Halliburton Company (HAL) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a mixed outlook: strong contract awards and technology development are positives, but weak Q3 guidance and margin reductions in North America are concerning. International growth in unconventionals and solid shareholder returns are encouraging, yet the lack of specific guidance on key projects and potential risks in North America temper enthusiasm. The Q&A reveals cautious customer behavior and ongoing challenges, suggesting a balanced sentiment with no clear catalyst for significant stock movement.
Key Financial Performance
Total company revenue $5.5 billion, an increase of 2% compared to Q1 2025. The increase was driven by higher drilling-related services globally and seasonal improvement in pressure pumping activity in the Western Hemisphere.
Operating income $727 million, with an operating margin of 13%. This reflects a decrease in operating income in some divisions due to lower pricing for stimulation services in US Land and increased startup and mobilization costs.
Net income per diluted share $0.55. This was not compared year-over-year but reflects the company's performance for Q2 2025.
Cash flow from operations $896 million. This was not compared year-over-year but indicates strong operational cash generation.
Free cash flow $582 million. This was not compared year-over-year but highlights the company's ability to generate cash after capital expenditures.
Completion and Production division revenue $3.2 billion, an increase of 2% compared to Q1 2025. The increase was due to seasonal improvement in pressure pumping activity in the Western Hemisphere.
Completion and Production division operating income $513 million, a decrease of 3% compared to Q1 2025. The decline was primarily driven by lower pricing for stimulation services in US Land.
Drilling and Evaluation division revenue $2.3 billion, an increase of 2% compared to Q1 2025. The increase was due to higher drilling-related services globally.
Drilling and Evaluation division operating income $312 million, a decrease of 11% compared to Q1 2025. The decline was due to seasonal roll-off of software sales and increased startup and mobilization costs.
International revenue $3.3 billion, a 2% sequential growth. Activity increases in Latin America and Europe/Africa were offset by reductions in Saudi Arabia.
North America revenue $2.3 billion, relatively flat compared to Q1 2025. Seasonal improvements in completions were offset by lower service pricing and reduced artificial lift activity.
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Operating Highlights
EarthStar 3DX: Launched a new reservoir mapping technology that provides a 3-dimensional map ahead of the bit while drilling, enhancing drilling efficiency and recovery.
ZEUS IQ: Expanded deployment of ZEUS IQ closed-loop fracturing technology in North America, with up to 1/3 of ZEUS electric fleets expected to operate with ZEUS IQ by year-end.
Sensori fiber optic fracture monitoring: Performed the first service in Argentina, marking a milestone in expanding unconventional technologies outside North America.
International revenue: Achieved $3.3 billion in Q2 revenue, with growth in Latin America and Europe/Africa offset by reductions in Saudi Arabia and Mexico.
North America revenue: Reported $2.3 billion in Q2 revenue, flat compared to Q1, with seasonal improvements offset by lower service pricing and reduced artificial lift activity.
Artificial lift: Secured the largest international ESP contract to date from a Middle East NOC, with international artificial lift revenue expected to grow over 20% this year.
Cost reduction: Plans to reduce variable and fixed cash costs to align with market conditions.
Asset management: Will retire, stack, or reallocate underperforming assets, including North America frac fleets.
Unconventionals: Continued adoption of North America-style development in international markets, with record achievements in Argentina and Australia.
Drilling services: Expanded use of iCruise and LOGIX automation technologies, achieving milestones in Norway and the Middle East.
Production services: Began operations on the largest integrated well intervention contract in Brazil and expanded riserless coiled tubing services in Norway.
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Risk or Challenges
Volatile Commodity Markets: The oilfield services market is impacted by trade and tariff uncertainty, geopolitical unrest, and OPEC+ production cuts, leading to volatility in commodity markets.
North America Activity Reductions: Multiple operators are planning significant schedule gaps in the second half of 2025, leading to lower drilling and completion activity, reduced service pricing, and stacking of frac fleets.
International Market Softness: Activity reductions and lower discretionary spending in large markets like Saudi Arabia and Mexico are expected to result in mid-single-digit revenue contraction for 2025.
Cost Pressures: Lower pricing for stimulation services in US Land and increased startup and mobilization costs are impacting operating income margins.
Tariff Impacts: Tariffs negatively impacted the business by $27 million in Q2 and are expected to increase to $35 million in Q3.
Economic Returns Challenges: The company plans to retire or stack underperforming assets, including North America frac fleets, to address economic return challenges.
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Guidance & Outlook
North America Revenue Outlook: Revenue in the second half of 2025 is expected to decline due to lower drilling and completion activity, reduced service pricing, and the stacking of underperforming frac fleets. Full-year North America revenue is forecasted to decline by low double digits year-over-year.
International Revenue Outlook: International revenue is expected to contract by mid-single digits year-on-year for 2025, primarily due to activity reductions in Saudi Arabia and Mexico. However, growth is anticipated in Brazil, Norway, and offshore frontier basins.
Artificial Lift Revenue Growth: International artificial lift revenue is expected to grow over 20% in 2025, with plans to double the installed base of the Intelevate remote operations and automation platform.
Capital Expenditures: Capital expenditures for the full year 2025 are expected to be about 6% of revenue.
Q3 2025 Segment Revenue and Margin Expectations: Completion and Production division revenue is anticipated to decrease 1% to 3%, with margins declining by 150 to 200 basis points. Drilling and Evaluation division revenue is also expected to decline 1% to 3%, but margins are projected to improve by 125 to 175 basis points.
Market Trends and Strategic Alignment: Demand for advanced technology in unconventionals, production-related services, and complex drilling is expected to grow. Halliburton plans to focus on these areas to deliver industry-leading returns.
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Shareholder Return Plan
Dividend Program: No specific mention of a dividend program or any changes to dividend payouts was made during the call.
Share Repurchase Program: During Q2 2025, Halliburton repurchased approximately $250 million of its common stock as part of its shareholder return strategy.
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Key Q&A
Q:What contributed to the softer C&P margins in Q2 and what is the guidance for Q3?
A:C&P margins in Q2 were softer due to a reduction in activity in Saudi Arabia (specifically frac and related services in Jafurah), pricing headwinds in US Land, and a reduction in the artificial lift business in North America. For Q3, the guidance is a 1% to 3% reduction in revenue and a 150 to 200 basis point reduction in margin, driven by reduced activity and pricing softness in North America land pressure pumping, reduced completion tool deliveries in most international markets, and continued reduction in frac activity in Saudi Arabia.
Q:What are the customer conversations about the white space in North America for the frac side of the business?
A:Customers are cautious and conserving budgets, focusing on technology and service quality performance. For 2026, activity is expected to pick up earlier in the year compared to Q3 and Q4 of 2025, but significant increases are unlikely without catalysts that change the price outlook.
Q:What is the outlook for E&Ps resetting their programs and the oil rig count?
A:The oil rig count has been steadily declining, and meaningful schedule gaps are expected. A Q4 bottom is possible, but recovery depends on supply and demand fundamentals, including oil demand growth and spare capacity consumption. Halliburton is focused on maintaining margins and returns rather than chasing uneconomic work.
Q:How significant are international unconventionals in Halliburton's portfolio, and what is the growth outlook?
A:International unconventionals, including markets like Argentina, Australia, and Saudi Arabia, are growing and represent double-digit year-on-year growth. Gas demand is expected to drive further growth in these markets.
Q:What is Halliburton's position in the Middle East unconventionals and the Jafurah tender?
A:Halliburton is well-positioned in the Middle East for unconventionals, with work starting in Q4 in the UAE. The Jafurah tender is in process, and Halliburton is focused on disciplined bidding centered on returns rather than volumes.
Q:What is Halliburton's approach to portfolio management, particularly regarding the chemicals business?
A:Halliburton is focused on investing in areas with the best returns and growth opportunities. The company is pruning its portfolio, with a focus on attractive segments like ESP lift, while evaluating other parts for accretive returns.
Q:What is the outlook for North America in light of tax reform and commodity prices?
A:Tax reform is not expected to significantly impact customer plans, which remain budget and commodity-driven. Halliburton is focused on maximizing returns and strategically managing equipment and activity levels.
Q:What is Halliburton's approach to cost management in North America?
A:Halliburton is taking action to reduce variable costs and improve efficiency. Structural cost reductions are targeted at around 1%, with adjustments expected over the next few quarters.
Q:How does Halliburton view the potential shift to LSTK contracts in Saudi Arabia and the Middle East?
A:Halliburton has strong capabilities in LSTK and collaborative work, which already represent over 20% of its international business. The company remains disciplined in its tendering process, focusing on returns rather than market share.
Q:What is the outlook for artificial lift in the U.S. and international markets?
A:International growth in artificial lift is driven by technology and performance in conventional wells, while U.S. activity is affected by overall activity levels and tariffs. Efforts are underway to rewire the supply chain to mitigate tariff impacts.
Q:What is the outlook for Mexico and Kuwait?
A:Kuwait is expected to see growth despite short-term fluctuations. Mexico's performance is solid but faces challenges due to unsettled issues and starts and stops in activity.
Q:What is the guidance for C&P margins in Q4?
A:C&P margins are expected to remain above double digits despite continued softness in the U.S. frac market and other challenges.
Q:What is the outlook for D&E margins in Q4?
A:D&E margins are expected to improve due to seasonal factors like increased software sales and the elimination of mobilization costs that impacted Q2.
Q:What is the status of the ZEUS fleet expansion and its impact on CapEx?
A:The ZEUS fleet expansion is demand-driven and expected to slow down as Halliburton has achieved about 50% of its fleet with ZEUS technology. CapEx is expected to decrease to the lower end of the range in 2026.
Q:What is the free cash flow outlook for 2025 and its impact on shareholder returns?
A:Free cash flow for 2025 is expected to be between $1.8 billion and $2 billion. Halliburton remains committed to its cash return framework, with over 50% of free cash flow already returned to shareholders through dividends.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the Jafurah tender, citing competitive reasons. Additionally, they did not provide exact figures for the potential CapEx savings from pausing the ZEUS fleet expansion, only offering a ballpark estimate.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
America Europe
America drilling
Brazil intervention
Co Research
Completion Production
Drilling Evaluation
EarthStar
Evaluation division
Inc Research
LOGIX automation
Land
Research Division
Saudi Arabia
ZEUS IQ
action
activity reduction
capability
construction
division increase
drilling service
iCruise LOGIX
increase income
lift activity
mapping
market today
milestone
oilfield service
product service
production service
reduction Saudi
return North
service line
service pricing
term softness
theme
HAL Transcript
Halliburton Company (HAL) Q4 2025 Earnings Call Transcript
Positive1-21
The earnings call summary and Q&A reveal a generally positive outlook for Halliburton. Key factors include strong Q4 performance, strategic partnerships like VoltaGrid, stable international markets, and technological advancements like ZEUS IQ. While North American revenue is expected to decline, international growth and cost reductions offer optimism. The positive guidance for 2026, especially in emerging markets and offshore activities, suggests a favorable stock price reaction. However, uncertainties remain regarding specific timelines and impacts, slightly tempering the overall sentiment.
Halliburton Company (HAL) Q3 2025 Earnings Call Transcript
Unknown10-21
The earnings call indicates declining revenues in North America and internationally, with reduced margins and activity. Although there is growth in artificial lift and strategic partnerships like VoltaGrid, overall guidance is weak, and management avoided specifics in key areas. The Q&A section highlights market tightness concerns and a flattish outlook for North America, suggesting potential near-term stock pressure.
Halliburton Company (HAL) Q2 2025 Earnings Call Transcript
Unknown7-22
The earnings call presents a mixed outlook: strong contract awards and technology development are positives, but weak Q3 guidance and margin reductions in North America are concerning. International growth in unconventionals and solid shareholder returns are encouraging, yet the lack of specific guidance on key projects and potential risks in North America temper enthusiasm. The Q&A reveals cautious customer behavior and ongoing challenges, suggesting a balanced sentiment with no clear catalyst for significant stock movement.
Halliburton Company (NYSE:HAL) Q1 2025 Earnings Call Transcript
Unknown4-23
The earnings report presents a mixed picture with several negative factors. Financial performance shows a decline in revenue and a flat margin, while international and North America revenues decreased. The Q&A reveals concerns about activity slowdown, unclear recovery timing in Mexico, and tariff impacts. Although there are positive elements like shareholder returns and potential growth in Saudi Arabia, the overall sentiment is negative due to weak financial results, unclear guidance, and challenges in key markets.
HAL Report
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