HALLIBURTON CO (HAL)

CIK: 0000045012. SIC: 1389 Oil & Gas Field Services, NEC. Latest 10-K as of: 2026-02-06.

SIC breadcrumb: Mining > SIC Major Group 13 > SIC 1389 Oil & Gas Field Services, NEC

SEC company page: https://www.sec.gov/edgar/browse/?CIK=45012. Latest filing source: 0000045012-26-000015.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-06. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000045012.json. Derived margins are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Missing metrics are omitted rather than fabricated.

Financial Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance

Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2026-02-06. Report date: 2025-12-31.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in

conjunction with the consolidated and combined financial statements included in Item 8. Financial Statements and

Supplementary Data contained herein.

EXECUTIVE OVERVIEW

Market conditions

In 2025, global oil and natural gas markets remained impacted by non-OPEC supply growth, slower demand recovery

in certain areas around the globe, OPEC+ production, ongoing geopolitical tensions in the Middle East, and the continued

impacts of the Russia-Ukraine conflict. In the U.S., oil and natural gas production in 2025 remained elevated, despite a

generally declining rig count, as a result of the industry's focus on efficiencies and higher service intensity. Lower commodity

pricing and U.S. land rig counts generally contributed to softness in the market for energy products and services in North

America. The international rig count decreased compared to 2024.

The West Texas Intermediate (WTI) crude oil price averaged approximately $60 per barrel during the fourth quarter of

2025 and approximately $65 per barrel for the full year of 2025. The Brent crude oil price averaged approximately $64 per

barrel during the fourth quarter of 2025 and approximately $69 per barrel for the full year of 2025.

Trade tensions and tariffs continue to shape the demand outlook amid varying market responses. We continue to

monitor and assess the impact of tariffs on goods being imported into the United States. Our global supply chain organization

continuously monitors market trends and works to mitigate those and other cost increases through economies of scale in global

procurement, technology modifications, and efficient sourcing practices. Globally, we continue to be impacted by extended

supply chain lead times for the supply of select raw materials. Also, while we have been impacted by inflationary cost

increases, primarily related to chemicals, cement, and logistics costs, we generally try to pass much of those increases on to our

customers and we believe we have effective solutions to minimize their operational impact.

Financial results

The following graph illustrates our revenue and operating margins for each operating segment over the past three

years.

During 2025, we generated total company revenue of $22.2 billion, a 3% decrease from the $22.9 billion of revenue

generated in 2024 with our Completion and Production (C&P) segment revenue decreasing by 4% and our Drilling and

Evaluation (D&E) segment revenue decreasing by 3%. Total company operating income was $2.3 billion, including

impairments and other charges of $831 million, in 2025, compared to $3.8 billion, including impairment and other charges of

$116 million, in 2024. Due to new tariffs imposed during 2025 by the United States, the incremental expense was

approximately $89 million.

Driven in large part by a decrease in the average North America rig count in 2025 as compared to 2024, our North

America revenue decreased 6% in 2025, resulting from lower activity across multiple product service lines in U.S. Land and

lower completion tool sales in the Gulf of America. Partially offsetting these decreases were improved stimulation activity and

increased fluids services in the Gulf of America, increased drilling activity in U.S. Land, and higher completion tool sales in

Canada.

HAL 2025 FORM 10-K | 24

Table of Contents

Item 7 | Executive Overview

Internationally, revenue decreased by 2% in 2025 compared to 2024, due to a decline in the international average rig

count and decreased activity across multiple product service lines in Mexico and Saudi Arabia. Partially offsetting these

decreases were higher activity across multiple services lines in Norway and Brazil, improved fluid services in the Middle East,

Argentina, and the Caribbean, and increased stimulation activity in Middle East/Asia and Africa.

Our operating performance and liquidity are described in more detail in “Liquidity and Capital Resources” and

“Business Environment and Results of Operations.”

HAL 2025 FORM 10-K | 25

Table of Contents

Item 7 | Liquidity and Capital Resources

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2025, we had $2.2 billion of cash and equivalents, compared to $2.6 billion of cash and

equivalents at December 31, 2024.

Significant sources and uses of cash in 2025

Sources of cash:

•Cash flows from operating activities were $2.9 billion. Working capital, which consists of receivables, inventories,

and accounts payable, collectively had a positive impact of $196 million.

•We received $444 million on the sale of investment securities.

•We received $185 million on the sale of property, plant, and equipment.

•We received $120 million on the sale of an equity investment.

Uses of cash:

•Capital expenditures were $1.3 billion.

•We repurchased 42.4 million shares of our common stock for $1.0 billion, which includes excise tax payment due

on 2024 share repurchases.

•We paid $579 million of dividends to our shareholders.

•We retired $382 million of our 3.8% senior notes due November 2025.

•We paid $363 million related to a purchase of an equity investment.

•We purchased $202 million of investment securities.

•We paid $185 million to acquire businesses.

Future sources and uses of cash

We manufacture most of our own equipment, which provides us with some flexibility to increase or decrease our

capital expenditures based on market conditions. We currently expect capital spending for 2026 to be approximately $1.1

billion. Despite this reduction from 2025, we believe this level of spending will enable continued investment in our core

strategic technologies and businesses, including the international expansion of our artificial lift, well intervention,

unconventionals, and drilling technologies. We will continue to maintain capital discipline and monitor the rapidly changing

market dynamics, and we may adjust our capital spend accordingly.

In 2026, we expect to pay approximately $505 million for contractual purchase obligations, with another $315 million

due through 2028, $378 million of interest on debt, and $418 million under our leasing arrangements. Payments for interest on

our debt are expected to remain relatively flat for the foreseeable future. See Notes to Consolidated Financial Statements, Note

6 and Note 10 for additional information on expected future payments under our leasing arrangements and debt maturities.

We are not able to reasonably estimate the timing of cash outflows associated with our uncertain tax positions, in part

because we are unable to predict the timing of potential tax settlements with applicable taxing authorities. As of December 31,

2025, we had $170 million of gross unrecognized tax benefits, excluding penalties and interest, of which we estimate $155

million may require us to make a cash payment. We estimate that approximately $131 million of the cash payment will not be

settled within the next 12 months.

While we maintain focus on liquidity, we are also focused on providing cash returns to our shareholders. In 2023, our

Board approved a capital return framework with a goal of returning at least 50% of our annual free cash flow to shareholders

through dividends and share repurchases. We returned $1.6 billion of capital to shareholders in 2025 through dividends and

share repurchases. During 2025, our quarterly dividend rate was $0.17 per common share, or approximately $145 million in

aggregate.

We may utilize share repurchases as part of our capital return framework. Our Board of Directors has authorized a

program to repurchase our common stock from time to time. We repurchased 42.4 million shares of common stock during the

year ended December 31, 2025 under this program. Approximately $2.0 billion remained authorized for repurchases as of

December 31, 2025 and may be used for open market and other share purchases.

HAL 2025 FORM 10-K | 26

Table of Contents

Item 7 | Liquidity and Capital Resources

During 2023, we began our migration to SAP S4 which we expect to complete in the fourth quarter of 2026. During

the year ended December 31, 2025, we incurred $154 million in expense on our SAP S4 migration. Due to the extension of the

project we announced in the second quarter of 2025, we expect the estimated total cost will be approximately $45 million per

quarter going forward. We believe the new system will provide important efficiency benefits, cost savings, enhanced visibility

to our operations, and advanced analytics that will benefit us and our customers.

We may, from time to time, redeem, repurchase, or otherwise acquire our outstanding debt through privately

negotiated transactions, open market purchases, redemptions, tender offers or otherwise, but we are under no obligation to do

so.

Other factors affecting liquidity

Financial condition in current market. As of December 31, 2025, we had $2.2 billion of cash and equivalents and $3.5

billion of available committed bank credit under a new revolving credit facility executed on August 18, 2025, with an

expiration date of August 16, 2030. We believe we have a manageable debt maturity profile, with approximately $90 million

due February 2027. Furthermore, we have no financial covenants or material adverse change provisions in our bank

agreements, and our debt maturities extend over a long period of time. We believe our cash on hand, cash flows generated from

operations, and our available credit facility will provide sufficient liquidity to address the challenges and opportunities of the

current market and our expected global cash needs, including capital expenditures, working capital investments, shareholder

returns, if any, debt repurchases, if any, and scheduled interest and principal payments, in the short term and long term.

Guarantee agreements. In the normal course of business, we have agreements with financial institutions under which

approximately $3.1 billion of letters of credit, bank guarantees, or surety bonds were outstanding as of December 31, 2025.

Some of the outstanding letters of credit have triggering events that would entitle a bank to require cash collateralization;

however, none of these triggering events have occurred. As of December 31, 2025, we had no material off-balance sheet

liabilities and were not required to make any material cash distributions to our unconsolidated subsidiaries.

We have entered into credit default swaps (CDSs) with third-party financial institutions that have an aggregate

notional amount outstanding as of December 31, 2025 of $592 million, compared to an aggregate notional amount outstanding

as of December 31, 2024 of $739 million, related to borrowings provided by the financial institutions to one of our primary

customers in Mexico, of which portions of the proceeds were utilized by this customer to pay certain of our outstanding

receivables. Approximately $455 million of the outstanding amount of the CDSs reduces monthly over its remaining 9-month

term and $75 million reduces monthly over its remaining 6-month term. The remaining $62 million outstanding amount reduces

monthly over its remaining 2-month term.

Credit ratings. Our credit ratings with Standard & Poor’s remain BBB+ for our long-term debt and A-2 for our short-

term debt, with a stable outlook. Our credit ratings with Moody's Investors Service remain A3 for our long-term debt and P-2

for our short-term debt, with a stable outlook.

Customer receivables. In line with industry practice, we bill our customers for our services in arrears and are,

therefore, subject to our customers delaying or failing to pay our invoices. In weak economic environments, we may experience

increased delays and failures to pay our invoices due to, among other reasons, a reduction in our customers’ cash flow from

operations and their access to the credit markets, as well as unsettled political conditions.

Receivables from our primary customer in Mexico accounted for approximately 7% of our total receivables as of

December 31, 2025. While we have experienced payment delays from our primary customer in Mexico, the amounts are not in

dispute and we have not historically had, and we do not expect, any material write-offs due to collectability of receivables from

this customer.

HAL 2025 FORM 10-K | 27

Table of Contents

Item 7 | Business Environment and Results of Operations

BUSINESS ENVIRONMENT AND RESULTS OF OPERATIONS

We operate in more than 70 countries throughout the world to provide a comprehensive range of services and products

to the energy industry. Our revenue is generated from the sale of services and products to major, national, and independent oil

and natural gas companies worldwide. The industry we serve is highly competitive with many substantial competitors in each

segment of our business. In 2025, 2024, and 2023, based on the location of the services provided and products sold, 39%, 40%,

and 44%, respectively, of our consolidated revenue was from the United States. No other country accounted for more than 10%

of our revenue for those periods.

Activity within our business segments is significantly impacted by spending on upstream exploration, development,

and production programs by our customers. Also impacting our activity is the status of the global economy, which impacts oil

and natural gas consumption.

Some of the more significant determinants of current and future spending levels of our customers are oil and natural

gas prices, our customers’ expectations about future prices, global oil supply and demand, the impact on natural gas supply and

demand in North America of electrification and data centers power requirements, completions intensity, the world economy, the

availability of capital, government regulation, and global stability, which together drive worldwide drilling and completions

activity. We expect that many of our customers in North America will continue their strategy of operating within their cash

flows and generating returns rather than prioritizing production growth. Lower oil and natural gas prices usually translate into

lower exploration and production budgets and lower rig count, while the opposite is usually true for higher oil and natural gas

prices. Our financial performance is therefore significantly affected by oil and natural gas prices and worldwide rig activity,

which are summarized in the tables below.

The table below shows the average prices for West Texas Intermediate (WTI) crude oil, United Kingdom Brent crude

oil, and Henry Hub natural gas.

2025

2024

2023

Oil Price - WTI (1)

$65.46

$76.55

$77.64

Oil Price - Brent (1)

69.10

80.53

82.47

Natural Gas Price - Henry Hub (2)

3.53

2.19

2.54

(1)

Oil prices measured in dollars per barrel.

(2)

Natural gas price measured in dollars per million British thermal units (Btu), or MMBtu.

The historical average rig counts based on the weekly Baker Hughes rig count data were as follows: 

2025

2024

2023

US Land

546

580

669

US Offshore

15

19

18

Canada

175

187

177

North America

736

786

864

International (1)

1,080

1,162

948

Worldwide Total

1,816

1,948

1,812

(1)

Historical average rig counts shown are based on data provided by Baker Hughes, which included

retroactive adjustments to international rig counts previously reported as a result of a methodology

change effective January 2024.

HAL 2025 FORM 10-K | 28

Table of Contents

Item 7 | Business Environment and Results of Operations

Business outlook

Looking ahead to 2026, we expect the global energy market to remain dynamic, with oil demand continuing to grow

modestly while global supply is projected to outpace demand in the near term, contributing to price pressure and inventory

builds. At the same time, natural gas demand is forecasted to strengthen in 2026 as LNG capacity expands and consumption in

key markets increases. Absent geo-political disruptions, we expect commodity prices are unlikely to rise.

We expect international activity to be stable year over year, with revenue to be flat to up modestly, led by Latin

America. We anticipate moderate softness in North America and expect revenue to decline year over year compared to 2025.

This outlook reflects the full year impact of reduced customer activity in land operations, our decision to stack uneconomic

fleets, and the timing of customer programs in the Gulf of America.

Despite the market conditions described above, we believe the combination of long-cycle international investments

and emerging structural demand for natural gas, driven by data centers, electrification, and power reliability, positions our

business for growth opportunities over the medium and long term. This growth includes our strategic collaboration with

VoltaGrid, for which we have secured manufacturing capacity for 400 megawatts of modular natural gas power systems for

delivery in 2028 to support the development of data centers in the Eastern Hemisphere. Additionally, we believe increased

investment in existing and new sources of oil and natural gas production is needed to address future demand. This will

necessitate production from conventional and unconventional, deep-water and shallow-water, and short and long-cycle projects.

We expect that increased oil and natural gas production requirements will in turn create demand for our products and services.

We continue to monitor the recent developments in Venezuela and plan to grow our business once commercial and

legal terms are resolved, including payment certainty.

HAL 2025 FORM 10-K | 29

Table of Contents

Item 7 | Results of Operations in 2025 Compared to 2024

RESULTS OF OPERATIONS IN 2025 COMPARED TO 2024

Favorable

Percentage

Millions of dollars

2025

2024

(Unfavorable)

Change

Revenue:

By operating segment:

Completion and Production

$12,782

$13,251

$(469)

(4)%

Drilling and Evaluation

9,402

9,693

(291)

(3)

Total revenue

$22,184

$22,944

$(760)

(3)%

By geographic region:

North America

$9,066

$9,626

$(560)

(6)%

Latin America

3,935

4,211

(276)

(7)

Europe/Africa/CIS

3,351

3,003

348

12

Middle East/Asia

5,832

6,104

(272)

(4)

Total revenue

$22,184

$22,944

$(760)

(3)%

Operating income:

By operating segment:

Completion and Production

$2,128

$2,709

$(581)

(21)%

Drilling and Evaluation

1,379

1,608

(229)

(14)

Total operations

3,507

4,317

(810)

(19)

Corporate and other

(262)

(255)

(7)

(3)

SAP S4 upgrade expense

(154)

(124)

(30)

(24)

Impairments and other charges

(831)

(116)

(715)

n/m

Total operating income

$2,260

$3,822

$(1,562)

(41)%

n/m = not meaningful

Operating Segments

Completion and Production

Completion and Production revenue in 2025 was $12.8 billion, a decrease of $469 million, or 4%, compared to 2024.

Operating income for the segment in 2025 was $2.1 billion, a decrease of $581 million, or 21%, compared to 2024. These

results were primarily driven by decreased pressure pumping services in U.S. Land, lower completion tool sales in the Western

Hemisphere, the Middle East, and Africa, and decreased well intervention services in Middle East/Asia. Partially offsetting

these decreases were higher year-end completion tool sales in Europe, and increased well intervention services in Latin

America.

Drilling and Evaluation

Drilling and Evaluation revenue in 2025 was $9.4 billion, a decrease of $291 million, or 3%, compared to 2024.

Operating income for the segment in 2025 was $1.4 billion, a decrease of $229 million, or 14%, compared to 2024. These

results were primarily driven by lower drilling activity in the Middle East and Latin America, and lower wireline activity in

Middle East/Asia, and decreased testing services internationally. Partially offsetting these decreases were improved fluids

services and higher project management activity in Latin America, and increased drilling activity in Europe/Africa.

Geographic Regions

North America

North America revenue in 2025 was $9.1 billion, a 6% decrease compared to 2024, largely driven by lower activity

across multiple product service lines in U.S. Land and lower completion tool sales in the Gulf of America. Partially offsetting

these decreases were improved stimulation activity and increased fluids services in the Gulf of America, increased drilling

activity in U.S. Land, and higher completion tool sales in Canada.

HAL 2025 FORM 10-K | 30

Table of Contents

Item 7 | Results of Operations in 2025 Compared to 2024

Latin America

Latin America revenue in 2025 was $3.9 billion, a 7% decrease compared to 2024, resulting from lower activity across

multiple product service lines in Mexico and lower completion tool sales in Brazil. Partially offsetting these decreases were

improved activity across multiple product service lines in Brazil, and higher drilling related services in Argentina and the

Caribbean.

Europe/Africa/CIS

Europe/Africa/CIS revenue in 2025 was $3.4 billion, a 12% increase compared to 2024, resulting from higher activity

across multiple product service lines in Norway and Romania, increased stimulation activity in Congo, higher project

management activity in Africa, and improved well construction activity in Namibia. Partially offsetting these increases were

lower activity across multiple product service lines in Italy and Senegal, and lower completion tool sales and decreased pressure

pumping services in Angola.

Middle East/Asia

Middle East/Asia revenue in 2025 was $5.8 billion, a 4% decrease compared to 2024, resulting from lower activity

across multiple product service lines in Saudi Arabia and Malaysia. Partially offsetting these decreases were improved activity

across multiple product service lines in Kuwait, higher stimulation activity in India, higher drilling related services in Indonesia,

and increased fluids services in the United Arab Emirates.

Other Operating Items

SAP S4 Upgrade Expense. As previously mentioned, during 2023 we began our migration to SAP S4, which we expect

to complete in the fourth quarter of 2026. During the years ended December 31, 2025 and 2024, we recognized $154 million

and $124 million of expense on our SAP S4 migration, respectively.

Impairments and Other Charges. During the year ended December 31, 2025, we recognized a pre-tax charge of $831

million primarily related to severance costs, an impairment of assets held for sale, fixed and other assets write-offs, an

impairment of facility closures and lease terminations, an equity in earnings loss, and other items, primarily related to legacy

environmental remediation cost estimate increases. During the year ended December 31, 2024, we recognized a pre-tax charge

of $116 million, primarily related to severance costs, an impairment of assets held for sale, expenses related to a cybersecurity

incident, a gain on a fair value adjustment of an equity investment, and other items. See Notes to Consolidated Financial

Statements, Note 2 for further discussion of these charges.

Nonoperating Items

Argentina Impairment on Investment. In years 2022, 2023 and 2024, we executed a series of loans to a third party and

received notes that are to be repaid in U.S. dollars upon maturity or earlier if certain conditions are met. During the year ended

December 31, 2025 and 2024, we recorded a loss of $23 million and $38 million, respectively, resulting from the deterioration

in the outlook of the debtor’s liquidity and financial projections. This is included in “Other, net” on the Consolidated

Statements of Operations.

Argentina Blue Chip Swap. The Central Bank of Argentina maintains currency controls that limit our ability to access

U.S. dollars in Argentina and remit cash from our Argentine operations. The execution of certain trades known as Blue Chip

Swaps effectively results in a parallel U.S. dollar exchange rate. For the years ended December 31, 2025, 2024, and 2023, we

entered into Blue Chip Swap transactions, which resulted in a pre-tax loss on investment for $9 million, $8 million, and $110

million, respectively.

Egypt Currency Impact. In the first quarter of 2024, the Egyptian pound devalued by approximately 35% relative to

the U.S. dollar. Consequently, we incurred a loss of $34 million during the year ended December 31, 2024, due to the

devaluation of the currency in Egypt. This is included in “Other, net” on the Consolidated Statements of Operations.

Income Tax Provision. During the year ended December 31, 2025, we recorded a total income tax provision of $479

million on a pre-tax income of $1.8 billion, resulting in an effective tax rate of 27.0%. The effective tax rate for 2025 was

primarily impacted by the pre-tax $831 million of impairments and other charges, the $23 million impairment of an investment

in Argentina, the additional valuation allowance recognized in the amount of $125 million on our deferred tax assets which

resulted from the impact on the realizability of our FTC carryforward due to the “One Big Beautiful Bill Act,” and partially

offset by an $86 million discrete tax benefit from the Foreign-Derived Intangible Income (FDII) deduction attributable to a

royalty prepayment. During the year ended December 31, 2024, we recorded a total income tax provision of $718 million on

pre-tax income of $3.2 billion, resulting in an effective tax rate of 22.2%. The effective tax rate for 2024 was primarily

impacted by our geographic mix of earnings, tax adjustments related to the reassessment of prior year tax accruals, and changes

of valuation allowance on some of our deferred tax assets. We recorded a tax benefit of $41 million during the year ended

December 31, 2024, due to a partial release of a valuation allowance on our deferred tax assets based on market conditions.

HAL 2025 FORM 10-K | 31

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Item 7 | Results of Operations in 2025 Compared to 2024

Pillar Two. The Organization for Economic Co-operation and Development enacted model rules for a new global

minimum tax framework, also known as Pillar Two, and certain governments globally have enacted, or are in the process of

enacting, legislation considering these model rules. These rules did not have a material impact on our taxes for the year ended

December 31, 2025 and 2024.

Internal Revenue Service Notice of Proposed Adjustment. We are subject to taxes in the United States and in numerous

jurisdictions where we operate or where our subsidiaries are organized. Our tax returns are routinely subject to examination by

the taxing authorities in the jurisdictions where we file tax returns. In most cases we are no longer subject to examination by tax

authorities for years before 2014. The only significant operating jurisdiction that has tax filings under review or subject to

examination by the tax authorities is the United States. Our United States federal income tax filings for tax years 2016 through

2024, including carry back of 2016 net operating losses to 2014, are currently under review or remain open for review by the

IRS.

On September 28, 2023, we received a Notice of Proposed Adjustment (NOPA) from the IRS covering our 2016 U.S.

tax return. The NOPA proposed an adjustment to reclassify approximately 95% of the $3.5 billion termination fee paid to Baker

Hughes in 2016 from an ordinary expense deduction to a capital loss. The termination fee was paid to Baker Hughes under the

merger agreement after antitrust regulators in multiple jurisdictions failed to approve our proposed merger. It is common

commercial practice to include a termination fee in a merger agreement to compensate the target for damages incurred when the

acquisition does not go forward. The IRS’s long-understood position at the time of the payment had been to treat such payments

as an ordinary and necessary business expense. We strongly disagree with the proposed adjustment on both a factual and legal

basis, and we plan to vigorously contest it.

We expect that resolving this dispute will take substantial time. In 2023, we initiated the IRS administrative appeals

process, which is ongoing. Failing a resolution through that process, the matter would ultimately be resolved by the United

States federal courts.

We regularly assess the likelihood of adverse outcomes resulting from tax examinations to determine the adequacy of

our tax reserves, and we believe our income tax reserves are appropriately provided for all open tax years. We cannot assure

you that the matter will be determined in our favor or against us, and if the matter is ultimately determined unfavorably to us, it

could have a material adverse impact on our results of operations and cash flows. Based on tax attributes currently available, we

estimate that, should the IRS's position prevail through the appellate process and subsequent litigation, the proposed adjustment

could result in cash taxes due of approximately $640 million (plus interest thereon in the case of amounts due for previous tax

years). Our estimates are calculated under current tax law and on the bases of our assumptions regarding taxable income and

loss and other tax attributes over the relevant period, which law could change and which assumptions could and likely will

differ materially from actual results. In any event, no payment of any additional tax is currently required, nor do we anticipate

that the proposed adjustment would materially and adversely impact our ability to meet our expected uses of cash, including

future capital expenditures, working capital investments, and scheduled debt repayments, or our ability to return cash to

shareholders, even if a final determination of the matter is reached that is adverse to us.

HAL 2025 FORM 10-K | 32

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Item 7 | Results of Operations in 2024 Compared to 2023

RESULTS OF OPERATIONS IN 2024 COMPARED TO 2023

Information related to the comparison of our operating results between the years 2024 and 2023 is included in Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2024 Form 10-K filed with the

SEC and is incorporated by reference into this annual report on Form 10-K.

HAL 2025 FORM 10-K | 33

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Item 7 | Critical Accounting Estimates

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements requires the use of judgments and estimates. Our critical accounting policies

are described below to provide a better understanding of how we develop our assumptions and judgments about future events

and related estimates and how they can impact our financial statements. A critical accounting estimate is one that requires our

most difficult, subjective, or complex judgments and assessments and is fundamental to our results of operations. We identified

our most critical accounting estimates to be:

-forecasting our income tax (provision) benefit, including our future ability to utilize foreign tax credits and the

realizability of deferred tax assets (including net operating loss carryforwards), and providing for uncertain tax

positions;

-legal and investigation matters;

-valuations of long-lived assets, including intangible assets and goodwill; and

-allowance for credit losses.

We base our estimates on historical experience and on various other assumptions we believe to be reasonable

according to the current facts and circumstances, the results of which form the basis for making judgments about the carrying

values of assets and liabilities that are not readily apparent from other sources. We believe the following are the critical

accounting policies used in the preparation of our consolidated financial statements, as well as the significant estimates and

judgments affecting the application of these policies. This discussion and analysis should be read in conjunction with our

consolidated financial statements and related notes included in this report.

Income tax accounting

We recognize the amount of taxes payable or refundable for the current year and use an asset and liability approach in

recognizing the amount of deferred tax liabilities and assets for the future tax consequences of events that have been recognized

in our financial statements or tax returns. We apply the following basic principles in accounting for our income taxes:

-a current tax liability or asset is recognized for the estimated taxes payable or refundable on tax returns for the

current year;

-a deferred tax liability or asset is recognized for the estimated future tax effects attributable to temporary differences

and carryforwards;

-the measurement of current and deferred tax liabilities and assets is based on provisions of the enacted tax law, and

the effects of potential future changes in tax laws or rates are not considered; and

-the value of deferred tax assets is reduced, if necessary, by the amount of any tax benefits that, based on available

evidence, are not expected to be realized.

We determine deferred taxes separately for each tax-paying component (an entity or a group of entities that is

consolidated for tax purposes) in each tax jurisdiction. That determination includes the following procedures:

-identifying the types and amounts of existing temporary differences;

-measuring the total deferred tax liability for taxable temporary differences using the applicable tax rate;

-measuring the total deferred tax asset for deductible temporary differences and operating loss carryforwards using

the applicable tax rate;

-measuring the deferred tax assets for each type of tax credit carryforward; and

-reducing the deferred tax assets by a valuation allowance if, based on available evidence, it is more likely than not

that some portion or all of the deferred tax assets will not be realized.

Our methodology for recording income taxes requires a significant amount of judgment and the use of assumptions

and estimates. Additionally, we use forecasts of certain tax elements, such as taxable income and foreign tax credit utilization,

as well as evaluate the feasibility of implementing tax planning strategies. Given the inherent uncertainty involved with the use

of such variables, there can be significant variation between anticipated and actual results that could have a material impact on

our income tax accounts related to continuing operations.

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Item 7 | Critical Accounting Estimates

We have operations in more than 70 countries. Consequently, we are subject to the jurisdiction of a significant number

of taxing authorities. The income earned in these various jurisdictions is taxed on differing bases, including net income actually

earned, net income deemed earned, and revenue-based tax withholding. Our tax filings are routinely examined in the normal

course of business by tax authorities. The final determination of our income tax liabilities involves the interpretation of local tax

laws, tax treaties and related authorities in each jurisdiction, as well as the significant use of estimates and assumptions

regarding the scope of future operations and results achieved, the timing and nature of income earned and expenditures

incurred. The final determination of tax audits or changes in the operating environment, including changes in tax law and

currency/repatriation controls, could impact the determination of our income tax liabilities for a tax year and have an adverse

effect on our financial statements. For example, we received a NOPA from the IRS on September 28, 2023. See Management's

Discussion and Analysis of Financial Condition and Results of Operations - Nonoperating Items, Internal Revenue Service

Notice of Proposed Adjustment and Notes to Consolidated Financial Statements, Note 12 for further information.

Tax filings of our subsidiaries, unconsolidated affiliates and related entities are routinely examined in the normal

course of business by tax authorities. These examinations may result in assessments of additional taxes, which we work to

resolve with the tax authorities and through the judicial process. Predicting the outcome of disputed assessments involves some

uncertainty. Factors such as the availability of settlement procedures, willingness of tax authorities to negotiate, and the

operation and impartiality of judicial systems vary across the different tax jurisdictions and may significantly influence the

ultimate outcome. We review the facts for each assessment, and then utilize assumptions and estimates to determine the most

likely outcome and provide taxes, interest, and penalties, as needed based on this outcome. We provide for uncertain tax

positions pursuant to current accounting standards, which prescribe a minimum recognition threshold and measurement

methodology that a tax position taken or expected to be taken in a tax return is required to meet before being recognized in the

financial statements. The standards also provide guidance for derecognition classification, interest and penalties, accounting in

interim periods, disclosure, and transition.

Legal and investigation matters

As discussed in Notes to Consolidated Financial Statements, Note 11, we are subject to various legal and investigation

matters arising in the ordinary course of business. As of December 31, 2025, we have accrued an estimate of the probable and

estimable costs for the resolution of some of our legal and investigation matters, which is not material to our consolidated

financial statements. For other matters for which the liability is not probable and reasonably estimable, we have not accrued any

amounts. Attorneys in our legal department monitor and manage all claims filed against us and review all pending

investigations. Generally, the estimate of probable costs related to these matters is developed in consultation with internal and

outside legal counsel representing us. Our estimates are based upon an analysis of potential results, assuming a combination of

litigation and settlement strategies. The accuracy of these estimates is impacted by, among other things, the complexity of the

issues and the amount of due diligence we have been able to perform. We attempt to resolve these matters through settlements,

mediation, and arbitration proceedings when possible. If the actual settlement costs, final judgments, or fines, after appeals,

differ from our estimates, there may be a material adverse effect on our future financial results. We have in the past recorded

significant adjustments to our initial estimates of these types of contingencies.

Value of long-lived assets, including intangible assets and goodwill

We carry a variety of long-lived assets on our balance sheet including property, plant, and equipment, goodwill, and

other intangibles. Impairment is the condition that exists when the carrying amount of a long-lived asset exceeds its fair value,

and any impairment charge that we record reduces our operating income. Goodwill is the excess of the cost of an acquired

entity over the net of the amounts assigned to assets acquired and liabilities assumed. We conduct impairment tests on goodwill

annually, during the third quarter, or more frequently whenever events or changes in circumstances indicate an impairment may

exist. We conduct impairment tests on long-lived assets, other than goodwill, whenever events or changes in circumstances

indicate that the carrying value may not be recoverable.

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Item 7 | Critical Accounting Estimates

When conducting an impairment test on long-lived assets, other than goodwill, we first group individual assets based

on the lowest level for which identifiable cash flows are largely independent of the cash flows from other assets. This requires

some judgment. We then compare estimated future undiscounted cash flows expected to result from the use and eventual

disposition of the asset group to its carrying amount. If the undiscounted cash flows are less than the asset group’s carrying

amount, we then determine the asset group’s fair value by using a discounted cash flow analysis. This analysis is based on

estimates such as management’s short-term and long-term forecast of operating performance, including revenue growth rates

and expected profitability margins, estimates of the remaining useful life and service potential of the assets within the asset

group, and a discount rate based on our weighted average cost of capital. An impairment loss is measured and recorded as the

amount by which the asset group’s carrying amount exceeds its fair value. See Notes to Consolidated Financial Statements,

Note 2 for further discussion of impairments and other charges. We perform our goodwill impairment assessment for each

reporting unit, which is the same as our reportable segments, the Completion and Production division and the Drilling and

Evaluation division, comparing the estimated fair value of each reporting unit to the reporting unit’s carrying value, including

goodwill. We estimate the fair value for each reporting unit using a discounted cash flow analysis based on management’s

short-term and long-term forecast of operating performance. This analysis includes significant assumptions regarding discount

rates, revenue growth rates, expected profitability margins, forecasted capital expenditures, and the timing of expected future

cash flows based on market conditions. If the estimated fair value of a reporting unit exceeds its carrying amount, goodwill of

the reporting unit is not considered impaired. If the carrying amount of a reporting unit exceeds its estimated fair value, an

impairment loss is measured and recorded.

The impairment assessments discussed above incorporate inherent uncertainties, including projected commodity

pricing, supply and demand for our services, and future market conditions, which are difficult to predict in volatile economic

environments and could result in impairment charges in future periods if actual results materially differ from the estimated

assumptions utilized in our forecasts. If market conditions deteriorate, including crude oil prices significantly declining and

remaining at low levels for a sustained period of time, we could be required to record additional impairments of the carrying

value of our long-lived assets in the future which could have a material adverse impact on our operating results. See Notes to

Consolidated Financial Statements, Note 1 for our accounting policies related to long-lived assets.

Allowance for credit losses

We evaluate our global accounts receivable through a continuous process of assessing our portfolio on an individual

customer and overall basis. This process consists of a thorough review of historical collection experience, current aging status

of the customer accounts, financial condition of our customers, and whether the receivables involve retainages. We also

consider the economic environment of our customers, both from a marketplace and geographic perspective, in evaluating the

need for an allowance. Based on our review of these factors, we establish or adjust allowances for specific customers. This

process involves judgment and estimation, and frequently involves significant dollar amounts. Accordingly, our results of

operations can be affected by adjustments to the allowance due to actual write-offs that differ from estimated amounts.

At December 31, 2025, our allowance for credit losses totaled $805 million or 14.9% of notes and accounts receivable

before the allowance. At December 31, 2024, our allowance for credit losses totaled $754 million, or 13.9% of notes and

accounts receivable before the allowance. The allowance for credit losses in both years is primarily comprised of accounts

receivable from our primary customer in Venezuela. A hypothetical 100 basis point change in our estimate of the collectability

of our notes and accounts receivable balance as of December 31, 2025 would have resulted in a $54 million adjustment to 2025

total operating costs and expenses. See Notes to Consolidated Financial Statements, Note 5 for further information.

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Item 7 | Financial Instrument Market Risk

FINANCIAL INSTRUMENT MARKET RISK

We are exposed to market risks primarily associated with changes in foreign currency exchange rates. We selectively

manage these exposures through the use of derivative instruments, including forward foreign exchange contracts and foreign

exchange options. The objective of our risk management strategy is to minimize the volatility from fluctuations in foreign

currency. We do not use derivative instruments for trading purposes. The counterparties to our forward contracts and options

are global commercial and investment banks.

We use a sensitivity analysis model to measure the impact of potential adverse movements in foreign currency

exchange rates. With respect to foreign exchange sensitivity, after consideration of the impact from our forward foreign

exchange contracts and options, a hypothetical 10% adverse change in the value of all our foreign currency positions relative to

the U.S. dollar as of December 31, 2025 would result in a $81 million, pre-tax loss for our net monetary assets denominated in

currencies other than U.S. dollars.

There are certain limitations inherent in the sensitivity analysis presented, primarily due to the assumption that

exchange rates change instantaneously in an equally adverse fashion. In addition, the analysis is unable to reflect the complex

market reactions that normally would arise from the market shifts modeled. While this is our best estimate of the impact of the

various scenarios, this estimate should not be viewed a forecast.

For further information regarding foreign currency exchange risk, interest rate risk and credit risk, see Notes to

Consolidated Financial Statements, Note 16.

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Item 7 | Environmental Matters

ENVIRONMENTAL MATTERS

We are subject to numerous environmental, legal, and regulatory requirements related to our operations worldwide.

For information related to environmental matters, see Notes to Consolidated Financial Statements, Note 11 and Part I, Item

1(a). Risk Factors.

FORWARD-LOOKING INFORMATION

The Private Securities Litigation Reform Act of 1995 provides safe harbor provisions for forward-looking information.

Forward-looking information is based on projections and estimates, not historical information. Some statements in this Form

10-K, including those in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations –

Business Environment and Results of Operations – Business Outlook, are forward-looking and use words like “may,” “may

not,” “believe,” “do not believe,” “plan,” “estimate,” “intend,” “expect,” “do not expect,” “anticipate,” “do not anticipate,”

“should,” “likely,” and other expressions. We may also provide oral or written forward-looking information in our statements

and other materials we release to the public. Forward-looking information involves risks and uncertainties and reflects our best

judgment based on current information. Our results of operations can be affected by inaccurate assumptions we make or by

known or unknown risks and uncertainties. In addition, other factors may affect the accuracy of our forward-looking

information. As a result, no forward-looking information can be guaranteed. Actual events and the results of our operations may

vary materially.

We do not assume any responsibility to publicly update any of our forward-looking statements regardless of whether

factors change as a result of new information, future events, or for any other reason, except as required by law. You should

review any additional disclosures we make in our press releases and Forms 10-K, 10-Q, and 8-K filed with or furnished to the

Securities and Exchange Commission. We also suggest that you listen to our quarterly earnings release conference calls with

financial analysts.

NEW ACCOUNTING STANDARDS NOT YET ADOPTED

See Notes to Consolidated Financial Statements, Note 18 for further discussion of accounting standards adopted during

the year and to be adopted in future periods.

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Item 7(a) | Quantitative and Qualitative Disclosures About Market Risk

Item 7(a). Quantitative and Qualitative Disclosures About Market Risk.

Information related to market risk is included in Item 7. Management’s Discussion and Analysis of Financial

Condition and Results of Operations – Financial Instrument Market Risk and Notes to Consolidated Financial Statements, Note

16.

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