Halliburton (NYSE:HAL) released second-quarter financial results and hosted an earnings call on Tuesday. Read the complete transcript below.
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Summary
Halliburton Company reported Q2 2026 revenue of $5.7 billion, with an adjusted operating margin of 12%.
International revenue reached $3.4 billion, marking a 6% year-over-year increase, while North America revenue remained flat at $2.3 billion.
The company generated $824 million in cash flow from operations and $668 million in free cash flow, and repurchased $200 million of common stock.
Halliburton's international strategy focuses on technology and execution, with significant wins in offshore and unconventional markets.
In North America, the company aims to maximize value through technology and pricing, while maintaining a balanced portfolio across regions.
Management expressed confidence in future revenue growth and margin expansion, driven by international opportunities and technological advancements.
The future outlook includes a focus on energy security, with expectations for long-term strategic reserves rebuilding and diversification of supply.
Halliburton expects international business growth in the low double digits this year, with continued progress in North America through pricing improvements and technology deployment.
Full Transcript
OPERATOR
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 speaker's presentation, there will be a question-and-answer session. To ask a question at this time, you need to press Star 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.
David Coleman, Senior Director, Investor Relations
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 Jeff Miller, Chairman, President and CEO, Shannon Slocum, Executive Vice President and COO, and Eric Carre, Executive Vice President and CFO. Some of 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 materially differ from our forward-looking statements. These risks are discussed in Halliburton's Form 10-K for the year ended December 31, 2025, Form 10-Q for the quarter ended March 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 and presentation section of our website. Now I'll turn the call over to Jeff.
Jeff Miller, President and Chief Executive Officer
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 meaningful and 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, but 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'll turn the call over to Shannon.
Shannon Slocum, Executive Vice President and COO
Thanks, Jeff. 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've seen in many years. In the second quarter, Halliburton recorded international revenue of $3.54 billion and secured a number of significant awards.
I'll 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 lows, 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's 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 and 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 projects offshore, and the resumptions of our unconventional fracturing operations in Jafurah all 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 STIM vessel, with the first operations of its multi-year contract expected at year-end. This deployment strengthens our leading global STIM business and importantly represents the first offshore implementation of OCTAVE, our automated pumping control system.
Second, in directional drilling, 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 in 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 its 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 D&E division grew 9% year over year.
In completions, our focus remains on returns, not share, and our option to redeploy equipment to international markets set a high bar for any North America fleet reactivation. Halliburton's maximized 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 adds near-well and crosswell subsurface measurements, expands data inputs, and gives customers well-by-well treatment control and simulfrac 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 a 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 Carre — Executive Vice President and Chief Financial Officer
Thank you, Shannon, and good morning. Our Q2 reported net income per diluted share was 64 cents. Adjusted net income per diluted share was 55 cents. 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% when 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 Mediterranean, 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 expenditures for Q2 were $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 Jeff.
Jeff Miller, President and Chief Executive Officer
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.
OPERATOR
Ladies and gentlemen, if you have a question or comment at this time, please press Star 11 on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, simply press Star 11 again. Again, if you have a question or comment at this time, please press Star 11 on your telephone keypad. Please stand by while we compile the Q&A roster. Our first question or comment comes from the line of Steve Richardson from Evercore.
Your line is open, sir.
Steve Richardson, Analyst at Evercore ISI
Hi, good morning, Jeff. Last quarter I think you showed quite a bit of foresight by talking about the end of white space and the pickup of inbounds in North American completion. Specifically, I was wondering if you could talk about how that evolved during the quarter, price, costs, and how much of that is feeding into the margin outlook you have in the second half of the year, particularly in C&P.
Jeff Miller, President and Chief Executive Officer
Yeah, thank you, Steve. Look, as I described, we see positive margin trajectory and white space is filled. We've seen rig adds, we're seeing white space filled, and it's a very constructive environment. We are seeing price increases and it's a steady march. It doesn't all happen at once. Anecdotally we can describe price increases, but what our primary focus is is across the entire fleet and very confident that we are seeing that trajectory continue actually into Q3.
So white space filled up. Looking forward, Q3, Q4. Pleased with that, and so we are again focused on margin expansion but all around the fleet, the entire fleet, not just one at a time. And in some cases when we work on price, that includes moving some equipment overseas to do better margins. And so when we think about maximizing value in North America, that includes moving on price and also maximizing the value of the entire fleet, which will include putting equipment to work where it has the highest margins.
Steve Richardson, Analyst at Evercore ISI
That's great, appreciate that. And then I was also wondering if you could just follow up on, you know, last quarter you all were talking about sort of itemized the impact of what we're seeing in the Middle East and talked about a 7 to 9 cent kind of headwind. Can you maybe just market to market on what you saw in the business and how you've thought about the dislocations as it pertains to the second half?
Shannon Slocum, Executive Vice President and COO
Yeah, Shannon here, and Steve, I'll have Eric provide a little more color on the guide. I guess let me just talk about activity in general in the Middle East. It's been really highly fluid. Customers are thinking about their long-term view, they're looking at capacity, they're looking at risk and really understand how quickly they can bring that back in. Q2, we saw a positive progression in the Middle East of what was going on. And then when we got here over the last week or so, obviously we've seen a little bit of a step back of escalations.
So we've kind of had a little bit of starting up and then a bit of pulling back. But I think it's important to maybe emphasize the bigger picture here as far as we think about what's going on in the Middle East. Regardless of the pace of when it comes back, Halliburton will be ready. We have the operational footprint intact. And also important to note is the business that we are winning in the Middle East, which is work that is absolutely going to get done.
We talked about going back to work in Jafurah and unconventional, the integrated work we won in re-entry, the integrated work we won offshore, and also a really exciting project in Iraq with IFMS. So the pace is highly dependent and fluid, but we're winning work that will mean something to Halliburton in the future.
Eric Carre — Executive Vice President and Chief Financial Officer
Yes, Steve, it's Eric regarding what's built in the guide. So our assumptions are for steady activity compared to where we are today. So we haven't put in our guidance any recovery to pre-war level, neither have we built in any major disruption. So it's basically steady from where we are. It's just very difficult to forecast as you understand.
Steve Richardson, Analyst at Evercore ISI
Thank you.
Jeff Miller, President and Chief Executive Officer
Thank you.
OPERATOR
Our next question or comment comes from the line of David Anderson from Barclays. Mr. Anderson, your line is now open.
David Anderson, Analyst at Barclays
Thank you and good morning. So you had a number of really nice wins in offshore this quarter. 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 here by the fourth quarter and what are some of the key drivers? You're talking about technology a lot as an enabler here, so maybe if you could expand a little bit more on how that's driving growth going forward.
Thank you.
Jeff Miller, President and Chief Executive Officer
Yeah, thanks, David. I guess first, really love our position. Maybe just an industry comment and then maybe a bit more about Halliburton on the inflection point. Yeah, big markets around the world, deepwater markets like in the Caribbean, the revitalization of tieback work, deepwater Gulf of Mexico, Brazil, West Africa, as you mentioned, Norway and East Med are all really busy markets for us. And while we're seeing a tightening of— we're seeing rigs being tendered for those spaces, we're seeing a tightening of FPSOs in that market.
I don't see that as probably a Q4 event. What I see that as more of a '27 event, probably later half of '27. But I think really important here is to emphasize the bigger picture here: we are winning in all those markets. Just announced a really sizable win with TotalEnergies in Suriname. We still have a great footprint with Guyana there, West Africa—Namibia, Nigeria, and even Ivory Coast have a good footprint there, are winning there. And obviously Norway, North Sea has been a big market for us moving forward.
So really like the direction we're offshore going. And I think again more importantly is that we're winning in that space. Maybe a comment technically, Dave, just to follow that up. I think a lot of those wins, most of that winning that you're seeing us do, is on the back of two things really: our value proposition to collaborate and engineer solutions to maximize asset value for our customers, and technology advances that we've made over just really the last few years.
With closed-loop geosteering, for example, you saw us acquire Sacal. That's an important step towards better adoption of that technology. It broadens our ability to implement that technology on more rigs than before, and so very positive technically around what we're doing and, again, how we're working with our customers—delivering real results.
David Anderson, Analyst at Barclays
Appreciate those comments, Jeff. Maybe if we could shift over 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're also in UAE and Jafurah. I was wondering if you could put all this together and walk us through those various opportunities and your strategy. And I'm also wondering about the impact on the C&P margins. Is the ramp-up kind of weighing down margins to a certain extent as you're building up in these different countries and you're not quite at the scale you want to be?
Thank you.
Shannon Slocum, Executive Vice President and COO
Yeah, let me, I'll comment on some of the activities and ask Eric to give more of the guidance here. But, hey, as you said, we're really excited about David, the scale converting at scale. Argentina with YPF, you know, big win, multi-year, multibillion, with Zeus, going back to Aramco and Jafurah. And if you kind of look at the big markets out there, Argentina starting there, it's a growing market — really Argentina, Algeria, Kuwait, Saudi, UAE. We have frac spreads in all of those locations today doing unconventional work. What I think is important across what we're doing in unconventional — this has been a deliberate, deliberate focus of ours — is continuing to use our scale with a real emphasis on, as Jeff said, returns, but also putting technology at play globally and competing on technology, not on horsepower. So I think that has been the recipe for us to be scaling this globally.
Let me take the last bit of that as well. In terms of margin, as you think about those businesses around the world, yes, there's some mobilization that goes on around that, but it's part of our growth engines and we know that with that scale comes margin expansion.
OPERATOR
Thank you. Our next question or comment comes from the line of Arun Jayaram from J.P. Morgan. Mr. Jayaram, your line is now open.
Arun Jayaram, Analyst at J.P. Morgan
Good morning, team. Jeff, I was wondering if you could comment on — and Shannon on. Clearly it appears that Halliburton is taking market share in international markets, as just highlighted by a number of awards in the Middle East, LatAm, etc. I wondered if you could maybe break down what you think is driving some of those share gains. Shannon did mention that he would expect these new opportunities to be margin accretive, and maybe you could just touch upon that as we think about framing second half of the year and into '27.
Jeff Miller, President and Chief Executive Officer
Yeah, I guess the short answer is yes. These wins that we're talking about, we do see them as future work that will be accretive to business. I think a couple of things have been driving it. One, the market is tight. Nobody's really overbuilt in the market, and that's a good thing — opportunity for expansion of margins for us — and we think that macro outlook for what we're seeing will continue. But I think going back to, you know, how we engage with our customers on some of these projects, we knew they were coming down the pipe.
I think our value proposition, how we collaborate with our customers, and really, if you look at Halliburton's portfolio globally, technically, there's no real holes in it. We compete all over the world in 70 countries. And I think that the combination of value prop and technology has been the difference-maker for us over the last 12 months.
Arun Jayaram, Analyst at J.P. Morgan
Got it, got it. And then maybe just to follow up on North America, one of the things that caught our attention is your intention to continue to perhaps mobilize equipment out of North America to meet some of these international opportunities. Is that just a reflection as you see better margin opportunities for unconventional now outside of NAM?
Shannon Slocum, Executive Vice President and COO
It really comes down to this: it's price first. We are actively working our entire fleet and getting price on that in North America. But we have zero hesitation of moving equipment around the world, whether it be in C&P or D&E, to a place that generates returns for Halliburton. And when there's opportunities, we'll do that. And that's what you've been seeing on the C&P side — frac with Argentina. You've seen that in the Middle East, Algeria, UAE.
All of these places have been going to a home that makes better margins and returns for Halliburton.
Arun Jayaram, Analyst at J.P. Morgan
Great, thanks a lot.
OPERATOR
Thank you. Our next question or comment comes from the line of Saurabh Pant from Bank of America. Your line is now open.
Saurabh Pant, Analyst at Bank of America
Hi, good morning, Jeff, Shannon and Eric. Eric, maybe I'll start with a quick clarification question for you. I want to make sure I heard it right. I think the revenue guidance, Eric, for the third quarter calls for both segments — I think C&P flat to down 2%, D&E down 3% to 5%. And I think within that, in response to one of the initial questions, you were thinking Middle East is steady, right? So flat, I call it, on a run-rate basis. Can you maybe talk to how should we think about the 2Q to 3Q revenue decline?
Where is that coming from? Is it timing? I know the chemical business sale happened in May of this year. Is it past that? Maybe just talk to that a little bit, Eric, just to give us some color.
Eric Carre — Executive Vice President and Chief Financial Officer
Yeah, so I'll give you some color on the guide. So starting with the D&E division, revenues are primarily affected by a drop in revenue in our drilling fluid and testing business — the drilling fluid in the Gulf of Mexico and Europe, testing across most international regions. And there's really nothing structural; it's simply rig moves and end of programs, et cetera. Part of that is offset by the seasonal pickup of our software business in Q3. So that's kind of on the revenue side.
On the margin side, the improvement is due to mix. I mean, drilling fluid was a very large contributor to Q2. In Q3 we're going to see less drilling fluids, more software sales, which run at structurally higher margins, which explain the guidance. On the C&P side, top-line revenue — you mentioned it — we have sold our chemical business, so we're not going to have any revenue coming from that. In Q3 we're going to be slightly down in Latin America and Europe/Africa, which had a fantastic Q2, up 19%.
And some of that is going to be offset by the recovery of our Middle East business. On the margin side, the main drivers of the improvement in our margins are the North America land frac business, which is going to see improved margins; the lift business as well; a recovery of completion tool delivery in the Gulf of Mexico; and also the Middle East recovery in C&P and D&E. So these are the main elements of our Q3 guidance.
Saurabh Pant, Analyst at Bank of America
I got it. I think that's very helpful. And then, Jeff, Shannon, maybe this one is for you. I want to touch on your Landmark business a little bit. I know digital and software doesn't come up too much here in the Q&A for you guys, but you've had a strong business. Landmark has been a strong business for you, especially in drilling LOGIX, DecisionSpace. I think you've had a lot of success in that. Then, like you had in your prepared remarks, you acquired Sekal last quarter, and today in your press release you had the acquisition of Informatic.
Maybe just talk to the Landmark business a little bit. It seems like it's making a lot of positive progress, but maybe just talk to what you're doing there and maybe the opportunities over the next few years.
Jeff Miller, President and Chief Executive Officer
Yeah, thank you. Look, we really like our approach to digital broadly — both the software business and the automation business. And from a software perspective, you know, our absolute focus on open architecture is very attractive to customers. And so, strategically: AI, open architecture, and then deep science, deep data management — those are the four areas that I feel the most confident about where we are and look forward to watching that continue to get legs.
Had several strategic wins over the last year, and I expect not only do those grow, but we just start to see a strengthening of that over time. From an automation perspective, you're correct: Zeus, iQ, LOGIX, Sekal — acquisitions that we make that we know help our customers drill better, more precise wells, or improve recovery for hydraulic fracturing for unconventional completions. And so that automation and answer products in terms of iQ, Zeus, and LOGIX, what it does has been a big part of recent awards.
And so we're seeing that manifest in actually the contracts that we are winning. It is a differentiator. It gives me a lot of confidence around why I believe — or why the contracts that we're winning are — accretive over time.
Saurabh Pant, Analyst at Bank of America
Fantastic note, Jeff. That's very helpful. Thank you. I'll turn it back.
OPERATOR
Thank you. Thank you. Our next question or comment comes from the line of James West from Melius Research. Your line is now open.
James West, Analyst at Melius Research
Hey, thanks. Good morning, guys. Good morning, Jeff. You guys have stuck to your knitting in North America as the only integrated service provider — a fully integrated oilfield service provider — that's really left in the market. But you've also used it as a cash flow harvesting machine, and that's led to, I think, some of the significant growth that you're now seeing in the international markets as you deploy capital to those markets, as you deploy capital into technologies and are increasingly taking share, or at least at minimum holding your own as others have failed there.
Could you talk about that strategy, how you see the evolution of that strategy in those international regions which are now — I mean, they're now coming to you. Just the amount of awards you've announced in the last two weeks has been highly impressive. And just wanted to just touch on kind of where are we in that kind of — I don't know if I want to call it a pivot — but just the deliberate strategy.
Jeff Miller, President and Chief Executive Officer
Look, it is a deliberate strategy. It's where we have market-leading both capability and technology that's sought after internationally. And as that market grows, we are leading that market and plan to continue to lead in that market. And unconventionals have been proven to be a successful way to deliver oil and gas, and now the rest of the world is doing more of it, and we plan to lead there — still focused on North America. And so, you know, we see solid trajectory in North America as well.
However, we have leading margins in North America today and plan to continue to keep those. And so as we push price up, there's always going to be some bumping around in the market, and that bumping around in the market, when you're already the market leader in terms of performance and margins, comes with freeing up some equipment as we push. And the point is we've got opportunities around the world as well to put equipment to work. So this is — I wouldn't describe it as a pivot, James.
I'd describe it as a conscious, deliberate strategy to take advantage of our competitive advantage around the world while continuing to drive better performance in North America. I don't think the two are mutually exclusive, but some of the bumping around you're going to see in North America is us putting real pressure on pricing and margins in North America.
James West, Analyst at Melius Research
Okay, got it. That makes perfect sense. And then as we think about moving of equipment abroad, how should we think about, I guess, the kind of margin opportunity set? I mean, I know Eric already gave us some guidance for just next quarter, which is pretty significant margin improvement sequentially. But how should we think about the competitive landscape internationally when you do move equipment? You have two things: you have, one, it's going to be better pricing, but also, two, you're not going to need to put as much capital into the market because you've already got — you have the steel already ready to go.
Eric Carre — Executive Vice President and Chief Financial Officer
Yeah, I'll talk a bit about margins, James, and then I'll let Shannon talk about the competitive environment. So I think that directionally — I mean, you heard the Q3 guide — margins are going to be up in both Completion and Production, and Drilling and Evaluation. I think the trend will continue, with margin up in D&E in Q4. We think it continues in '27. We think the same trend is going to be there for C&P, although you got to take into account the typical seasonality in Q4.
So we'll have to see how that one plays out as we get closer to Q4. And then you get some Middle East unknown around all of that.
Shannon Slocum, Executive Vice President and COO
Yeah, James, I guess kind of the short answer on how we think about when we move things around, you know,
Jeff Miller, President and Chief Executive Officer
The country is moving to what is the efficiencies and logistics challenges around that? What's the scope of work, how long does it last? Everything from volumes being pumped to stages and access to sand and water. But really it's a pretty straightforward answer after you get through all that: do we have term and do we make better margins if we put it in XYZ country? And we make those decisions every quarter when we're looking at that, if we have an opportunity to move it somewhere in the world.
And it's really, there's different levels of maturity around unconventionals around the world. Those that are mature obviously are ones we probably want to move as quickly as we can. Others we look and say okay, is it AWEL or is it a long-term program? And we base our decisions around that.
OPERATOR
Thank you. Thank you very much. Our next question or comment comes from the line of Derek from Piper Sandler. Your line is now open.
Derek, Analyst at Piper Sandler
Hey, good morning everyone. So you mentioned North America land — you know that that's helping improve the C&P margins. I think the guide at the midpoint was 150 basis. Top line seems to be impacted by the chemical business sale. Talked about Latin America, Europe, Africa which had a stellar quarter. But maybe some more color on what you're seeing activity-wise impacting your U.S. land frac revenue. 2Q. The theme was absorbing the white space. Are you still seeing that full calendar in 3Q as well?
Any indication on pricing will be there to help even reactivate some sideline equipment? Or you mentioned maybe that international unconventional market is more attractive to deploy that idled equipment. Just some more color on U.S. land frac specifically impacting C&P. Yeah, sure.
Shannon Slocum, Executive Vice President and COO
This is Shannon here, Derek. Yeah, hey. We're seeing a positive margin trajectory, C&P and certainly D&E as well. White space in Q2 was taken up. Q3, we're seeing the same thing in Q3 and I think an important point is we're also seeing pretty significant rig adds here — over 30-plus rigs being added to North America. Not only is that a real positive for our D&E business, but kind of raises the bar, if you will, of activity sets moving in the future.
So it makes us feel really good. And you know, there's very little capacity at all in the market on gas substitution, zero at all on electric. And so as we start seeing some of these smaller and medium-sized players moving a little quicker, you know, nobody's doing less out here. So I think that's an environment. It doesn't happen overnight. It's a steady march and something, as Jeff mentioned, we look across our entire fleet, not just one fleet, of raising you.
We'll let that tide up on the entire scope of work we do.
Derek, Analyst at Piper Sandler
Got it. Okay, that's helpful. And then maybe moving over to Jafurah — you won an award there deploying a frac fleet for the basin. Obviously there's a player over there that won majority of the committed work. Is this the uncommitted work? Is there upside to the fleet that you're deploying over there? Maybe talk about some of the technology you could add into the Jafurah basin as it continues to scale over time. Just an exciting award, so maybe a little more color there.
Shannon Slocum, Executive Vice President and COO
Yeah, that's my exact words — exciting. I'm really excited about it. It is committed scope. You know, we got terms that we're satisfied with, volumes and wells per pad, and I think a big driver is of course we moved it because of long-term work there in the gas and we can continue to see that market, in particular gas, growing not just in conventionals but unconventionals. But a big driver of that was bringing really our automation — subsurface and surface — moving that to the Kingdom and yeah, I think we're excited to be back and that will be a long-term program for us moving forward.
Derek, Analyst at Piper Sandler
Great. Appreciate all the color, Shannon. I'll turn it back.
OPERATOR
Thank you. Our next question or comment comes from the line of Neil Mehta from Goldman Sachs. Your line is now open.
Neil Mehta, Analyst at Goldman Sachs
Yeah, thank you so much. Team Jeff, Shannon, maybe you can unpack a little bit about the opportunity set in Iraq. We've seen some of your large customers really lean into it and some big announcements last week. So as we think about the margin, the profitability associated with the opportunity set, but also how you're thinking about some of the moving pieces around the geopolitics and the above-ground concerns that the market historically has had in that region.
Jeff Miller, President and Chief Executive Officer
Yeah, I'd say today things obviously are very fluid, and Iraq — I was just there a couple of weeks ago and just spent some time with the Prime Minister actually here over the last week. You know, I'm encouraged by the direction of policy that's being made within the country, wanting companies like Halliburton to come to work within country. As far as the war right now, it's still impacted as far as not close to pre-war levels. But what I'm really excited about is this integrated field management award that we got.
It really encompasses — you think about everything that Halliburton does from field development planning, production optimization, responsible for well construction, digital, a bit of the UPCM work in there. But I think what's important is the big picture here: that is a contract for Halliburton that yes, it's good for Iraq, yes it's good for Halliburton, but it is foundational building for us within Iraq — something we think we can scale and build on.
So broadly great for Iraq, but also really good for us in our Middle East business.
Neil Mehta, Analyst at Goldman Sachs
Thanks. And as a follow-up for Eric, it's just around share repurchases and buybacks. One thing that has been a constant of 2026 is volatility, including your share price, which has done well but consolidated from peaks. And so, you know, how do you think about the buyback? Do we keep the $200 million run rate or is there an opportunity to be opportunistic with shares trading at a discount potentially, at least relative to where we were a couple months ago?
Eric Carre — Executive Vice President and Chief Financial Officer
Yeah, look, we haven't really changed our philosophy around buyback, Neil. We were a bit more conservative at the beginning of the year, as we indicated on the Q1 call, because the macro situation was very different at that time. Now our thinking is to reestablish pretty much the run rate that we've been on for the last couple of years. So you can expect buybacks to pick up. But we are going to continue to do this on a continuous basis rather than jump in the market.
Neil Mehta, Analyst at Goldman Sachs
Thanks, Jeff.
OPERATOR
Thank you very much. Our next question or comment comes from the line of Doug Becker from Capital One. Mr. Becker, your line is now open.
Doug Becker, Analyst at Capital One
Thank you. It really seems like we're seeing evidence of the international growth engines revving up. Back in January of last year you mentioned the international growth engines could add two and a half to three billion of annual revenue in three to five years. Is that still a reasonable target or is there some upside there? And could we get a sense how each of the four engines is progressing relative to your expectations?
Jeff Miller, President and Chief Executive Officer
Yeah, Doug. Hey, I think not only we're ahead of schedule as far as that, you know, 2.5 to 3 billion by 2028. We think there's upside on that number. We really love our position offshore and land on the drilling side of things. I think the acquisition of Sakal in particular on the offshore has really strengthened our offshore positioning — our technology advantage there. Unconventionals we talked about a lot already, whether it's the YPF or, you know, the Aramco work, Sonatrach — all good business for us.
And I think that whole technology that we're deploying internationally will give us more legs in the future. And then as far as, you know, intervention and lift, you know, we have a significant footprint in the intervention space, in particular HDWO and coiled tubing. But we're really excited also about the trajectory we're seeing on our artificial lift business globally. So yeah, I think there's upside on that number.
Doug Becker, Analyst at Capital One
Certainly sounds encouraging. Eric, I did want to just parse the second quarter C&P margin a little bit more. The guidance was for 50 to 100 basis points of sequential margin improvement — a little bit less than that — and just trying to get a sense how much of that was related to the chemical business versus, say, lower Middle East activity. Just want to understand that a little bit better.
Eric Carre — Executive Vice President and Chief Financial Officer
Yeah, I think in both divisions we were a little higher than guidance on revenue. We were on the lower end of margin overall for both divisions as well. There's not a lot to read into it. If you take the C&P margins, for example, we had higher maintenance cost 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 a product line mix as well that drove the same results — and the D&E guidance.
Doug Becker, Analyst at Capital One
Thank you very much.
OPERATOR
Thank you. Our next question or comment comes from the line of Scott Gruber from Citigroup. Mr. Gruber, your line is now open.
Scott Gruber, Analyst at Citigroup
Thanks. Good morning everybody. I actually wanted to stay on the near-term margin guide. Eric, you mentioned mobilization impact — I think it was with C&P. Just broadly, given the pace of growth for you guys, which is pretty impressive, and the new contract wins, are mobilization and startup costs a significant weight on margins today? And are those completely fading in 3Q or are they still impacting? Just some more color on the mobilization, startup costs, and the trend towards normalizing?
Eric Carre — Executive Vice President and Chief Financial Officer
Yeah, I mean, I can't give you an exact number in terms of the impact of mobilization. You have mobilization happening — mobilization or movement of equipment happening at all times in our business as we try to optimize where we put asset to work. The contract wins that we have had have elevated that number a little bit. So we have some headwinds related to that. I just can't quantify it exactly.
Jeff Miller, President and Chief Executive Officer
One of the things just to point out: under the hood in North America, we are seeing pricing and we are seeing improvement in that business. So as Eric described — Gulf of Mexico moves and mobilizations, et cetera — underneath the hood, we're pleased that we are getting the traction in pricing and improvement in performance in our North America land business.
Scott Gruber, Analyst at Citigroup
Yeah, that's where I wanted to go to next — on the medium to longer term outlook for improvement. And I heard you guys mention the new work is coming in and that's going to be margin accretive. I'm just curious on how to dimension that as we think about the go forward. We normally think about incrementals for Halliburton in that 30–35% range. But a lot of the new contract wins seem to be propelled by new technologies. And those mobilization and startup costs should settle down in the years ahead and then hopefully we have normalization of activity in the Middle East.
As you think through the potential path for margins, given those factors, should we be thinking about a couple years above normal incrementals for Halliburton in '27 and '28? Is that possible?
Jeff Miller, President and Chief Executive Officer
You're in. Yeah. Your incremental expectations aren't wrong. Those are my expectations as well. And so, you know, we're getting underway. I like the trajectory that we're seeing on the ground in North America. We're winning big contracts all around the world. Yeah, there's always going to be mobilization associated with those, but that doesn't diminish my — when I say revenue growth and margin expansion, I expect margin expansion. And those types of incrementals aren't inconsistent at all with my expectations.
Scott Gruber, Analyst at Citigroup
Can we do better than normal on incrementals, I guess, is the question — kind of given all those factors around technology and the Middle East coming back?
Jeff Miller, President and Chief Executive Officer
Yes, I mean, I think so. It's always possible. And, you know, the Middle East is an odd mix with the Middle East where it is. We've got this pipeline of work that we know will be done and it will be done, and it'll start late this year into next year in different parts of the world. And so, you know, it's a bit of an odd mix right now in terms of Middle East slower, North America improving, and, yes, some mobilization going on.
OPERATOR
Okay, appreciate the call, Jess. Thank you. Our next question or comment comes from the line of Mark Bianchi from TD Cowen. Mr. Bianchi, your line is now open.
Mark Bianchi, Analyst at TD Cowen
Hey, thank you. I was curious if you could share the impact of the Middle East on the business in the second quarter.
Eric Carre — Executive Vice President and Chief Financial Officer
It pretty much landed where we thought it would land. Now it's difficult because it's difficult to say, you know, if there had been no conflict, the activity would have been that much, and then compare it to the actual result is something you just can't do. But in terms of how we were thinking the quarter would evolve and the results that the Middle East delivered, it's pretty much where we thought it would be, broadly speaking.
Mark Bianchi, Analyst at TD Cowen
Okay. Okay, thank you, Eric. And then on the comment that the international business ex-Middle East will grow low double digits, I'm curious, what do you think the broader market is doing? And where I'm going with this is like, can we maybe infer some sort of growth above whatever the broader market's doing because of all these, you know, contracts that you've announced here in the last last few quarters?
Jeff Miller, President and Chief Executive Officer
Thank you. Yes, I do believe we're going to see outsized growth. I mean, the growth engines that we described are driving this. These are places where you have clear competitive advantage. They're outgrowing the broader market. And I believe that we are outgrowing the broader market. So I look forward to, you know, as these things feather in over the next little bit, you know, the growth in our position in Deepwater continues to strengthen, and a lot of that's outside the US and then also our strength in the Middle East, as we just described, those are meaningful step forwards, and most are on the back of our technology and value propositions.
I'm comfortable those are differentiated.
Mark Bianchi, Analyst at TD Cowen
Jeff, would you say that the broader market without this benefit would be up something like mid single digits?
Jeff Miller, President and Chief Executive Officer
Could be, you know, tough to call the entire broader market. But I do believe we're going to be at the very high end of that.
Mark Bianchi, Analyst at TD Cowen
Yep. All right, thanks very much. I'll turn it back.
OPERATOR
Thank you. Thank you. Ladies and gentlemen, that concludes our Q and A session. At this time, I would like to turn the conference back over to management for any closing remarks.
Jeff Miller, President and Chief Executive Officer
Okay, thank you, Howard. 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.
OPERATOR
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, stand by.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.
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