Halliburton 1Q16 Earnings Call Notes

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Dave Lesar

Obtaining anti-trust approval has become increasingly difficult

“From a regulatory perspective, we completely understood that the transaction would draw regulatory scrutiny and that substantial divestitures would be required to obtain regulatory approval. However, obtaining the U.S. anti-trust approval of large complex business combinations, regardless of the industry, has become increasingly time intensive and difficult, as evidenced by the termination and litigation of several other large proposed transactions over the last 16 months.”

Deterioration of oil prices also decimated the economics of the deal

“In addition to regulatory matters, the unprecedented deterioration of the oil and gas industry decimated the economics of the deal. During the pendency of the deal, the WTI price of oil has gone from over $76 in November of 2014 to a low of just over $26 in February of this year, while the global rig count has gone to a 17 year low and you all know what’s happened in North America, where each week we seem to hit new historical lows.”

People are more optimistic with oil prices higher, Q2 could be bottom for rig count

“I think that clearly they’re marginally more optimistic about things. I don’t think we’ve seen that optimism translated into any set plans to actively increase the rigs in the back half of the year, certainly those discussions are taking place. I think if you look at our release we put out last week, we thought the rig count would bottom in Q2, I think we still believe that’s the fact. But certainly, with the oil prices a little higher, people are more optimistic and we do think that potentially we’ll see an upswing in the rig count in the back half of the year.”

Independents are confident that they’ll get the money they need

“And I think given the nature of these companies and they are independents, they’re very confident in their own skill set, they’re confident in the acreage they have and I think that when they believe that the time is right to start drilling, they will do it. And generally, I think what we’ve seen is they’ll be able to get the money to do that either through commodity prices, or through going back into the equity markets or the debt markets. So, yeah, they are feeling better and I think they’re trying to survive to 2017 and then get on with things.”

Christian A. Garcia – Senior Vice President of Finance & Acting Chief Financial Officer

Jeffrey Allen Miller – President & Director

Lowest cost wins

“Commodity prices in markets will move up and down, but the one thing about which I am certain, one thing that won’t change over time is that the lowest cost per BOE wins.”

International cycles are usually longer than North America

“The international cycles are just longer, and so they are longer on the way down because structurally the contracts are longer, they’re also slower on the uptick as well. So, I don’t expect to see improvement internationally until we see some improvement in North America. That timeframe has usually been six months to a year in terms of the lag between North America and the rest of the world”