View Filing Data

General and administrative

^[1]

381

3,189

1,895

132

147

Total operating costs and expenses

3,705

5,539

18,697

18,802

Interest expense, net of interest income

128

(6,831)

(251)

(141)

(99)

(502)

(311)

Other, net

(39)

(34)

(117)

(281)

Income (loss) from continuing operations before income taxes

(52)

(90)

(7,450)

(843)

Income tax benefit (provision)

1,836

207

Income (loss) from continuing operations

(53)

(5,614)

(636)

Income (loss) from discontinued operations, net of income tax (provision) benefit

(2)

(5)

Net income (loss)

(53)

(5,616)

(641)

Net (income) loss attributable to noncontrolling interest

(1)

(2)

Net income (loss) attributable to company

(54)

(5,614)

(643)

Amounts attributable to company shareholders:

Income (loss) from continuing operations

(54)

(5,612)

(638)

Income (loss) from discontinued operations, net

(2)

(5)

Net income (loss) attributable to company

$ 6

$ (54)

$ (5,614)

$ (643)

Basic income per share attributable to company shareholders:

Income (loss) from continuing operations (in dollars per share)

$ 0.01

$ (0.06)

$ (6.53)

$ (0.75)

Income (loss) from discontinued operations, net (in dollars per share)

0.00

(0.01)

Net income (loss) per share (in dollars per share)

0.01

(0.06)

(6.53)

(0.76)

Diluted income per share attributable to company shareholders:

Income (loss) from continuing operations (in dollars per share)

0.01

(0.06)

(6.53)

(0.75)

Income (loss) from discontinued operations, net (in dollars per share)

0.00

(0.01)

Net (loss) income per share (in dollars per share)

0.01

(0.06)

(6.53)

(0.76)

Cash dividends per share

$ 0.18

$ 0.54

Basic weighted average common shares outstanding (in shares)

862

855

860

852

Diluted weighted average common shares outstanding (in shares)

864

855

860

852

[1]

Impairments and other charges are as follows:-For the three months ended September 30, 2015, includes $228 million attributable to Completion and Production, $138 million attributable to Drilling and Evaluation, and $15 million attributable to Corporate and other. -For the nine months ended September 30, 2016, includes $2.0 billion attributable to Completion and Production, $1.1 billion attributable to Drilling and Evaluation, and $8 million attributable to Corporate and other. -For the nine months ended September 30, 2015, includes $949 million attributable to Completion and Production, $865 million attributable to Drilling and Evaluation, and $81 million attributable to Corporate and other.

Condensed Consolidated Statements of Operations (Unaudited) (Parenthetical) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Interest income	$ 18	$ 3	$ 38	$ 10
Income (loss) from discontinued operations, income tax benefit (provision)	$ 0	$ 0	$ 1	$ 3

Cash flows from operating activities:

Amount of tax expense (benefit) related to a discontinued operation. Includes, but is not limited to, tax expense (benefit) related to income (loss) from operations during the phase-out period, tax expense (benefit) related to gain (loss) on disposal, tax expense (benefit) related to gain (loss) for reversal of write-down (write-down) to fair value, less cost to sell, and tax expense (benefit) related to adjustments of a prior period gain (loss) on disposal.

+ References + Details

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Net income (loss)	$ 7	$ (53)	$ (5,616)	$ (641)
Other comprehensive income (loss), net of income taxes:
Unrealized gain (loss) on cash flow hedges	0	(166)	0	(62)
Other	1	13	3	10
Other comprehensive income (loss), net of income taxes	1	(153)	3	(52)
Comprehensive income (loss)	8	(206)	(5,613)	(693)
Comprehensive (income) loss attributable to noncontrolling interest	(1)	(1)	2	(2)
Comprehensive income (loss) attributable to company shareholders	$ 7	$ (207)	$ (5,611)	$ (695)

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions	Sep. 30, 2016	Dec. 31, 2015
Current assets:
Cash and equivalents	$ 3,289	$ 10,077
Receivables less allowance for bad debts	4,360	5,317
Inventories	2,475	2,993
Prepaid income taxes	703	527
Other current assets	933	1,156
Total current assets	11,760	20,070
Property, plant, and equipment, net of accumulated depreciation	8,741	12,117
Goodwill	2,383	2,385
Deferred income taxes	1,944	552
Other assets	1,927	1,818
Total assets	26,755	36,942
Current liabilities:
Accounts payable	1,543	2,019
Accrued employee compensation and benefits	535	862
Liabilities for Macondo well incident	369	400
Current maturities of long-term debt	152	659
Other current liabilities	1,032	1,397
Total current liabilities	3,631	5,337
Long-term debt	12,163	14,687
Employee compensation and benefits	449	479
Other liabilities	786	944
Total liabilities	17,029	21,447
Shareholders' equity:
Common shares, par value $2.50 per share	2,675	2,677
Paid-in capital in excess of par value	184	274
Accumulated other comprehensive loss	(360)	(363)
Retained earnings	14,445	20,524
Treasury stock, at cost	(7,262)	(7,650)
Company shareholders' equity	9,682	15,462
Noncontrolling interest in consolidated subsidiaries	44	33
Total shareholders' equity	9,726	15,495
Total liabilities and shareholders' equity	$ 26,755	$ 36,942

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) shares in Millions, $ in Millions	Sep. 30, 2016	Dec. 31, 2015
Current assets:
Allowance for bad debts	$ 197	$ 145
Accumulated depreciation	$ 10,944	$ 11,576
Shareholders' equity:
Common stock, par value (in dollars per share)	$ 2.50	$ 2.50
Common stock, shares authorized (in shares)	2,000	2,000
Common stock, shares issued (in shares)	1,070	1,071
Treasury shares (in shares)	206	215

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Millions

9 Months Ended

Sep. 30, 2016

Sep. 30, 2015

Net income (loss)

$ (5,616)

$ (641)

Adjustments to reconcile net income (loss) to net cash flows from operating activities:

Deferred income tax expense (benefit), continuing operations

^[1]

3,189

1,895

(1,511)

(411)

Depreciation, depletion, and amortization

1,117

1,433

U.S. tax refund

430

(33)

(333)

Changes in assets and liabilities:

Receivables

682

1,396

Accounts payable

(461)

(469)

Inventories

388

(23)

Other

(947)

(826)

Total cash flows provided by (used in) operating activities

(2,762)

2,021

Cash flows from investing activities:

Capital expenditures

(625)

(1,748)

Proceeds from sales of property, plant, and equipment

176

133

Other investing activities

(73)

(109)

Total cash flows used in investing activities

(522)

(1,724)

Cash flows from financing activities:

Payments on long-term borrowings

(3,149)

(8)

Dividends to shareholders

(465)

(460)

Other financing activities

163

146

Total cash flows used in financing activities

(3,451)

(322)

Effect of exchange rate changes on cash

(53)

(17)

Increase (decrease) in cash and equivalents

(6,788)

(42)

Cash and equivalents at beginning of period

10,077

2,291

Cash and equivalents at end of period

3,289

2,249

Cash payments (receipts) during the period for:

Interest

516

355

Income taxes

$ (25)

$ 454

[1]

Acquisitions and Dispositions (Notes)	9 Months Ended
Acquisitions and Dispositions (Notes)	Sep. 30, 2016
Acquisitions and Dispositions [Abstract]
Acquisitions and Dispositions	Acquisitions and Dispositions Termination of Baker Hughes acquisition In November 2014, we entered into a merger agreement with Baker Hughes to acquire all outstanding shares of Baker Hughes in a stock and cash transaction. On April 30, 2016, we and Baker Hughes mutually terminated our merger agreement primarily because of the challenges in obtaining remaining regulatory approvals and general industry conditions that severely damaged deal economics. In April 2015, we had announced our decision to market for sale our Fixed Cutter and Roller Cone Drill Bits, our Directional Drilling, and our Logging-While-Drilling/Measurement-While-Drilling businesses in connection with the anticipated Baker Hughes transaction. Accordingly, beginning in April 2015, the assets and liabilities for these businesses, which are included within our Drilling and Evaluation operating segment, were classified as held for sale and the corresponding depreciation and amortization expense ceased at that time. Since our proposed divestitures no longer met the assets held for sale accounting criteria at March 31, 2016, we reclassified these businesses to assets held and used in the accompanying condensed consolidated balance sheets for both periods presented. We recorded corresponding charges during the first quarter of 2016 totaling $464 million within "Baker Hughes related costs and termination fee" in our condensed consolidated statements of operations, which included $329 million of accumulated unrecognized depreciation and amortization expense for these businesses during the period the associated assets were classified as held for sale, including the first quarter of 2016, along with $135 million of capitalized and other divestiture-related costs incurred during the first quarter. Beginning April 1, 2016, all depreciation and amortization expense associated with these businesses were included in operating costs and expenses on our condensed consolidated statements of operations. In conjunction with the termination of our merger agreement, we paid Baker Hughes a termination fee of $3.5 billion in May 2016 and recognized this expense during the second quarter. The termination also triggered a mandatory redemption of $2.5 billion of the senior notes we had issued in November 2015 in contemplation of the transaction. We redeemed those notes in May 2016 using cash on hand at a price of 101% of their principal amount, plus accrued and unpaid interest. The notes redeemed included the $1.25 billion of 2.7% senior notes due in 2020 and $1.25 billion of 3.375% senior notes due in 2022. The redemption resulted in $41 million of fees and associated expenses included in interest expense on our condensed consolidated statements of operations for the nine months ended September 30, 2016.

Basis of Presentation

9 Months Ended

Sep. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements were prepared using generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Regulation S-X. Accordingly, these financial statements do not include all information or notes required by generally accepted accounting principles for annual financial statements and should be read together with our 2015 Annual Report on Form 10-K.

Our accounting policies are in accordance with United States generally accepted accounting principles. The preparation of financial statements in conformity with these accounting principles requires us to make estimates and assumptions that affect:


-	the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements; and


-	the reported amounts of revenue and expenses during the reporting period.

Ultimate results could differ from our estimates.

In our opinion, the condensed consolidated financial statements included herein contain all adjustments necessary to present fairly our financial position as of September 30, 2016, the results of our operations for the three and nine months ended September 30, 2016 and 2015, and our cash flows for the nine months ended September 30, 2016 and 2015. Such adjustments are of a normal recurring nature. In addition, certain reclassifications of prior period balances have been made to conform to the current period presentation. The results of our operations for the three and nine months ended September 30, 2016 may not be indicative of results for the full year.

Impairments and Other Charges (Notes)

9 Months Ended

Sep. 30, 2016

Restructuring and Related Activities [Abstract]

Impairments and Other Charges

We carry a variety of long-lived assets on our balance sheet including property, plant and equipment, goodwill, and other intangibles. We conduct impairment tests on long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable, and we conduct impairment tests on goodwill annually. We review the recoverability of the carrying value of our assets based upon estimated future cash flows while taking into consideration assumptions and estimates including the future use of the asset, remaining useful life of the asset and service potential of the asset. Additionally, inventories are valued at the lower of cost or market.

Market conditions have negatively impacted our business during 2016 with continued depressed commodity prices and widespread pricing pressure and activity reductions for our products and services on a global basis. As a result of these conditions and their corresponding impact on our business outlook, we determined the carrying amount of a number of our long-lived assets exceeded their respective fair values due to projected declines in asset utilization. We assessed the fair value of our long-lived assets based on a discounted cash flow analysis, which required the use of significant unobservable inputs such as management’s short-term and long-term forecast of operating performance, including revenue growth rates and expected profitability margins, and a discount rate based on our weighted average cost of capital.

Over the last four years, we have been systematically converting our pressure pumping fleet in North America over to a new pump and blender design. As such, we impaired or wrote off a large portion of our older equipment, primarily during the first quarter of 2016. Additionally, current market conditions required us to take other actions to reduce some of our infrastructure and further reduce our global workforce in an effort to mitigate the impact of the industry downturn and better align our workforce with anticipated activity levels in the near-term. This resulted in a headcount reduction of approximately 13,000 for the first nine months of 2016 and corresponding severance charges recognized during the period. We also determined that the cost of some of our inventory exceeded its market value, resulting in associated write-downs of its carrying value during the nine months ended September 30, 2016.

We executed a financing agreement with our primary customer in Venezuela during the second quarter of 2016 in an effort to actively manage outstanding receivables in the country, resulting in an exchange of $200 million of outstanding trade receivables for an interest-bearing promissory note. We recorded the note at its fair market value at the date of exchange based on available pricing data points for similar assets in an illiquid market, which resulted in a $148 million pre-tax loss on exchange during the second quarter. For additional information, see Note 10 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Business Environment and Results of Operations.”

As a result of the events described above, we recorded impairments and other charges of approximately $3.2 billion and $1.9 billion during the nine months ended September 30, 2016 and 2015, respectively, and $381 million during the three months ended September 30, 2015. Total impairments and other charges consisted of fixed asset impairments and write-offs, severance costs, impairments of intangible assets, inventory write-downs, country and facility closures, a loss on exchange for the Venezuela promissory note, and other items. There were no impairments and other charges recorded during the three months ended September 30, 2016.

We also performed our annual goodwill impairment assessment at September 30, 2016. This assessment consists of a discounted cash flow analysis based on management’s short-term and long-term forecast of operating performance for each reporting unit. Our discounted cash flow analysis for each reporting unit includes significant assumptions regarding discount rates, revenue growth rates, expected profitability margins, forecasted capital expenditures, the timing of an anticipated market recovery, and the timing of expected future cash flows. As such, these analyses incorporate inherent uncertainties that 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. As a result of our analyses, we determined that the fair value of each reporting unit exceeded its net book value and, therefore, no goodwill impairment was necessary as of September 30, 2016.

The following table presents various charges we recorded during the nine months ended September 30, 2016 and 2015 and three months ended September 30, 2015 as a result of the downturn in the energy industry and other matters, all of which were recorded within "Impairments and other charges" on our condensed consolidated statements of operations:



	Nine Months Ended					Three Months Ended
Millions of dollars	September 30, 2016			September 30, 2015		September 30, 2015
Industry downturn:
Fixed asset impairments	$	2,537		$	648	$	154
Severance costs	261			308		96
Inventory write-downs	130			410		64
Intangible asset impairments	87			209		37
Other	40			173		21
Other matters:
Venezuela promissory note loss	148			—		—
Country closures	2			81		4
Other	(16		)	66		5
Total impairments and other charges	$	3,189		$	1,895	$	381

Business Segment and Geographic Information

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Business Segment and Geographic Information

We operate under two divisions, which form the basis for the two operating segments we report: the Completion and Production segment and the Drilling and Evaluation segment. Intersegment revenue was immaterial. Our equity in earnings and losses of unconsolidated affiliates that are accounted for by the equity method of accounting are included within cost of services on our statements of operations, which is part of operating income of the applicable segment.

The following table presents information on our business segments.



	Three Months Ended September 30						Nine Months Ended September 30
Millions of dollars	2016			2015			2016			2015
Revenue:
Completion and Production	$	2,176		$	3,200		$	6,614		$	10,890
Drilling and Evaluation	1,657			2,382			5,252			7,661
Total revenue	$	3,833		$	5,582		$	11,866		$	18,551
Operating income (loss):
Completion and Production	$	24		$	163		$	22		$	938
Drilling and Evaluation	151			401			546			1,107
Total operations	175			564			568			2,045
Corporate and other (a)	(47		)	(140		)	(4,210		)	(401		)
Impairments and other charges (b)	—			(381		)	(3,189		)	(1,895		)
Total operating income (loss)	$	128		$	43		$	(6,831	)	$	(251	)
Interest expense, net of interest income	(141		)	(99		)	(502		)	(311		)
Other, net	(39		)	(34		)	(117		)	(281		)
Loss from continuing operations before income taxes	$	(52	)	$	(90	)	$	(7,450	)	$	(843	)

(a) Corporate and other includes certain expenses not attributable to a particular business segment such as costs related to support functions and corporate executives and Baker Hughes related costs for all periods presented, including the $3.5 billion termination fee incurred during the second quarter of 2016.

(b) Impairments and other charges are as follows:

-For the three months ended September 30, 2015, includes $228 million attributable to Completion and Production, $138 million attributable to Drilling and Evaluation, and $15 million attributable to Corporate and other.

-For the nine months ended September 30, 2016, includes $2.0 billion attributable to Completion and Production, $1.1 billion attributable to Drilling and Evaluation, and $8 million attributable to Corporate and other.

-For the nine months ended September 30, 2015, includes $949 million attributable to Completion and Production, $865 million attributable to Drilling and Evaluation, and $81 million attributable to Corporate and other.

Receivables

As of September 30, 2016, 23% of our gross trade receivables were from customers in the United States, 13% in Venezuela, and 11% in Saudi Arabia. As of December 31, 2015, 26% of our gross trade receivables were from customers in the United States and 14% in Venezuela. Other than the United States, Saudi Arabia, and Venezuela, no other country or single customer accounted for more than 10% of our gross trade receivables at these dates.

Venezuela. We have continued to experience delays in collecting payments on our receivables from our primary customer in Venezuela. These receivables are not disputed, and we have not historically had material write-offs relating to this customer. Additionally, we routinely monitor the financial stability of our customers. During the second quarter of 2016, we executed a financing agreement with our primary customer in Venezuela in an effort to actively manage these customer receivables, resulting in an exchange of $200 million of outstanding trade receivables for an interest-bearing promissory note.

Our total outstanding net trade receivables in Venezuela were $564 million as of September 30, 2016, excluding the promissory note receivable discussed above, compared to $704 million as of December 31, 2015, which represents 13% and 14% of total company trade receivables for the respective periods. The majority of our Venezuela receivables are United States dollar-denominated receivables. Of the $564 million of receivables in Venezuela as of September 30, 2016, $138 million have been classified as long-term and included within “Other assets” on our condensed consolidated balance sheets. Of the $704 million of receivables in Venezuela as of December 31, 2015, $175 million have been classified as long-term and included within “Other assets” on our condensed consolidated balance sheets.

As a result of current conditions in Venezuela and the continued delays in collecting payments on our receivables in the country, we began curtailing activity in Venezuela during the first quarter of 2016. See Note 10 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Business Environment and Results of Operations” for additional information about the promissory note exchange.

Stockholders' Equity Note [Abstract]

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 34
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8981-108599

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9038-108599

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 33
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8971-108599

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 12
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8595-108599

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8380-108599

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8933-108599

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 26
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8844-108599

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 35
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8984-108599

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 40
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9031-108599

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 42
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9054-108599

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8538-108599

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 29
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8864-108599

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8924-108599

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8906-108599

+ Details

Income Taxes (Notes)	9 Months Ended
Income Taxes (Notes)	Sep. 30, 2016
Income Taxes [Abstract]
Income Taxes	Income Taxes During the three months ended September 30, 2016, we recorded a total income tax benefit of $59 million on pre-tax losses of $52 million, resulting in an effective tax rate of 114.3%. Our effective tax rate was primarily impacted by a $29 million tax benefit recognized during the third quarter reflecting the beneficial use of an Argentinian tax treaty that reduces the taxation of royalty payments for intellectual property. Additionally, we recognized third quarter taxable losses in our United States operations in which we recorded tax benefits at the U.S. statutory rate, offset by third quarter taxable income in our foreign operations in which the corresponding tax expenses are applied at lower statutory rates in certain jurisdictions. During the three months ended September 30, 2015, we recorded a total income tax benefit $37 million on pre-tax losses of $90 million, resulting in an effective tax rate of 40.8%. Our effective tax rate was positively impacted by lower tax rates in certain foreign jurisdictions and was impacted by the tax effects of the $381 million of impairments and other charges during the period, exacerbated by our lower level of pre–tax earnings during the period.

Inventories

9 Months Ended

Sep. 30, 2016

Inventory Disclosure [Abstract]

Inventories

Inventories are stated at the lower of cost or market value. In the United States, we manufacture certain finished products and parts inventories for drill bits, completion products, bulk materials and other tools that are recorded using the last-in, first-out method, which totaled $109 million as of September 30, 2016 and $138 million as of December 31, 2015. If the average cost method had been used, total inventories would have been $19 million higher than reported as of September 30, 2016 and $18 million higher as of December 31, 2015. The cost of the remaining inventory was recorded using the average cost method. Inventories consisted of the following:



Millions of dollars	September 30, 2016		December 31, 2015
Finished products and parts	$	1,528	$	1,992
Raw materials and supplies	836		879
Work in process	111		122
Total	$	2,475	$	2,993

As a result of the continued downturn in the oil and gas industry and its corresponding impact on our business outlook, we recorded inventory write-downs as the cost of some of our inventory exceeded its market value, particularly in the first nine months of 2016. See Note 3 for further information about impairments and other charges.

Finished products and parts are reported net of obsolescence reserves of $240 million as of September 30, 2016 and $251 million as of December 31, 2015.

Shareholders' Equity

9 Months Ended

Sep. 30, 2016

Stockholders' Equity

Shareholders’ Equity

The following tables summarize our shareholders’ equity activity:



Millions of dollars	Total shareholders' equity			Company shareholders' equity			Noncontrolling interest in consolidated subsidiaries
Balance at December 31, 2015	$	15,495		$	15,462		$	33
Payments of dividends to shareholders	(465		)	(465		)	—
Stock plans	348			348			—
Other	(39		)	(52		)	13
Comprehensive loss	(5,613		)	(5,611		)	(2		)
Balance at September 30, 2016	$	9,726		$	9,682		$	44



Millions of dollars	Total shareholders' equity			Company shareholders' equity			Noncontrolling interest in consolidated subsidiaries
Balance at December 31, 2014	$	16,298		$	16,267		$	31
Payments of dividends to shareholders	(460		)	(460		)	—
Stock plans	380			380			—
Other	(45		)	(44		)	(1		)
Comprehensive income (loss)	(693		)	(695		)	2
Balance at September 30, 2015	$	15,480		$	15,448		$	32

Our Board of Directors has authorized a program to repurchase our common stock from time to time. Approximately $5.7 billion remains authorized for repurchases as of September 30, 2016. From the inception of this program in February 2006 through September 30, 2016, we repurchased approximately 201 million shares of our common stock for a total cost of approximately $8.4 billion. There were no repurchases made under the program during the nine months ended September 30, 2016.

Accumulated other comprehensive loss consisted of the following:



Millions of dollars	September 30, 2016			December 31, 2015
Defined benefit and other postretirement liability adjustments	$	(220	)	$	(221	)
Cumulative translation adjustments	(79		)	(78		)
Other	(61		)	(64		)
Total accumulated other comprehensive loss	$	(360	)	$	(363	)

Commitments and Contingencies Disclosure [Abstract]

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 10
-Section S99
-Paragraph 4
-Subparagraph (SAB Topic 4.E)
-URI http://asc.fasb.org/extlink&oid=27010918&loc=d3e74567-122707

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21484-112644

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(29))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21488-112644

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(e))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(31))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 4
-Subparagraph (SAB Topic 4.C)
-URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187143-122770

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(30))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21506-112644

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(d))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187085-122770

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 30
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6405834&loc=d3e23285-112656

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Preferred Stock
-URI http://asc.fasb.org/extlink&oid=6521494

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21463-112644

Reference 16: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21564-112644

+ Details

Commitments and Contingencies

9 Months Ended

Sep. 30, 2016

Commitments and Contingencies

Macondo well incident

The semisubmersible drilling rig, Deepwater Horizon, sank on April 22, 2010 after an explosion and fire onboard the rig that began on April 20, 2010. The Deepwater Horizon was owned by an affiliate of Transocean Ltd. and had been drilling the Macondo exploration well in the Gulf of Mexico for the lease operator, BP Exploration & Production, Inc. (BP). We performed a variety of services on that well for BP. There were eleven fatalities and a number of injuries as a result of the Macondo well incident.

Litigation and settlements. Numerous lawsuits relating to the Macondo well incident and alleging damages arising from the blowout were filed against various parties, including BP, Transocean and us, in federal and state courts throughout the United States, most of which were consolidated in a Multi District Litigation proceeding (MDL) in the United States Eastern District of Louisiana. The defendants in the MDL proceeding filed a variety of cross claims against each other.

In 2012, BP reached a settlement to resolve the substantial majority of eligible private economic loss and medical claims stemming from the Macondo well incident (BP MDL Settlements). The MDL court has since certified the classes and granted final approval for the BP MDL Settlements, which also provided for the release by participating plaintiffs of compensatory damage claims against us.

The trial for the first phase of the MDL proceeding occurred in February 2013 through April 2013 and covered issues arising out of the conduct and degree of culpability of various parties allegedly relevant to the loss of well control, the ensuing fire and explosion on and sinking of the Deepwater Horizon, and the initiation of the release of hydrocarbons from the Macondo well. In September 2014, the MDL court ruled (Phase One Ruling) that, among other things, (1) in relation to the Macondo well incident, BP’s conduct was reckless, Transocean’s conduct was negligent, and our conduct was negligent, (2) fault for the Macondo blowout, explosion and spill was apportioned 67% to BP, 30% to Transocean and 3% to us, and (3) the indemnity and release clauses in our contract with BP are valid and enforceable against BP. The MDL court did not find that our conduct was grossly negligent, thereby, subject to any appeals, eliminating our exposure in the MDL for punitive damages. The appeal process for the Phase One Ruling is underway, with various parties filing briefs according to a court-ordered schedule.

In September 2014, prior to the Phase One Ruling, we reached an agreement, subject to court approval, to settle a substantial portion of the plaintiffs’ claims asserted against us relating to the Macondo well incident (our MDL Settlement). Pursuant to our MDL Settlement, we agreed to pay an aggregate of $1.1 billion, which includes legal fees and costs, into a settlement fund in three installments over two years, except that one installment of legal fees will not be paid until all of the conditions to the settlement have been satisfied or waived. Certain conditions must be satisfied before our MDL Settlement becomes effective and the funds are released from the settlement fund. These conditions include, among others, the issuance of a final order of the MDL court, including the resolution of certain appeals. In addition, we have the right to terminate our MDL Settlement if more than an agreed number of plaintiffs elect to opt out of the settlement prior to the expiration of the opt out deadline to be established by the MDL court. Before approving our MDL Settlement, the MDL court must certify the settlement class, the numerous class members must be notified of the proposed settlement, and the court must hold a fairness hearing. The Court has issued a preliminary approval, with the hearing for the final approval set for November 2016. We are unable to predict when the MDL court will approve our MDL Settlement.

Our MDL Settlement does not cover claims against us by the state governments of Alabama, Florida, Mississippi, Louisiana, or Texas, claims by our own employees, compensatory damages claims by plaintiffs in the MDL that opted out of or were excluded from the settlement class in the BP MDL Settlements, or claims by other defendants in the MDL or their respective employees. However, these claims have either been dismissed, are subject to dismissal, are subject to indemnification by BP, or are not believed to be material.

On May 20, 2015, we and BP entered into an agreement to resolve all remaining claims against each other, and pursuant to which BP will defend and indemnify us in future trials for compensatory damages. On July 2, 2015, BP announced that it had reached agreements in principle to settle all remaining federal, state and local government claims arising from the Macondo well incident.

Regulatory action. In October 2011, the Bureau of Safety and Environmental Enforcement (BSEE) issued a notification of Incidents of Noncompliance (INCs) to us for allegedly violating federal regulations relating to the failure to take measures to prevent the unauthorized release of hydrocarbons, the failure to take precautions to keep the Macondo well under control, the failure to cement the well in a manner that would, among other things, prevent the release of fluids into the Gulf of Mexico, and the failure to protect health, safety, property and the environment as a result of a failure to perform operations in a safe and workmanlike manner. We have appealed the INCs, but the appeal has been suspended pending certain proceedings in the MDL and potential appeals. The BSEE has announced that the INCs will be reviewed for possible imposition of civil penalties once the appeal has ended. We understand that the regulations in effect at the time of the alleged violations provide for fines of up to $35,000 per day per violation.

Loss contingency. During the second quarter of 2016, we made a legal fees payment of $33 million in accordance with our MDL Settlement. During the third quarter of 2016, we revised our estimate-based non-current Macondo liability with a reduction of $28 million. Accordingly, as of September 30, 2016, our remaining loss contingency liability related to the Macondo well incident was $413 million, consisting of a current portion of $369 million related to our MDL Settlement and a non-current portion of $44 million unrelated to that settlement. Our loss contingency liability has not been reduced for potential recoveries from our insurers. See below for information regarding amounts that we could potentially recover from insurance.

Subject to the satisfaction of the conditions of our MDL Settlement and to the resolution of the appeal of the Phase One Ruling, we believe that the BP MDL Settlement, our MDL Settlement, the Phase One Ruling and our settlement with BP have eliminated any additional material financial exposure to us in relation to the Macondo well incident.

Insurance coverage. We had a general liability insurance program of $600 million at the time of the Macondo well incident. Our insurance was designed to cover claims by businesses and individuals made against us in the event of property damage, injury, or death and, among other things, claims relating to environmental damage, as well as legal fees incurred in defending against those claims. Through September 30, 2016, we have incurred approximately $1.5 billion of expenses related to the MDL Settlement, legal fees, and other settlement-related costs, of which $409 million has been reimbursed or is expected to be reimbursed under our insurance program. Some of the insurance carriers that issued policies covering the final layer of insurance coverage relating to the Macondo well incident notified us that they would not reimburse us with respect to our MDL Settlement; however, we have settled with several of them and those settlement recoveries are included in the $409 million discussed above. We have initiated arbitration proceedings to pursue recovery of the remaining balance of approximately $100 million. Due to the uncertainty surrounding such recovery, no related amounts have been recognized in the condensed consolidated financial statements as of September 30, 2016.

Securities and related litigation

In June 2002, a class action lawsuit was filed against us in federal court alleging violations of the federal securities laws after the Securities and Exchange Commission (SEC) initiated an investigation in connection with our change in accounting for revenue on long-term construction projects and related disclosures. In the weeks that followed, approximately twenty similar class actions were filed against us. Several of those lawsuits also named as defendants several of our present or former officers and directors. The class action cases were later consolidated, and the amended consolidated class action complaint, styled Richard Moore, et al. v. Halliburton Company, et al., was filed and served upon us in April 2003. As a result of a substitution of lead plaintiffs, the case was styled Archdiocese of Milwaukee Supporting Fund (AMSF) v. Halliburton Company, et al. AMSF has changed its name to Erica P. John Fund, Inc. (the Fund). We settled with the SEC in the second quarter of 2004.

In June 2003, the lead plaintiffs filed a motion for leave to file a second amended consolidated complaint, which was granted by the court. In addition to restating the original accounting and disclosure claims, the second amended consolidated complaint included claims arising out of our 1998 acquisition of Dresser Industries, Inc., including that we failed to timely disclose the resulting asbestos liability exposure.

In April 2005, the court appointed new co-lead counsel and named the Fund the new lead plaintiff, directing that it file a third consolidated amended complaint and that we file our motion to dismiss. The court held oral arguments on that motion in August 2005. In March 2006, the court entered an order in which it granted the motion to dismiss with respect to claims arising prior to June 1999 and granted the motion with respect to certain other claims while permitting the Fund to re-plead some of those claims to correct deficiencies in its earlier complaint. In April 2006, the Fund filed its fourth amended consolidated complaint. We filed a motion to dismiss those portions of the complaint that had been re-pled. A hearing was held on that motion in July 2006, and in March 2007 the court ordered dismissal of the claims against all individual defendants other than our Chief Executive Officer (CEO). The court ordered that the case proceed against our CEO and us.

In September 2007, the Fund filed a motion for class certification, and our response was filed in November 2007. The district court issued an order in November 2008 denying the motion for class certification. The Fifth Circuit Court of Appeals affirmed the district court’s order denying class certification. In June 2011, the United States Supreme Court reversed the Fifth Circuit ruling that the Fund needed to prove loss causation in order to obtain class certification and the case was returned to the lower courts for further consideration.

In January 2012, the district court issued an order certifying the class. In April 2013, the Fifth Circuit issued an order affirming the district court's order. In June 2014, the Supreme Court reversed the Fifth Circuit and held that we are entitled to rebut that presumption of class member reliance by presenting evidence that there was no impact on our stock price from the alleged misrepresentations. The Supreme Court vacated the Fifth Circuit’s decision and remanded for further proceedings consistent with the Supreme Court decision.

In December 2014, the district court held a hearing to consider whether there was an impact on our stock price from the alleged misrepresentations. On July 27, 2015, the district court denied certification for the plaintiff class with respect to five of the six dates upon which the plaintiffs claimed that disclosures correcting previously misleading statements had been made that resulted in an impact to the stock price. However, the district court certified the class with respect to a disclosure made on December 7, 2001 regarding an adverse jury verdict in an asbestos case that plaintiffs alleged was corrective. The ruling was based on the district court's conclusion that the court was required to assume at class certification that a disclosure was actually corrective. We appealed the ruling to the Fifth Circuit. The Fifth Circuit heard oral argument on the appeal on August 31, 2016. We are currently awaiting a decision from the Fifth Circuit. On October 19, 2016, the district court issued an order continuing the December 2016 trial date. A new trial date will be set at a later date. We cannot predict the outcome or consequences of this case, which we intend to vigorously defend.

Investigations

We are conducting internal investigations of certain areas of our operations in Angola and Iraq, focusing on compliance with certain company policies, including our Code of Business Conduct (COBC), and the Foreign Corrupt Practices Act (FCPA) and other applicable laws.

In December 2010, we received an anonymous e-mail alleging that certain current and former personnel violated our COBC and the FCPA, principally through the use of an Angolan vendor. The e-mail also alleges conflicts of interest, self-dealing, and the failure to act on alleged violations of our COBC and the FCPA. We contacted the DOJ to advise them that we were initiating an internal investigation.

During the second quarter of 2012, in connection with a meeting with the DOJ and the SEC regarding the above investigation, we advised the DOJ and the SEC that we were initiating unrelated, internal investigations into payments made to a third-party agent relating to certain customs matters in Angola and to third-party agents relating to certain customs and visa matters in Iraq.

Since the initiation of the investigations described above, we have participated in meetings with the DOJ and the SEC to brief them on the status of the investigations and produced documents to them both voluntarily and as a result of SEC subpoenas to us and certain of our current and former officers and employees.

We expect to continue to have discussions with the DOJ and the SEC regarding issues relevant to the Angola and Iraq matters described above. We have engaged outside counsel and independent forensic accountants to assist us with these investigations.

Because these investigations are ongoing, we cannot predict their outcome or the consequences thereof.

Environmental

We are subject to numerous environmental, legal, and regulatory requirements related to our operations worldwide. In the United States, these laws and regulations include, among others:


-	the Comprehensive Environmental Response, Compensation, and Liability Act;


-	the Resource Conservation and Recovery Act;


-	the Clean Air Act;


-	the Federal Water Pollution Control Act;


-	the Toxic Substances Control Act; and


-	the Oil Pollution Act.

In addition to the federal laws and regulations, states and other countries where we do business often have numerous environmental, legal, and regulatory requirements by which we must abide. We evaluate and address the environmental impact of our operations by assessing and remediating contaminated properties in order to avoid future liabilities and comply with environmental, legal and regulatory requirements. Our Health, Safety and Environment group has several programs in place to maintain environmental leadership and to help prevent the occurrence of environmental contamination. On occasion, in addition to the matters relating to the Macondo well incident described above, we are involved in other environmental litigation and claims, including the remediation of properties we own or have operated, as well as efforts to meet or correct compliance-related matters. We do not expect costs related to those claims and remediation requirements to have a material adverse effect on our liquidity, consolidated results of operations, or consolidated financial position. Our accrued liabilities for environmental matters were $53 million as of September 30, 2016 and $50 million as of December 31, 2015. Because our estimated liability is typically within a range and our accrued liability may be the amount on the low end of that range, our actual liability could eventually be well in excess of the amount accrued. Our total liability related to environmental matters covers numerous properties.

Additionally, we have subsidiaries that have been named as potentially responsible parties along with other third parties for eight federal and state Superfund sites for which we have established reserves. As of September 30, 2016, those eight sites accounted for approximately $5 million of our $53 million total environmental reserve. Despite attempts to resolve these Superfund matters, the relevant regulatory agency may at any time bring suit against us for amounts in excess of the amount accrued. With respect to some Superfund sites, we have been named a potentially responsible party by a regulatory agency; however, in each of those cases, we do not believe we have any material liability. We also could be subject to third-party claims with respect to environmental matters for which we have been named as a potentially responsible party.

Guarantee arrangements

In the normal course of business, we have agreements with financial institutions under which approximately $1.9 billion of letters of credit, bank guarantees, or surety bonds were outstanding as of September 30, 2016. Some of the outstanding letters of credit have triggering events that would entitle a bank to require cash collateralization.

Income (Loss) per Share

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

Income (Loss) per Share

Income per Share

Basic income or loss per share is based on the weighted average number of common shares outstanding during the period. Diluted income per share includes additional common shares that would have been outstanding if potential common shares with a dilutive effect had been issued. Antidilutive securities represent potentially dilutive securities which are excluded from the computation of diluted income or loss per share as their impact would be antidilutive.

A reconciliation of the number of shares used for the basic and diluted income per share computations is as follows:



	Three Months Ended September 30		Nine Months Ended September 30
Millions of shares	2016	2015	2016	2015
Basic weighted average common shares outstanding	862	855	860	852
Dilutive effect of awards granted under our stock incentive plans	2	—	—	—
Diluted weighted average common shares outstanding	864	855	860	852

Antidilutive shares:
Options with exercise price greater than the average market price	12	13	13	10
Options which are antidilutive due to net loss position	—	2	1	2
Total antidilutive shares	12	15	14	12

Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

At September 30, 2016, we held $96 million of investments in fixed income securities with maturities ranging from less than one year to May 2019, of which $60 million are classified as “Other current assets” and $36 million are classified as “Other assets” on our condensed consolidated balance sheets. At December 31, 2015, we held $96 million of investments in fixed income securities, of which $63 million are classified as “Other current assets” and $33 million are classified as “Other assets” on our condensed consolidated balance sheets. These securities consist primarily of corporate bonds and other debt instruments, are accounted for as available-for-sale and recorded at fair value, and are based on quoted prices for identical assets in less active markets (Level 2).

During the second quarter of 2016, we executed a financing agreement with our primary customer in Venezuela, resulting in an exchange of $200 million of outstanding trade receivables for an interest-bearing promissory note. We recorded the note at its fair market value at the date of exchange based on pricing data points for similar assets in an illiquid market (Level 3), resulting in a $148 million pre-tax loss on exchange. We are using an effective interest method to accrete the carrying amount to its par value as it matures. This accretion income is being recorded through “Interest expense, net of interest income” on our condensed consolidated statements of operations. As of September 30, 2016, the carrying amount of this promissory note was $60 million and approximates its fair value. This amount consists of a current portion of $14 million and non-current portion of $46 million, which are classified as “Receivables” and “Other assets,” respectively, on our condensed consolidated balance sheets. In October 2016, we agreed to exchange this promissory note for a new note with the same maturity and coupon, but which is expected to be tradeable in a more liquid market. We intend to hold the new note to maturity.

We maintain an interest rate management strategy that is intended to mitigate the exposure to changes in interest rates in the aggregate for our debt portfolio. We hold a series of interest rate swaps relating to three of our debt instruments with a total notional amount of $1.5 billion in order to effectively convert a portion of our fixed rate debt to floating LIBOR-based rates. These interest rate swaps, which expire when the underlying debt matures, are designated as fair value hedges of the underlying debt and are determined to be highly effective. These derivative instruments are marked to market with gains and losses recognized currently in interest expense to offset the respective gains and losses recognized on changes in the fair value of the hedged debt. The fair value of our interest rate swaps is included in “Other assets” in our condensed consolidated balance sheets and was immaterial as of September 30, 2016 and December 31, 2015. The fair value of our interest rate swaps was determined using an income approach model with inputs, such as the notional amount, LIBOR rate spread, and settlement terms that are observable in the market or can be derived from or corroborated by observable data (Level 2).

We have no financial instruments measured at fair value based on quoted prices in active markets (Level 1). The carrying amount of cash and equivalents, receivables, and accounts payable, as reflected in the condensed consolidated balance sheets, approximates fair value due to the short maturities of these instruments.

The carrying amount and fair value of our long-term debt, including current maturities, is as follows:



	September 30, 2016								December 31, 2015
Millions of dollars	Level 1		Level 2		Total fair value		Carrying value		Level 1		Level 2		Total fair value		Carrying value
Long-term debt	$	783	$	12,943	$	13,726	$	12,315	$	1,009	$	14,947	$	15,956	$	15,346

Our Level 1 debt fair values are calculated using quoted prices in active markets for identical liabilities with transactions occurring on the last two days of period-end. Our Level 2 debt fair values are calculated using significant observable inputs for similar liabilities where estimated values are determined from observable data points on our other bonds and on other similarly rated corporate debt or from observable data points of transactions occurring prior to two days from period-end and adjusting for changes in market conditions. Differences between the periods presented in our Level 1 and Level 2 classification of our long-term debt relate to the timing of when transactions are executed. We have no debt measured at fair value using unobservable inputs (Level 3).

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

New Accounting Pronouncements	9 Months Ended
New Accounting Pronouncements	Sep. 30, 2016
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
New Accounting Pronouncements and Changes in Accounting Principles	New Accounting Pronouncements Standards adopted in 2016 Consolidation On January 1, 2016, we adopted an accounting standards update issued by the Financial Accounting Standards Board (FASB) related to the consolidation analysis, which amended the guidelines for determining whether certain legal entities should be consolidated. This update eliminated the presumption that a general partner should consolidate a limited partnership and modified the evaluation of whether limited partnerships are variable interest entities or voting interest entities. The adoption of this update did not materially impact our condensed consolidated financial statements. Business Combinations On January 1, 2016, we adopted an accounting standards update issued by the FASB which simplifies the accounting for measurement-period adjustments for an acquirer in a business combination. The update requires an acquirer to recognize any adjustments to provisional amounts of the initial accounting for a business combination with a corresponding adjustment to goodwill in the reporting period in which the adjustments are determined in the measurement period, as opposed to revising prior periods presented in financial statements. Thus, an acquirer shall adjust its financial statements as needed, including recognizing in its current-period earnings the full effect of changes in depreciation, amortization, or other income effects, by line item, if any, as a result of the change to the provisional amounts calculated as if the accounting had been completed at the acquisition date. The adoption of this update did not impact our condensed consolidated financial statements. Standards not yet adopted Revenue Recognition In May 2014, the FASB and the International Accounting Standards Board (IASB) issued a comprehensive new revenue recognition standard that will supersede existing revenue recognition guidance under United States Generally Accepted Accounting Principles (U.S. GAAP) and International Financial Reporting Standards (IFRS). The issuance of this guidance completes the joint effort by the FASB and the IASB to improve financial reporting by creating common revenue recognition guidance for U.S. GAAP and IFRS. The core principle of the new guidance is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard creates a five-step model that requires companies to exercise judgment when considering the terms of a contract and all relevant facts and circumstances. The standard allows for several transition methods: (a) a full retrospective adoption in which the standard is applied to all of the periods presented, or (b) a modified retrospective adoption in which the standard is applied only to the most current period presented in the financial statements, including additional disclosures of the standard’s application impact to individual financial statement line items. In August 2015, the FASB issued an accounting standards update for a one-year deferral of the revenue recognition standard's effective date for all entities, which changed the effectiveness to annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. We are currently evaluating this standard and our existing revenue recognition policies to determine which contracts in the scope of the guidance will be affected by the new requirements and what impact they would have on our consolidated financial statements upon adoption. We have not yet determined which transition method we will utilize upon adoption on the effective date. Inventory In July 2015, the FASB issued an accounting standards update to simplify the measurement of inventory, which requires inventory measured using the first in, first out (FIFO) or average cost methods to be subsequently measured at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable cost of completion, disposal and transportation. Currently, these inventory methods are required to be subsequently measured at the lower of cost or market. "Market" could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. This update will be effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, and will be applied prospectively. Early adoption is permitted. We evaluated this new accounting standard and determined it will not have an impact on our consolidated financial statements. Leases In February 2016, the FASB issued an accounting standards update related to accounting for leases, which requires the assets and liabilities that arise from leases to be recognized on the balance sheet. Currently only capital leases are recorded on the balance sheet. This update will require the lessee to recognize a lease liability equal to the present value of the lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term for all leases longer than 12 months. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and liabilities and recognize the lease expense for such leases generally on a straight-line basis over the lease term. This update will be effective for fiscal periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. We are currently evaluating the impact that this update will have on our consolidated financial statements. Stock-Based Compensation In March 2016, the FASB issued an accounting standards update to simplify several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and the classification on the statement of cash flows. In addition, an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest, which is the current U.S. GAAP practice, or account for forfeitures when they occur. This update will be effective for fiscal periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is permitted. We are currently evaluating the impact that this update will have on our consolidated financial statements.

Restructuring and Related Activities [Abstract]

The entire disclosure of changes in accounting principles, including adoption of new accounting pronouncements, that describes the new methods, amount and effects on financial statement line items.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Change in Accounting Principle
-URI http://asc.fasb.org/extlink&oid=6507316

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Direct Effects of a Change in Accounting Principle
-URI http://asc.fasb.org/extlink&oid=66092750

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=64853466&loc=d3e22583-107794

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Indirect Effects of a Change in Accounting Principle
-URI http://asc.fasb.org/extlink&oid=6515603

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=64853466&loc=d3e22580-107794

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 270
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.10-01.(b)(6))
-URI http://asc.fasb.org/extlink&oid=27015980&loc=d3e46468-122699

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Accounting Change
-URI http://asc.fasb.org/extlink&oid=6503790

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=64853466&loc=d3e22499-107794

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Retrospective Application
-URI http://asc.fasb.org/extlink&oid=6523989

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 270
-SubTopic 10
-Section 45
-Paragraph 13
-URI http://asc.fasb.org/extlink&oid=68064558&loc=d3e765-108305

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 270
-SubTopic 10
-Section 45
-Paragraph 12
-URI http://asc.fasb.org/extlink&oid=68064558&loc=d3e725-108305

+ Details

Impairments and Other Charges (Policies)	9 Months Ended
Impairments and Other Charges (Policies)	Sep. 30, 2016
Restructuring and Related Activities [Abstract]
Inventory, Policy	inventories are valued at the lower of cost or market. Inventories are stated at the lower of cost or market value.

Inventories (Policies)	9 Months Ended
Inventories (Policies)	Sep. 30, 2016
Inventory Disclosure [Abstract]
Inventory, Policy	inventories are valued at the lower of cost or market. Inventories are stated at the lower of cost or market value.

Impairments and Other Charges (Tables)

9 Months Ended

Sep. 30, 2016

Impairments and Other Charges



	Nine Months Ended					Three Months Ended
Millions of dollars	September 30, 2016			September 30, 2015		September 30, 2015
Industry downturn:
Fixed asset impairments	$	2,537		$	648	$	154
Severance costs	261			308		96
Inventory write-downs	130			410		64
Intangible asset impairments	87			209		37
Other	40			173		21
Other matters:
Venezuela promissory note loss	148			—		—
Country closures	2			81		4
Other	(16		)	66		5
Total impairments and other charges	$	3,189		$	1,895	$	381

Business Segment and Geographic Information (Tables)

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Information on business segments

The following table presents information on our business segments.



	Three Months Ended September 30						Nine Months Ended September 30
Millions of dollars	2016			2015			2016			2015
Revenue:
Completion and Production	$	2,176		$	3,200		$	6,614		$	10,890
Drilling and Evaluation	1,657			2,382			5,252			7,661
Total revenue	$	3,833		$	5,582		$	11,866		$	18,551
Operating income (loss):
Completion and Production	$	24		$	163		$	22		$	938
Drilling and Evaluation	151			401			546			1,107
Total operations	175			564			568			2,045
Corporate and other (a)	(47		)	(140		)	(4,210		)	(401		)
Impairments and other charges (b)	—			(381		)	(3,189		)	(1,895		)
Total operating income (loss)	$	128		$	43		$	(6,831	)	$	(251	)
Interest expense, net of interest income	(141		)	(99		)	(502		)	(311		)
Other, net	(39		)	(34		)	(117		)	(281		)
Loss from continuing operations before income taxes	$	(52	)	$	(90	)	$	(7,450	)	$	(843	)

(b) Impairments and other charges are as follows:

Inventories (Tables)

9 Months Ended

Sep. 30, 2016

Inventory Disclosure [Abstract]

Inventories

Inventories consisted of the following:



Millions of dollars	September 30, 2016		December 31, 2015
Finished products and parts	$	1,528	$	1,992
Raw materials and supplies	836		879
Work in process	111		122
Total	$	2,475	$	2,993

Shareholders' Equity (Tables)

9 Months Ended

Sep. 30, 2016

Stockholders' Equity Note [Abstract]

Summary of shareholders' equity activity

The following tables summarize our shareholders’ equity activity:



Millions of dollars	Total shareholders' equity			Company shareholders' equity			Noncontrolling interest in consolidated subsidiaries
Balance at December 31, 2015	$	15,495		$	15,462		$	33
Payments of dividends to shareholders	(465		)	(465		)	—
Stock plans	348			348			—
Other	(39		)	(52		)	13
Comprehensive loss	(5,613		)	(5,611		)	(2		)
Balance at September 30, 2016	$	9,726		$	9,682		$	44



Millions of dollars	Total shareholders' equity			Company shareholders' equity			Noncontrolling interest in consolidated subsidiaries
Balance at December 31, 2014	$	16,298		$	16,267		$	31
Payments of dividends to shareholders	(460		)	(460		)	—
Stock plans	380			380			—
Other	(45		)	(44		)	(1		)
Comprehensive income (loss)	(693		)	(695		)	2
Balance at September 30, 2015	$	15,480		$	15,448		$	32

Schedule of comprehensive income (loss)

Accumulated other comprehensive loss consisted of the following:



Millions of dollars	September 30, 2016			December 31, 2015
Defined benefit and other postretirement liability adjustments	$	(220	)	$	(221	)
Cumulative translation adjustments	(79		)	(78		)
Other	(61		)	(64		)
Total accumulated other comprehensive loss	$	(360	)	$	(363	)

Income (Loss) per Share Income (Loss) per Share (Tables)

9 Months Ended

Sep. 30, 2016

Weighted average shares outstanding and antidilutive shares [Line Items]

Weighted average shares outstanding and antidilutive shares

A reconciliation of the number of shares used for the basic and diluted income per share computations is as follows:



	Three Months Ended September 30		Nine Months Ended September 30
Millions of shares	2016	2015	2016	2015
Basic weighted average common shares outstanding	862	855	860	852
Dilutive effect of awards granted under our stock incentive plans	2	—	—	—
Diluted weighted average common shares outstanding	864	855	860	852

Antidilutive shares:
Options with exercise price greater than the average market price	12	13	13	10
Options which are antidilutive due to net loss position	—	2	1	2
Total antidilutive shares	12	15	14	12

Fair Value of Financial Instruments Fair value by balance sheet grouping table (Tables)

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Schedule of Carrying Values and Estimated Fair Values of Debt Instruments

The carrying amount and fair value of our long-term debt, including current maturities, is as follows:



	September 30, 2016								December 31, 2015
Millions of dollars	Level 1		Level 2		Total fair value		Carrying value		Level 1		Level 2		Total fair value		Carrying value
Long-term debt	$	783	$	12,943	$	13,726	$	12,315	$	1,009	$	14,947	$	15,956	$	15,346

Acquisitions and Dispositions (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Jun. 30, 2016	Mar. 31, 2016	Sep. 30, 2016
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Total charges related to Baker Hughes acquisition		$ 464
Baker Hughes Contract Termination Fee	$ 3,500
Mandatory Redemption of Senior Notes	$ 2,500
Debt Instrument, Redemption Price, Percentage	101.00%
Depreciation Expense on Reclassified Assets		329
Capitalized and divestiture costs related to Baker Hughes acquisition		$ 135
Redemption Premium			$ 41
Senior Notes due November 2020 [Member]
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Mandatory Redemption of Senior Notes	$ 1,250
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate	2.70%
Senior Notes due November 2022 [Member]
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Mandatory Redemption of Senior Notes	$ 1,250
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate	3.375%

Impairments and Other Charges (Details)
$ in Millions

3 Months Ended

9 Months Ended

Sep. 30, 2016

USD ($)

Jun. 30, 2016

USD ($)

Sep. 30, 2015

USD ($)

Sep. 30, 2016

USD ($)

Sep. 30, 2015

USD ($)

Restructuring Cost and Reserve [Line Items]

Restructuring and Related Cost, Number of Positions Eliminated

13,000

Goodwill impairment

$ 0

Venezuela trade receivables exchanged for promissory note

$ 200

Pre-tax loss on promissory note

$ 148

$ 0

148

$ 0

Fixed asset impairments

154

2,537

648

Severance costs

261

308

Intangible asset impairments

209

Inventory write-downs

130

410

Other restructuring costs

173

Country closures

Other Deductions and Charges

(16)

Segment Reporting Information [Line Items]

^[1]

$ 0

$ 381

$ 3,189

$ 1,895

[1]

Business Segment and Geographic Information (Narrative) (Details) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2016 USD ($) Division Countries Customers	Dec. 31, 2015 USD ($) Countries Customers	Jun. 30, 2016 USD ($)
Concentration Risk [Line Items]
Number of business segments \| Division	2
Maximum Percentage Gross Trade Receivables From One Geographic Segment	10.00%	10.00%
Maximum Percentage Gross Trade Receivables From One Customer	10.00%	10.00%
Number of Countries Exceed Receivables Threshold \| Countries	3	0
Number of Customers Exceed Receivables Threshold \| Customers	0	0
Venezuela trade receivables exchanged for promissory note			$ 200
VENEZUELA
Concentration Risk [Line Items]
Accounts Receivable, Gross	$ 564	$ 704
Accounts Receivable, Gross, Noncurrent	$ 138	$ 175
Accounts Receivable [Member] \| VENEZUELA
Concentration Risk [Line Items]
Concentration Risk, Percentage	13.00%	14.00%
Geographic Concentration Risk [Member] \| UNITED STATES \| Accounts Receivable [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	23.00%	26.00%
Geographic Concentration Risk [Member] \| SAUDI ARABIA \| Accounts Receivable [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	11.00%

Business Segment and Geographic Information (Details) - USD ($)
$ in Millions

3 Months Ended

9 Months Ended

Sep. 30, 2016

Jun. 30, 2016

Sep. 30, 2015

Sep. 30, 2016

Sep. 30, 2015

Baker Hughes Contract Termination Fee

$ 3,500

Revenue:

$ 3,833

$ 5,582

$ 11,866

$ 18,551

128

(6,831)

(251)

Interest expense, net of interest income

^[1]

(381)

(3,189)

(1,895)

(141)

(99)

(502)

(311)

Other, net

(39)

(34)

(117)

(281)

Income (loss) from continuing operations before income taxes

(52)

(90)

(7,450)

(843)

Completion and Production

Revenue:

2,176

3,200

6,614

10,890

163

938

(228)

(2,000)

(949)

Drilling and Evaluation

Revenue:

1,657

2,382

5,252

7,661

151

401

546

1,107

(138)

(1,100)

(865)

Total operations

Revenue:

3,833

5,582

11,866

18,551

175

564

568

2,045

Corporate and other

^[2]

$ (47)

(140)

(4,210)

(401)

Income Tax Expense (Benefit)

$ (15)

$ (8)

$ (81)

[1]

[2]

Corporate and other includes certain expenses not attributable to a particular business segment such as costs related to support functions and corporate executives and Baker Hughes related costs for all periods presented, including the $3.5 billion termination fee incurred during the second quarter of 2016.

Income Taxes (Details) - USD ($)
$ in Millions

3 Months Ended

9 Months Ended

Sep. 30, 2016

Sep. 30, 2015

Sep. 30, 2016

Sep. 30, 2015

Income Taxes [Abstract]

$ 59

$ 37

$ 1,836

$ 207

Income (loss) from continuing operations before income taxes

$ (52)

$ (90)

(7,450)

(843)

Effective Income Tax Rate Reconciliation, Percent

114.30%

40.80%

Other Tax Expense (Benefit)

$ 29