Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in conjunction with the condensed consolidated financial statements included in "Item 1. Financial Statements" contained herein.
EXECUTIVE OVERVIEW Organization We are one of the world's largest providers of products and services to the energy industry. We help our customers maximize value throughout the lifecycle of the reservoir - from locating hydrocarbons and managing geological data, to drilling and formation evaluation, well construction and completion, and optimizing production throughout the life of the asset. Activity levels within our operations are significantly impacted by spending on upstream exploration, development, and production programs by major, national, and independent oil and natural gas companies. We report our results under two segments, the Completion and Production segment and the Drilling and Evaluation segment.
•Completion and Production delivers cementing, stimulation, intervention, pressure control, artificial lift, and completion products and services. The segment consists of Production Enhancement, Cementing, Completion Tools, Production Solutions, Artificial Lift, and Pipeline and Process Services.
•Drilling and Evaluation provides field and reservoir modeling, drilling, fluids and specialty chemicals, evaluation and precise wellbore placement solutions that enable customers to model, measure, drill, and optimize their well construction activities. The segment consists of Baroid,Sperry Drilling , Wireline and Perforating, Drill Bits and Services,Landmark Software and Services, Testing andSubsea , and Project Management. The business operations of our segments are organized around four primary geographic regions:North America ,Latin America ,Europe /Africa /CIS, andMiddle East /Asia . We have manufacturing operations in various locations, the most significant of which are inthe United States ,Malaysia ,Singapore , and theUnited Kingdom . With approximately 40,000 employees, we operate in more than 70 countries around the world, and our corporate headquarters is inHouston, Texas . Our value proposition is to collaborate and engineer solutions to maximize asset value for our customers. We work to achieve strong cash flows and returns for our shareholders by delivering technology and services that improve efficiency, increase recovery, and maximize production for our customers. Our strategic priorities are to: -deliver profitable growth in our international business; -maximize value and cash flows in ourNorth America business; -accelerate the deployment and integration of digitalization and automation technologies that create differentiation, both internally and for our customers; -drive increased capital efficiencies in all parts of our business; and -actively participate in advancing a sustainable energy future.
The following charts depict revenue split between our two operating segments and
our four primary geographic regions for the quarter ended
[[Image Removed: hal-20220630_g1.jpg]][[Image Removed: hal-20220630_g2.jpg]]
HAL Q2 2022 FORM 10-Q | 12 -------------------------------------------------------------------------------- Table of Contents Part I. Item 2 | Executive Overview Market conditions, COVID-19 pandemic, andRussia /Ukraine Conflict Oil and natural gas prices continue to be impacted by the efforts to contain COVID-19, the pace of economic recovery, and changes to OPEC+ production levels. In addition,Russia's invasion ofUkraine in February of 2022 and the ongoing conflict continues to cause regional instability as discussed below. The foregoing destabilizing factors have caused dramatic fluctuations in global financial markets and uncertainty about world-wide oil supply and demand, which in turn has increased the volatility of oil and natural gas prices.West Texas Intermediate (WTI) averaged approximately$109 per barrel during the second quarter of 2022. TheU.S. land average rig count continues to be below pre-pandemic levels, but rose 13% in the second quarter of 2022 compared to the first quarter of 2022. The Brent crude oil price averaged over$114 per barrel during the second quarter of 2022 and the international average rig count decreased 1% as compared to the first quarter of 2022. Globally, we are being impacted by supply chain and labor shortages as the post-pandemic recovery stressed both the supply of raw materials and labor, plus transportation logistics. We monitor market trends and work to mitigate cost impacts through economies of scale in global procurement, technology modifications, and efficient sourcing practices. Also, while we have been impacted by inflationary cost increases, primarily related to frac sand, 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 that work to minimize the operational impact. As a result ofRussia's invasion ofUkraine , governments in theEuropean Union ,the United States , theUnited Kingdom ,Switzerland , and other countries have enacted additional sanctions againstRussia and Russian interests. These sanctions include controls on the export, re-export, and in-country transfer inRussia of certain goods, supplies, and technologies, including some that we use in our business inRussia , and the imposition of restrictions on doing business with certain state-owned Russian customers and other investments and business activities inRussia . In order to comply with these sanctions, we ceased pursuing future business inRussia and began to wind down our remaining operations inRussia in March of 2022. During the second quarter of 2022, we made the decision to sell our Russian operations. We executed a non-binding letter of intent with our Russian employee group in May of 2022 for the divestiture of the Russian operations and are in the process of negotiating definitive documentation related to this divestiture. The net assets to be sold (i.e., the disposal group) met the held for sale criteria and as a result, we wrote down the disposal group to fair value less costs to sell, resulting in a pre-tax charge of$344 million . See Note 2 to our condensed consolidated financial statements for additional information. The invasion of and ongoing conflict inUkraine will likely continue to cause disruption and instability inRussia ,Ukraine , and other markets in which we operate. Litigation may result, both by us in the event of any expropriation or nationalization of our assets and by others against us as a result of our wind down due to sanctions compliance. We may also incur employee severance costs in connection with the wind down. It is not possible at this time to predict the ultimate consequences of the conflict inUkraine or the responses of governments or others to the conflict, which could include, among other things, additional sanctions, greater regional instability or expansion of the conflict, embargoes, geopolitical shifts, litigation, and impacts on macroeconomic conditions, commodities, currency exchange rates, supply chains, and financial markets.
Financial results The following graph illustrates our revenue and operating margins for each operating segment for the second quarter of 2021 and 2022.
[[Image Removed: hal-20220630_g3.jpg]] HAL Q2 2022 FORM 10-Q | 13 -------------------------------------------------------------------------------- Table of Contents Part I. Item 2 | Executive Overview During the second quarter of 2022, we generated total company revenue of$5.1 billion , a 37% increase as compared to the second quarter of 2021. We reported operating income of$374 million during the second quarter of 2022 that included$344 million of impairments and other charges related to our decision to market for sale ourRussia operations. This compares to operating income of$434 million during the second quarter of 2021. Our Completion and Production segment revenue increased 42% in the second quarter of 2022 as compared to the second quarter of 2021, primarily due to increased pressure pumping services inNorth America land. Our Drilling and Evaluation segment revenue increased 30% in the second quarter of 2022 as compared to the second quarter of 2021, driven primarily by improvements in drilling-related services, wireline services, and testing services globally. InNorth America , our revenue increased 55% in the second quarter of 2022, as compared to the second quarter of 2021, driven by increased pressure pumping services inNorth America land, as well as increased activity in most other product service lines. While the averageNorth America rig count increased 58% from the second quarter of 2021, it is still below pre-pandemic levels. Revenue in our international markets increased 24% in the second quarter of 2022, as compared to the second quarter of 2021, primarily driven by higher activity for drilling and completions related services across all regions. The international rig count increased 11% in the second quarter of 2022 as compared to the second quarter of 2021. Sustainability and Energy Advancement We continue to pursue our strategic initiatives around advancing cleaner, affordable energy, and supporting sustainable energy advancements, using innovation and technology to reduce the environmental impact of producing oil and gas. This includes the continued development and deployment of low-carbon solutions to help oil and gas operators lower their current emissions profiles while also using our existing technologies in renewable energy applications. In addition,Halliburton Labs , our clean energy accelerator, continues to pursue companies and has 15 participants and alumni as of the second quarter of 2022.
Our operating performance and liquidity are described in more detail in "Liquidity and Capital Resources" and "Business Environment and Results of Operations."
HAL Q2 2022 FORM 10-Q | 14 --------------------------------------------------------------------------------
Table of Contents Part I. Item 2 | Liquidity and Capital Resources
LIQUIDITY AND CAPITAL RESOURCES
As of
Significant sources and uses of cash during the first six months of 2022
Sources of cash:
•Cash from operating activities was
Uses of cash:
•In February of 2022, we paid$641 million to redeem$600 million aggregate principal amount of our 3.8% senior notes due 2025. The payment also included the make-whole premium and accrued interest.
•Capital expenditures were
•We paid
Future sources and uses of cash We manufacture most of our own equipment, which provides us with significant flexibility to increase or decrease our capital expenditures based on market conditions. We expect capital spending for the full year 2022 will be approximately 5-6% of revenue. We believe this level of spend will allow us to adequately invest in key strategic areas. However, we will continue to maintain capital discipline and monitor the rapidly changing market dynamics, and we may adjust our capital spend accordingly. Our quarterly dividend rate is$0.12 per common share, or approximately$109 million . We will continue to maintain our focus on liquidity and review our quarterly dividend considering our priorities of debt reduction and, as market conditions evolve, reinvesting in our business. Our Board of Directors has authorized a program to repurchase our common stock from time to time. No repurchases occurred during the second quarter of 2022 under this program. Approximately$5.1 billion remained authorized for repurchases as ofJune 30, 2022 and may be used for open market and other share purchases. Other factors affecting liquidity Financial position in current market. As ofJune 30, 2022 , 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 onApril 27, 2022 with an expiration date ofApril 27, 2027 . We believe we have a manageable debt maturity profile, with approximately$1.1 billion coming due through the end of 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 global cash needs, including capital expenditures, working capital investments, dividends, if any, and contingent liabilities. Guarantee agreements. In the normal course of business, we have in place agreements with financial institutions under which approximately$1.9 billion of letters of credit, bank guarantees, or surety bonds were outstanding as ofJune 30, 2022 . 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 ofJune 30, 2022 , we had no material off-balance sheet liabilities and were not required to make any material cash distributions to our unconsolidated subsidiaries. Credit ratings. Our credit ratings withStandard & Poor's (S&P) 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 (Moody's) remain Baa1 for our long-term debt and P-2 for our short-term debt, with a stable outlook. HAL Q2 2022 FORM 10-Q | 15 --------------------------------------------------------------------------------
Table of Contents Part I. Item 2 | Liquidity and Capital Resources
Customer receivables. In line with industry practice, we bill our customers for our services in arrears and are, therefore, subject to risk that our customers may delay or fail 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. Given the nature and significance of the pandemic and disruption in the oil and gas industry, we have experienced delayed customer payments and payment defaults associated with customer liquidity issues. Receivables from our primary customer inMexico accounted for approximately 8% of our total receivables as ofJune 30, 2022 . While we have experienced payment delays inMexico , these 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 Q2 2022 FORM 10-Q | 16 -------------------------------------------------------------------------------- Part I. Item 2 |
Business Environment and Results of
Table of Contents 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. During the first six months of 2022, based upon the location of the services provided and products sold, 44% of our consolidated revenue was fromthe United States , compared to 40% of consolidated revenue fromthe United States in the first six months of 2021. No other country accounted for more than 10% of our revenue. 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 and our customers' expectations about future prices, global oil supply and demand, completions intensity, the world economy, the availability of capital, government regulation, and global stability, which together drive worldwide drilling and completions activity. Additionally, many of our customers inNorth America have shifted their strategy from production growth to operating within cash flow and generating returns, and we generally expect that to continue throughout 2022. 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 oil and natural gas prices for WTI, United
Kingdom Brent crude oil, and
Three Months Ended Year Ended June 30 December 31 2022 2021 2021 Oil price - WTI (1)$ 108.72 $ 66.09 $ 67.99 Oil price - Brent (1) 113.54 68.83 70.68 Natural gas price - Henry Hub (2) 7.48 2.94 3.91
(1) Oil price 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 weeklyBaker Hughes rig count data were as follows: Three Months Ended Six Months Ended Year Ended June 30 June 30 December 31 2022 2021 2022 2021 2021 U.S. Land 698 438 660 409 465 U.S. Offshore 15 12 15 15 15 Canada 113 72 155 107 132 North America 826 522 830 531 612 International 816 734 819 716 755 Worldwide total 1,642 1,256 1,649 1,247 1,367 HAL Q2 2022 FORM 10-Q | 17
-------------------------------------------------------------------------------- Part I. Item 2 |
Business Environment and Results of
Table of Contents Operations Business outlook According to theUnited States Energy Information Administration (EIA)July 2022 "Short Term Energy Outlook," the Brent spot price is expected to average$111 per barrel for the third quarter of 2022, with an expected full year 2022 average of$107 per barrel, a rise of approximately$36 per barrel, or 51%, as compared to the full year 2021 average. According to the EIA, WTI prices are expected to average$106 per barrel in the third quarter of 2022 and$102 per barrel for the full year 2022. The EIA's 2022 WTI forecast for 2022 would result in an increase of$34 per barrel, or 50%, compared to the full year 2021. Heightened levels of uncertainty continue to exist resulting from a variety of factors, includingRussia's invasion ofUkraine . The EIA also expects an average Brent spot price of$108 per barrel in the second half of 2022 and falling to an average of$97 per barrel in 2023. According to the EIA, the current oil inventory levels are low compared to pre-pandemic levels, thereby causing potential additional oil price volatility. Actual price outcomes will depend heavily on the impact of existing sanctions imposed onRussia , any potential future sanctions, and the effect of independent corporate actions onRussia's oil production or the sale ofRussia's oil in the global market. The EIAJuly 2022 "Short Term Energy Outlook" projectsHenry Hub natural gas prices to average$8.69 per MMBtu during the third quarter of 2022, average$7.40 per MMBtu for the full year 2022, and to further decrease to an average of$4.74 per MMBtu in 2023. Per theInternational Energy Agency's (IEA)July 2022 "Oil Market Report", the forecasted global oil demand is set to average 99.2 million barrels per day in 2022, a 1.7 million barrel per day increase from 2021. The EIA projects crude oil production inthe United States will average 11.92 million barrels per day in 2022, approximately a 7% increase from the average 11.19 million barrels per day in 2021, and to average 12.97 million barrels per day in 2023, an increase of 9% from 2022. We continue to expect oil and gas demand will grow over the next several years despite the actions taken by central banks in an attempt to control inflation and the resulting concern about a potential economic slowdown and will be driven by economic expansion, energy security concerns, and population growth. We believe supply dynamics have fundamentally changed due to investor return requirements, public environmental, social, and governance commitments, and regulatory pressure, all of which drive short-cycle production strategies, which enable operators to change investment and spending more rapidly to address changes in market conditions and crude oil pricing. There are important exceptions where successful long-term projects will be developed, but we believe that most investments will be directed towards short-cycle activity over the next several years. Within our international markets, we expect our customers' spend to remain on track to increase by mid-teens this year, with theMiddle East andLatin America expected to grow the most on a full year basis. InNorth America , net pricing improvements resulted in strong completion and production margin expansion during the second quarter, and we expect pricing gains to continue, with customer spending expected to increase by over 35% this year. HAL Q2 2022 FORM 10-Q | 18 -------------------------------------------------------------------------------- Part I. Item 2 | Results of
Operations in 2022 Compared to
Table of Contents 2021 (QTD)
RESULTS OF OPERATIONS IN 2022 COMPARED TO 2021
Three Months EndedJune 30, 2022 Compared with Three Months EndedJune 30, 2021 Three Months Ended June 30 Favorable Percentage Millions of dollars 2022 2021 (Unfavorable) Change Revenue: By operating segment: Completion and Production$ 2,911 $ 2,048 $ 863 42 % Drilling and Evaluation 2,163 1,659 504 30 Total revenue$ 5,074 $ 3,707 $ 1,367 37 % By geographic region: North America$ 2,426 $ 1,569 $ 857 55 % Latin America 758 534 224 42 Europe/Africa/CIS 718 679 39 6 Middle East/Asia 1,172 925 247 27 Total revenue$ 5,074 $ 3,707 $ 1,367 37 % Operating income: By operating segment: Completion and Production$ 499 $ 317 $ 182 57 % Drilling and Evaluation 286 175 111 63 Total 785 492 293 60 Corporate and other (67) (58) $ (9) (16) % Impairments and other charges (344) - (344) n/m Total operating income$ 374 $ 434 $ (60) (14) % n/m = not meaningful Operating Segments Completion and Production Completion and Production revenue in the second quarter of 2022 was$2.9 billion , an increase of$863 million , or 42%, when compared to the second quarter of 2021. Operating income in the second quarter of 2022 was$499 million , an increase of$182 million , or 57%, when compared to the second quarter of 2021. These results were driven by increased pressure pumping services, artificial lift activity, and completion tool sales in the Western Hemisphere andSaudi Arabia , higher cementing services inMiddle East /Asia , and improved well intervention services inNorth America land. These improvements were partially offset by lower completion tool sales inNorway andMalaysia , and decreased pipeline services inChina , theUnited Kingdom , andRussia . Drilling and Evaluation Drilling and Evaluation revenue in the second quarter of 2022 was$2.2 billion , an increase of$504 million , or 30%, when compared to the second quarter of 2021. Operating income in the second quarter of 2022 was$286 million , an increase of$111 million , or 63%, when compared to the second quarter of 2021. These results were due to increased drilling-related services, wireline services, and testing services globally, and higher project management services inLatin America andMiddle East /Asia . Partially offsetting these increases were lower activity in multiple product service lines inRussia andNorway .
Geographic Regions
North America North America revenue in the second quarter of 2022 was$2.4 billion , a 55% increase compared to the second quarter of 2021. This increase was primarily driven by increased pricing, and pressure pumping activity and drilling-related services in the region, mainlyNorth America land. These increases were partially offset by reduced project management services in theGulf of Mexico . HAL Q2 2022 FORM 10-Q | 19 -------------------------------------------------------------------------------- Part I. Item 2 | Results of
Operations in 2022 Compared to
Table of Contents 2021 (QTD)Latin America Latin America revenue in the second quarter of 2022 was$758 million , a 42% increase compared to the second quarter of 2021 due to improved activity across multiple product service lines inArgentina ,Colombia ,Mexico ,Ecuador ,Brazil , andGuyana . Partially offsetting these increases were reduced pressure pumping services and completion tool sales inTrinidad and lower drilling-related services inBolivia .
Europe /Africa /CIS revenue in the second quarter of 2022 was$718 million , a 6% increase compared to the second quarter of 2021. This improvement was primarily driven by higher activity across multiple product service lines inWest Africa ,Egypt , andAngola , and increased drilling-related activity and completion tool sales inAzerbaijan . These increases were partially offset by reduced activity across multiple product service lines inRussia andNorway , and reduced testing services and completion tool sales inAlgeria .Middle East /Asia Middle East /Asia revenue in the second quarter of 2022 was$1.2 billion , a 27% increase compared to the second quarter of 2021, resulting from increased activity across multiple product lines inSaudi Arabia ,Kuwait ,India , andAustralia , increased drilling-related services inOman , and increased fluid and wireline services inUnited Arab Emirates . These increases were partially offset by reduced stimulation services inOman , lower pipeline services inChina , and lower completion tool sales inMalaysia .
Other Operating Items
Impairments and other charges. During the three months endedJune 30, 2022 , we recognized a pre-tax charge of$344 million , related to the write down of all our net assets inRussia as a result of our decision to market ourRussia operations for sale due to the additional sanctions enacted againstRussia arising from the conflict inUkraine . See Note 2 to the condensed consolidated financial statements for further discussion on these charges.
Nonoperating Items
Effective tax rate. During the three months endedJune 30, 2022 , we recorded a total income tax provision of$114 million on a pre-tax income of$231 million , resulting in an effective tax rate of 49.3% for the quarter. The effective tax rate was higher primarily due to the impact of the decision to sell our Russian operations and a corresponding increase in the valuation allowance on foreign tax credits. During the three months endedJune 30, 2021 , we recorded a total income tax provision of$65 million on a pre-tax income of$295 million , resulting in an effective tax rate of 22.0% for the quarter. HAL Q2 2022 FORM 10-Q | 20 -------------------------------------------------------------------------------- Part I. Item 2 | Results of
Operations in 2022 Compared to
Table of Contents 2021 (YTD)
Six Months Ended
Six Months Ended June 30 Favorable Percentage Millions of dollars 2022 2021 (Unfavorable) Change Revenue: By operating segment: Completion and Production$ 5,264 $ 3,918 $ 1,346 34 % Drilling and Evaluation 4,094 3,240 854 26 Total revenue$ 9,358 $ 7,158 $ 2,200 31 % By geographic region: North America$ 4,351 $ 2,973 $ 1,378 46 % Latin America 1,411 1,069 342 32 Europe/Africa/CIS 1,395 1,313 82 6 Middle East/Asia 2,201 1,803 398 22 Total revenue$ 9,358 $ 7,158 $ 2,200 31 % Operating income: By operating segment: Completion and Production$ 795 $ 569 $ 226 40 % Drilling and Evaluation 580 346 234 68 Total$ 1,375 $ 915 $ 460 50 Corporate and other (124) (111) $ (13) (12) % Impairments and other charges (366) - (366) n/m Total operating income$ 885 $ 804 $ 81 10 % n/m = not meaningful Operating Segments Completion and Production Completion and Production revenue in the first six months of 2022 was$5.3 billion , an increase of$1.3 billion , or 34%, compared to the first six months of 2021. Operating income in the first six months of 2022 was$795 million , an increase of$226 million , or 40%, compared to the first six months of 2021. These increases were primarily driven by higher utilization in pressure pumping services globally and increased completion tool sales in the Western Hemisphere andSaudi Arabia . Also increasing were artificial lift activity inNorth America land, and well intervention services mostly inNorth America land andEurope /Africa /CIS. Partially offsetting these increases were lower completion tool sales inNorway andMalaysia , and decreased pipeline services inChina , theUnited Kingdom , andRussia . Drilling and Evaluation Drilling and Evaluation revenue in the first six months of 2022 was$4.1 billion , an increase of$854 million , or 26%, compared to the first six months of 2021. Operating income in the first six months of 2022 was$580 million , an increase of$234 million , or 68%, compared to the first six months of 2021. These results were primarily related to increased drilling-related services in the Western Hemisphere,Middle East /Asia ,West Africa ,Azerbaijan , andEgypt , higher wireline activity in the Western Hemisphere,Saudi Arabia , andUnited Arab Emirates , higher project management activity inColombia andEcuador , along with increased testing services in the Eastern Hemisphere andLatin America . Partially offsetting these increases were reduced drilling-related services inRussia and lower project management activity inIraq . HAL Q2 2022 FORM 10-Q | 21 -------------------------------------------------------------------------------- Part I. Item 2 | Results of
Operations in 2022 Compared to
Table of Contents 2021 (YTD) Geographic RegionsNorth America North America revenue in the first six months of 2022 was$4.4 billion , a 46% increase compared to the first six months of 2021, driven by higher activity and pricing across the region, primarily associated with pressure pumping activity, drilling-related services, and completion tool sales, improved artificial lift activity inNorth America land andCanada , and increased wireline activity inNorth America land and theGulf of Mexico . Partially offsetting these increases were lower software sales across the region.Latin America Latin America revenue in the first six months of 2022 was$1.4 billion , a 32% increase compared to the first six months of 2021, resulting primarily from increases across multiple product service lines inArgentina andColombia , increased well construction services and stimulation activity inBrazil andMexico , as well as higher wireline activity across the region. Also improving were project management activity inEcuador and completion tool sales inGuyana . Partially offsetting these increases were lower project management activity inMexico and well intervention services inBrazil .
Europe /Africa /CIS revenue in the first six months of 2022 was$1.4 billion , a 6% increase compared to the first six months of 2021, driven by increases across multiple product service lines inAzerbaijan ,Egypt , and Eastern Mediterranean, along with increased cementing services inAngola . Well intervention services and testing services increased across the region, coupled with higher fluid services inWest Africa . These increases were partially offset by decreases in multiple product service lines inRussia ,Norway , and theUnited Kingdom and lower software sales across the region.Middle East /Asia Middle East /Asia revenue in the first six months of 2022 was$2.2 billion , a 22% increase compared to the first six months of 2021, resulting primarily from increased activity across multiple product service lines inSaudi Arabia ,Kuwait ,United Arab Emirates ,Australia , andIndia , higher drilling-related services and project management activity inOman , along with improved wireline activity across the region. Partially offsetting these increases were lower completion tool sales inMalaysia and project management activity inIraq .
Other Operating Items
Impairments and other charges. During the six months endedJune 30, 2022 , we recognized a pre-tax charge of$366 million , primarily related to a$344 million write down of all our net assets inRussia as a result of our decision to market ourRussia operations for sale due to the additional sanctions enacted againstRussia arising from the conflict inUkraine in the second quarter of 2022. In the first quarter of 2022, we recognized a pre-tax charge of$22 million to write down all of our assets inUkraine , including$16 million in receivables, due to the ongoing conflict betweenRussia andUkraine . See Note 2 to the condensed consolidated financial statements for further discussion on these charges.
Nonoperating Items
Loss on early extinguishment of debt. During the six months endedJune 30, 2022 , we recorded a$42 million loss on the early redemption of$600 million aggregate principal amount of our 3.8% senior notes, which included premiums and unamortized expenses. See Note 6 to the condensed consolidated financial statements for further information. Effective tax rate. During the six months endedJune 30, 2022 , we recorded a total income tax provision of$182 million on a pre-tax income of$563 million , resulting in an effective tax rate of 32.2%. The effective tax rate was higher primarily due to the impact of the decision to sell our Russian operations and a corresponding increase in the valuation allowance on foreign tax credits. During the six months endedJune 30, 2021 , we recorded a total income tax provision of$117 million on pre-tax income of$518 million , resulting in an effective tax rate of 22.6%. HAL Q2 2022 FORM 10-Q | 22 --------------------------------------------------------------------------------
Table of Contents Part I. Item 2 | Forward-Looking Information 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-Q 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 other materials we release to the public. Forward-looking information involves risk 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. 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 theSEC . We also suggest that you listen to our quarterly earnings release conference calls with financial analysts.
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