call back to Jeff.

Thanks, Eric. Let me summarize our discussion today. Our international business is growing at a strong pace across all regions. I expect our differentiated technology offerings, selective contract wins, and our unique collaborative approach to working with our customers to deliver higher international margins and growth for Halliburton. Our strategy to maximize value in North America is driven by capital efficiency, differentiated technology and alignment with high-quality customers. I expect this will allow us to generate solid financial performance. I expect that the execution of our strategy in this long-duration upcycle will deliver better returns, more free cash flow, and more cash back to shareholders. And now, let's open it up for questions.

[Operator Instructions] Our first question will come from the line of David Anderson with Barclays.

Hi! Good morning, Jeff.

Hey!

So, North America's slowing down a bit. International's starting to accelerate, to be expected. But I was wondering if you could perhaps take a bit of a step back and talk about how you see the primary markets trending in the next kind of 12 to 24 months in terms of NAM [ph], Middle East, and offshore. Maybe set LATAM aside, which has been a steady growth market. I guess my question is, in terms of the cadence, how do you see the trajectory of each of these markets playing out? You lowered NAM spend. I think you were saying 10% up from down from 15%. So is that kind of flattish in the second half of the year? And then how do you see the ramp up in the Middle East and then the timing of offshore? I know it's a lot, but maybe kind of this bigger picture, how you see those markets trending [inaudible]?

Certainly. And look, I'm as confident as I have ever been in the duration, the long duration of this cycle. And that's rooted in attractive commodity price and really the growth in demand for oil, so I'll start there. I think the offshore piece of this, we're super excited about it. If we include Gulf of Mexico, we're eclipsing 50% of our revenues internationally are offshore, and so all of our service lines are represented there. I think the cadence as I look over the next year, let's say year or so, I mean it just takes time to get this work underway. I'm just back from a trip and we were looking at projects that, you know they have to get rigs, get plans, get agreement from governments, but it's starting and I expect it continues to build into ‘24 and beyond. I mean, these are the kinds of projects that take a decade to do and so… You know Middle East, I see the same thing. The number of rigs being mobilized in the Middle East, that takes some time to do. But we are beginning to see it. We are seeing it, but my view is that we’ll continue to build over the next 12 or 24 months. Coming back to North America, I gave you an outlook on the second half of the year. But I think what's most important is, when I look into ‘24, I mean commodity markets are getting more constructive, oil prices firming up, gas seems to have found its footing you know and expect that ramps. We're seeing some consolidation with customers and that means that bigger customers do more planning through the cycle. They are committed to executing plans over a longer term and service intensity in North America never lets up. In fact, it only gets harder and you can't – you got to – you got to work harder just to stand still. So all of this is constructive for Halliburton's business as I look out into ‘24 and beyond. And you know, and some of that in North America, I mean just that it’s backed up by the pace of e-fleet contracts that we're seeing. We've had more contracts last quarter. We've even signed another one this quarter, and that's really for work that starts in ‘24 and goes ‘24, ‘25, ‘26. So, there are a lot of reasons that I see ‘24 looking super strong for us.

And then, Jeff, maybe we can just kind of get into the heart of kind of where a lot of the chatter has been during the quarter. Obviously, rig count has been falling. We've been hearing about pricing and pumping getting softer. Of course, a lot of this is coming from your competitors who would love to pay less for these services. Can you give us some insight in kind of what you're seeing in the pricing trend? Is the softness kind of really stuck on the Tier 2 side? In your comments you talked about your

Well, I think that – you know I've told you what we're doing, which is retiring older equipment and transitioning to electric and so I think that's an important factor. We really don't see, we don't participate in the bottom part of that market particularly at all, really where that’s the spot type market. Most of our work, I'd say over 70% of our work is with large privates and publics and so – you know these are customers that execute their plans and they do execute their plans. And from our perspective, the performance – we continue to see our performance improving, okay, even as we add electric, but also even on our diesel fleets. And differentiated service performance, technology is getting better. I mean those are things that drive not only margins, but they are also part of the dialogue around what's it take to actually run a high-performing business that requires engines, transmissions and people. And we really haven't seen any deflation in those things.

Our next question comes from a line of Arun Jayaram with JP Morgan.

Hey Jeff, maybe just a follow-up to David's question. One question we get is, how do softer conditions called in the spot market influence pricing on your dedicated fleets or as you start some of your price negotiations on 2024 in North America?

Well look, I think that – you know again, we've got a little exposure to the spot as I described. I would say broadly, as we look ahead, high-performance, high-quality services really matter and we see a lot of bifurcation there and we're going to continue with our e-fleet rollout, which is sort of a whole different category of service. It's actually lower cost or better performance for our clients, but also lowers our total cost of ownership. And so I would say we're planning to deliver high-quality service and we really don't see any point in burning up equipment with no margins, that's not a good direction. It actually has longer-lasting impacts if surface equipment isn't taken care of.

Okay, fair enough. And Jeff, I wanted to get your thoughts on offshore. Obviously, one of the trends the market has been observing is just strength in offshore markets. Could you talk about how it's positioned from a product line perspective offshore and what you're seeing perhaps in the Gulf of Mexico to mitigate maybe some of the risk of lower activity in North America?

Well look, we're heavily levered towards the offshore business. In fact, all of our service lines participate in our offshore business and we've got leading positions in cementing and HCT. You know our drilling business, we've talked a lot about where we're going with drilling and Wireline and so that's an important business for us. It is higher service intensity, which means that it takes more equipment to do and so we really like that. I expect the Gulf of Mexico continues to strengthen. And again, we talked about last quarter, sort of the percentage of our offshore international business anyway as a percentage continues to grow. And so I think that the offshore business is going to be very important for Halliburton, and the Gulf of Mexico and all around the world.

Our next question comes from a line of James West with Evercore ISI.

Hey! Good morning, Jeff. Good morning, Eric.

Morning.

Good morning, James.

Look, it's not a perfect science in terms of one-in, one-out, but it’s generally one-in, one-out over time. And so the type of equipment for example that we would retire is typically higher cost to maintain, and so when we retire a fleet, we sort of blow the parts back into the current fleet and that lowers the cost or improves the margins of the existing fleet. But we're replacing – say replacing – we're adding equipment only as it's demanded by clients, so that's the difference. We're not building it to replace it. We're building it for contracts where there is commitment to return the capital and also the return on capital inside of the contract, and so that's what's driving the pace of replacement.

Okay, okay, that makes sense. And then on the international and particularly offshore side, as these rigs are mobilizing and getting set up, governments, signing contracts, etc., and the companies your customers are sourcing, the Service Equipment and Service Products, what's the conversation like with them around pricing and kind of – or is there even really much of a concern about pricing, because they just need to get the equipment?

Well, I think that we're seeing pricing moving up, whether it comes in the form of a tender or a dialogue, and a lot of that is around tightness, it's also around efficiency and performance of our equipment. We've just done a lot to structurally overhaul and technically overhaul a lot of our drilling business and I talked a bit about some of the Wireline things that we're doing, so you know. The dialogue is certainly price is up and it comes in a few forms, whether it's a negotiation or a discussion or in some cases we call and say we just don't have it, which is again, driving prices up.

Our next question comes from the line of Neil Mehta with Goldman Sachs.

Yes, thanks so much. Jeff, maybe I’ll start with you to talk a little bit about return of capital to shareholders and I'll let you go anywhere you want with this. You did buy back $250 million worth of stock in the quarter and you've been pretty steady in terms of that dividend coming back to shareholders as well. As you think about the repurchase program, how aggressive do you intend to be? Do you view this as more of a radical program versus – or an opportunistic one?

Look, I think that we've committed to return at least 50% free cash flow back to shareholders. The reality is it's going to be more than that. I think what we do is we build a base case around what we return to shareholders and then we're able to flex up from that and I think that's you know some of what you're seeing. Eric, do you want to add to that?

I think it’s – you covered it well, I think. The – I mean, the main focus in the organization right now is to continue to generate free cash flow. That's really the first priority, and ensure that we have enough and actually we're generating enough free cash flow right now to continue to buyback share, but also to continue to work and further strengthen our balance sheet. So, if we look forward, we intend to do both, even though the buyers right now is clearly on continuing to buy back more shares.

Thanks Eric and the follow up is for you. It's just, I hear you made some comments around this in the script, but any Q3 considerations you want us as a market to keep in mind as we think about and building this sequential model into next quarter.

No, I think we covered it in the prepared remark and Jeff mentioned it, as well as you look throughout the remainder of the year. I know there's a lot of question on North America, so maybe I'll repeat what we indicated, which is H2 is going to be a little lower than H1 for North America. Q3 is a bit down compared to Q2 and we're expecting Q4 to be flat relative to Q3, considering there were some holidays and seasonality as well. So you combine that with the guidance by division and I think it gives you a really good perspective on how we see the second half of the year unfolding.

Our next question comes from the line of Scott Gruber with Citigroup.

Yes, I wanted to say on the second half outlook, typically frac activity does slow down into the holiday season. But the gas forward curve is actually quite encouraging today Jeff. As you mentioned in your conversation earlier, the conversations with clients today, are they suggesting that they are going to bring back some gas completion activity later this year or is that more likely to wait until next year, after the budget reset process?

Look, I think that – I'm not going to try to call tops and bottoms, I'll let others do that. But I think that, the outlook I described for 2024 is consistent with what you just described and so when we see that, I don't have precision around the date. But there's no question that gas is firming up and that there'll be LNG takeaway and that the gas market will be busy. It's a question of the date, but I expect that build in ‘24, could it come sooner? Obviously, it could and I would say oil price is quite constructive today as well, which may bring some smaller players back into the market. But all of these things structurally from a cycle standpoint are very, very positive and as I look at ‘24, sometime between now and there, we see improving activity.

Got it. That makes sense. Yes, and I did want to touch on the oil side as well. Obviously last year well productivity was down and that was starting this conversation around the need just to drill more wells to kind of offset that productivity loss. This year we do seem to be at maybe a localized plateau on well productivity on the oil side in the U.S. But is that part of the conversation here with customers that you know over time that they are going to have to be drilling more wells in the U.S. given that productivity decline? Is that kind of top of mind as they kind of start to think about ‘24 needs or is that a kind of off the horizon still?

No, I mean let me frame that differently. I think that this is my point around service intensity, meaning it takes more work to produce the same over time unless there are step changes in terms of either efficiency or insight. And so, we talk about our smart fleet offering quite often, but the reality is that's part of our technology portfolio to help customers better understand productivity of rock and where the frac is going and how to design fracs that can be more productive over time, so I think that's an important step. But there is no question when we think about North America and we even saw that during the COVID when the pace at which North America declined following sort of the near slowdown or near stoppage in North America and so I think those are well understood by the market and our clients. And so when I think about the way forward in North America, that features in it and is clearly part of our view as to why (a) there'll be more activity over time, even to stand still, and further why e-fleets in our case are so valuable, because they really do help clients achieve better productivity and lower costs. So I think that that's one of the reasons we're so focused on that and I think that's how it plays out.

Our next question comes from the line of Luke Lemoine with Piper Sandler.

Hey! Good morning, Jeff and Eric.

Morning, Luke.

Jeff – Morning! Jeff, nice job on that North America margins in 2Q, I mean those flat, and you talked about those remaining strong for the balance of the year. It kind of sounded like you're not expecting these to be materially different from the first half. Is that correct?

That's correct.

Okay. And then Eric, 2Q D&E margins for better inter guide. Can you maybe walk us through what changed relative to your expectations?

Yes, I think, I mean there's a lot of moving parts in the D&E margins. I think we just delivered better across the board in most product lines and in all of the regions. There's really not a lot more to say about that solid execution from all product lines across the globe.

Okay, got it. Thanks a bunch.

Our next question comes from a line of Stephen Gengaro with Stifel.

Hi! Can you hear me?

Yes.

Yes.

Oh, sorry. I got cut-off. Thanks. Good morning, everybody. Two things to me, the first is, we've written and we've heard from others that, the consolidation in the U.S. frac business and then just the better behavior by you and many others has led to a different dynamic in the business. I’m just curious, as you've seen a little bit of obviously rig count softness and frac spreads have come off a bit, are you seeing – can you visibly see any different approach to pricing across the industry yet? Is it too early to tell? Just curious if there's any proof of concepts here yet?

Look, I think there is quite different, and I think it's different along a couple of dimensions. Number one, quite different in the sense of the type of equipment that we are putting into the market with e-fleet. So that's a very different dynamic than we've seen in the past. And I think that the, pull for those from customers is meaningful and so that's one key difference. And I think from the other perspective, the bifurcation and performance is an important point. And I think that we've seen quite a difference in our performance and that still matters. In fact, that matters a lot. And I think that, sort of the overall – we've always replaced our equipment, invested in our equipment and technology. But I think that, the idea that equipment runs in perpetuity or that it can be run to the ground and then somehow rebuild does not realistic. And so I think there's some understanding around that today that there probably wasn't before.

Thank you. And when you – you touched on this a little bit earlier, but when we hear from E&Ps and just industry data in general, that well quality is curating a bit. Is that a net positive you think for the completion side of your business? How do you think about the impact that has or is it kind of too gradual to really jump out?

Yes look, I mean, what that drives is more technology and more service intensity, both. I mean, that's the upshot of what you just described for our customers and we see that. And so we're – you know like you said, I'm quite confident about – I'm confident in North America's contribution to the overall oil and gas supply for the world. It's important and sustaining mass going to require investment and a lot of technology and a lot of just repetitions. So I think it's not very well for Halliburton.

Our next question comes from a line of Marc Bianchi with Cowen.

Hi! I just want to ask one more on sort of the North America outlook for the back half. I know it's been asked several times, but just because so many people seem to be focused on that. I think people are surprised by fourth quarter being flat quarter-over-quarter and margins seemingly holding in. Would you anticipate that overall the profit for Halliburton or the EPS should be flat to up in the fourth quarter versus the third quarter?

Yes. I mean, we're not going to guide Q4, but directionally everything is intact.

Yes. Okay, great. Thanks for that Jeff. The other one I had is just a bit of a modeling question on the corporate line for you, Eric, because we've got this new software element that we need to include. So if I take those two together, the corporate plus the software, it looks like we should be something in the mid-80’s of a negative number and then that should be sort of on a $20 million to $25 million run rate beyond third quarters. Is that the right way to think about that software impact.

Yes, I mean we guided the two separately, so as to give you clarity as to what they are. So we guided corporate going into Q3 to be $5 million to $10 million up from Q2, that's essentially a timing issue. We were a bit under guidance in Q2, so that gives you the corporate number. And then in terms of SAP which we guided as a separate line, we guided to $20 million or about $0.02 and what we'll do on that one, we give you the yearly number so $50 million this year, $100 million next year, $100 million the following year, so you can kind of run your models on the yearly basis and then we'll give you more color quarter-to-quarter. Because some of it depends on how the rollout is happening right. So we want to do that on a quarter to quarter basis.

Our next question comes from the line of Kurt Hallead with Benchmark.

Hey! Good morning Jeff and everybody. Hey Jeff, I'm kind of curious. On the international front right, just are you seeing the prospect of maybe an acceleration in an activity whether that be in the Middle East or Latin America, maybe relative to the beginning part of the year. I know that there is some questions about the OPEC production cuts, and that may be having a negative impact on activity. But I'm kind of curious as to whether that – you know there's a situation in the Middle East where there's a greater sense of urgency and maybe a push to move some projects a little more quickly.

OPEC cuts absolutely do not have an impact on activity. I’m being crystal clear around that. These are customers with plans that are meeting global demand and it is unrelated to cuts and OPEC. I would say that the growth, I wouldn't describe it as an acceleration, I would describe it as continued growth, and that's very positive. That's a good thing, because that's consistent with the long duration nature of this cycle. So it's not a spike to come at some point in time in the future to then level out. I think what we're going to continue to see is steady growth in activity, kind of like we've seen. Although does the pace pick up? It might some in fits and starts as big projects get started. But I think overall, this is a great setup for Halliburton in terms of timing and pacing and absolutely consistent with how we see the length of the cycle. Meaning, it's going to take quite a period of time as barrels are invested in and reinvestment is made.

Okay, that's great. I appreciate that color. Now, maybe then focusing again on the North American market, you've given some clear deep expectations on what you see there. With the fact that you guys are getting rid of older equipment, focusing on e-fleet, you mentioned a couple of long-term contracts. How do you see the prospects for Halliburton to continue to outpace the market if the market is just going to be flat?

Well, I think I've described what we're going to do and I think that sort of the – we’re focused on what we're doing in terms of – you mentioned e-fleet, but that's an important thing, and that's an important opportunity for Halliburton, it's somewhat unique for Halliburton. I also believe that it's – as I look out into the future, as I said I see, we talked to extensively about service intensity and technology and I think both of those are going to be very high demand as we get into ’24, and I would say for what we do, it's an high demand now. And so you know, I think the long term for North America clearly points towards what we do uniquely at Halliburton and so I feel pretty confident about that.

That concludes today's question-and-answer session. I'd like to turn the call back to Jeff Miller for closing remarks.

Yes, thank you and thank you all for participating in today's call. Let me close out the call with this. Halliburton delivered an impressive first half of 2023 and 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 to shareholders. I look forward to speaking with you next quarter. Please close out the call.