We owe our 2021 success to the work of our global team of more than 40,000 Halliburton employees. They delivered solid execution across every part of our business — safety, service quality, and financial results. You will read about that execution throughout this report. Despite the challenges of working during a pandemic with increasing complexity in global energy demand, they outperformed and delivered what the world requires — affordable and reliable energy that oil and gas provides — in a safe, efficient, and ethical manner while minimizing our environmental impact. Our 2021 financial performance demonstrates that aligning our actions with our strategic priorities allows us to accelerate cash flow generation, strengthen our balance sheet, and increase cash returns to shareholders. This execution on our strategic priorities also allows us to make meaningful progress on the objectives we describe throughout this report.
As this multi-year upcycle accelerates, we will use our international strength and leadership position in North America to deliver profitable growth and industry-leading returns. We will also build on the tangible progress we made in 2021 toward achieving our 40% reduction in Scope 1 and 2 emissions by 2035 from our 2018 baseline. And, as ever, we remain well positioned to support our customers through the energy transition as a leader in technology and innovation.
Deliver Profitable Growth Internationally
Throughout 2021, and despite global supply chain challenges, we served customers in more than 70 countries. In doing so, we allocated capital to the highest returns opportunities, increased international revenue and margins every quarter, and brought new drilling and formation evaluation technologies to the international markets. We also scaled our artificial lift business in the Middle East and continued construction of our new specialty chemicals plant in Saudi Arabia. We expect our international accomplishments in 2021 to set us up for continued profitable growth in 2022.
Maximize Cash Flow in North America
As the only fully integrated oilfield services company in North America, our strategy is to maximize cash flow in this structurally changed market, which remains the largest oil and gas services market in the world. Halliburton’s North American business in 2021 benefited from meaningful operating leverage we created early in the pandemic and expanded margins as customer activity accelerated across basins. We also have the right type of equipment for this market. We are the leaders in the high-demand, low-emissions equipment segment with our Tier 4 dual-fuel and electric fracturing solutions. As you will read in this report, our proven Zeus™ e-frac solution helps customers reduce their carbon footprint and provides unprecedented operational control and precision.
Accelerate Digital and Automation
We advance digitalization and automation in all aspects of our business. In 2021, Halliburton 4.0 — our digital approach — accelerated the deployment and integration of digital and automation technologies within our own and our customers’ operations. As a result of increased digital adoption, we benefit from more intelligent, remote, autonomous, and environmentally friendly operations. We showcase these advancements in this report.
Increase Capital Efficiency
Halliburton focuses on driving capital efficiency across the balance sheet. This is consistent with our goal to deliver significant free cash flow to shareholders. Research and development and process changes allow us to build tools cheaper, lengthen their run life, and move assets to where they make the best returns. Capital efficiency also allows for our many investments in health and safety, employees, diversity, equity, and inclusion, and the communities in which we operate.
Advance a Sustainable Energy Future
Finally, our strategy is to advance a sustainable energy future. Our cycle of innovation includes sustainability, and Halliburton’s global resources, leading engineering, scientific, and technical expertise, and more than a century of experience provide our customers with the efficient and innovative tools and services to minimize the environmental impact of their oil and gas operations. This report contains many examples of technologies that help our oil and gas customers decarbonize their legacy production base, reduce water consumption, produce less waste, and enhance efficiencies to improve project economics.
At the same time, we are on a parallel path to use our existing technologies in renewable energy applications. This report highlights how Halliburton employs our technology in those adjacent markets.
2021 was the first full year of Halliburton Labs, our clean energy accelerator. We have 12 participating companies, each of whom have access to our collaborative environment in which entrepreneurs, academics, and investors work together to advance cleaner and more affordable energy. Through Halliburton Labs, companies benefit from Halliburton’s more than 100 years of industrial capabilities, technical expertise, and culture of teamwork and mentorship. Through their work at Halliburton Labs, we — and our participating companies — plan to achieve results that make a significant impact on clean energy’s future.
Into the Future
2022 and beyond present enormous opportunity as the multi-year upcycle unfolds. We approach the future with enthusiasm and resolve to execute on our value proposition: we collaborate and engineer solutions to maximize asset value for our customers. We are confident that our focus on technology differentiation, digital adoption, and capital efficiency positions us for profitable growth internationally and maximizing value in North America.
Halliburton will evolve as energy evolves. 2021 demonstrated that to advance everywhere for everyone, the world will require oil and gas long into the future, even as it transitions to additional energy sources and builds out required value chains. Halliburton’s core competencies and service excellence will play an important role regardless of the energy source called upon to deliver the future of energy.
A bold vision of the future requires a steadfast, focused, and technologically advanced energy supply and Halliburton stands ready to deliver. As we move forward, Halliburton will continue to work with our customers to provide reliable, affordable energy to all people around the world — whether in emerging or established economies.
In closing, we thank our employees, our Board of Directors, and our shareholders for the important role each of you play in our success. Halliburton managed the transition from a global pandemic to the next energy upcycle because of the hard work of our employees, who deliver on our core values of integrity, safety, respect, creativity, and reliability every day. We look to the future with optimism and are well on our way to deliver strong free cash flow and returns for our shareholders.
