Halliburton Company (HAL) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
Total Company Revenue $5.6 billion, an increase of 2% compared to Q2 2025. The increase was driven by higher project management and improved wireline activity in Latin America, increased drilling services in North America and Europe, Africa, and higher software sales in Europe, Africa.
International Revenue $3.2 billion, a decrease of 2% year-over-year. The decline was attributed to lower completion tool sales internationally and decreased well intervention services in the Middle East.
North America Revenue $2.4 billion, flat year-over-year but a 5% sequential increase. The sequential increase was driven by improved stimulation activity in U.S. Land and Canada, higher completion tool sales, and increased wireline activity in the Gulf of America.
Cash Flow from Operations $488 million. This was part of the company's overall financial performance for the quarter.
Free Cash Flow $276 million. This was achieved alongside repurchasing approximately $250 million of common stock.
Adjusted Operating Margin 13%, reflecting the company's operational efficiency during the quarter.
Completion and Production Division Revenue $3.2 billion, an increase of 2% compared to Q2 2025. The increase was driven by increased completion tool sales and higher artificial lift activity in North America, partially offset by lower completion tool sales internationally and decreased well intervention services in the Middle East.
Drilling and Evaluation Division Revenue $2.4 billion, an increase of 2% compared to Q2 2025. The increase was driven by higher project management and improved wireline activity in Latin America, increased drilling services in North America and Europe, Africa, and higher software sales in Europe, Africa.
Net Income per Diluted Share Reported at $0.02, while adjusted net income per diluted share was $0.58.
Cost Reduction Actions Expected to save approximately $100 million per quarter going forward. This was achieved through rightsizing operations and overhead.
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Operating Highlights
ZEUS electric fleets: Over half of the active North America fleet is now ZEUS, with strong demand for ZEUS IQ closed-loop fracturing offering. Two additional ZEUS electric fleets were introduced under contract this year.
iCruise CX: Introduced a new 7 7/8 iCruise CX system for the Permian Basin, completing curve and lateral sections in a single run. This broadens the iCruise product portfolio and is expected to see rapid adoption.
International growth engines: Progress in production services, artificial lift, unconventionals, and drilling. Key contracts include a 5-year deal with ConocoPhillips in the North Sea and multiyear ESP contracts in Kuwait and Colombia.
VoltaGrid partnership: Signed an agreement to be VoltaGrid's international partner for distributed power solutions for data centers outside North America.
Cost reduction: Actions taken to save approximately $100 million per quarter starting Q4 2025 by rightsizing operations and overhead.
Capital expenditure adjustment: 2026 capital spending is expected to decline by almost 30% to around $1 billion.
Offshore market focus: Offshore operations account for roughly half of international revenue, with expectations for this share to grow. Focus on deepwater drilling and collaboration with customers to improve well placement and reduce drilling times.
Technology leadership: Continued investment in technology development and maintaining a competitive position in both onshore and offshore markets.
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Risk or Challenges
Volatile Commodity Prices: Near-term oil price volatility is impacting the macro environment, leading to cautious customer behavior in North America and uncertainty in activity recovery timing.
Cost Structure Adjustments: The company has undertaken cost reduction actions, including severance and asset write-offs, to address market conditions, which may indicate challenges in maintaining profitability.
North America Market Conditions: The North American market is described as tough, with greater-than-typical white space and seasonal slowdowns expected to reduce revenue by 12%-13% sequentially in Q4.
International Revenue Challenges: Flat international revenue growth in Q3 and lower activity in regions like the Middle East and Caspian Area indicate challenges in sustaining growth in international markets.
Capital Expenditure Reductions: Capital spending for 2026 is expected to decline by almost 30%, which could impact future growth and operational capabilities.
Tariff Impacts: Tariffs impacted the business by $31 million in Q3 and are expected to increase to $60 million in Q4, adding cost pressures.
Regulatory and Tax Changes: Changes to U.S. tax laws resulted in a $125 million valuation allowance expense, impacting financials and effective tax rates.
Equipment Utilization: The company is idling or retiring equipment that does not meet return thresholds, which may limit operational capacity in the near term.
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Guidance & Outlook
Oil and Gas Demand: Oil and gas demand is expected to grow over the long term, requiring significant investment to maintain and grow production levels.
North America Market Outlook: Customers are expected to maintain a cautious posture due to volatile commodity prices, with a 12%-13% sequential revenue decline anticipated in Q4 2025.
International Market Outlook: Activity is expected to remain steady through 2026, with Q4 2025 international revenue projected to increase by 3%-4%.
Cost Reduction: Quarterly labor costs are expected to decrease by approximately $100 million starting in Q4 2025 due to operational rightsizing.
Capital Expenditures: Capital spending in 2026 is projected to decline by almost 30% to around $1 billion.
Technology and Growth Engines: Continued focus on technology development and growth engines, including production services, artificial lift, unconventionals, and drilling, is expected to drive future performance.
ZEUS Electric Fleets: Over half of the active North America fleet is now ZEUS electric fleets, with meaningful growth expected in 2025 and 2026.
iCruise CX Drilling System: The iCruise CX system is expected to see rapid adoption and continued growth in North America.
VoltaGrid Partnership: Halliburton and VoltaGrid have signed an agreement to deliver distributed power solutions for data centers outside North America, presenting a long-term growth opportunity.
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Shareholder Return Plan
Share Repurchase: During the third quarter, Halliburton repurchased approximately $250 million of its common stock.
Commitment to Shareholder Returns: The company emphasized its focus on returning cash to shareholders as part of its broader strategy.
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Key Q&A
Q:Can you discuss your views on the evolution of the distributed power generation market and the strategic collaboration with VoltaGrid?
A:Jeffrey Miller highlighted the significant demand growth for power and AI globally, emphasizing Halliburton's strengths in execution, manufacturing, and global scale. The collaboration with VoltaGrid allows Halliburton to invest in project economics and leverage their technical expertise and scale. The partnership has been built over five years, focusing on solving technical requirements for data centers.
Q:What drove the North American revenue outperformance in Q3, and what are your thoughts on 2026?
A:North American revenue was up 5% sequentially due to less white space than expected and strong customer programs. Jeffrey Miller expressed confidence in Halliburton's market positioning and technology, including the ZEUS fleets and ZEUS IQ, which enhance efficiency and EURs. For 2026, he described the outlook as flattish with some bright spots, noting factors like OPEC+ barrels entering the market and North America's below-maintenance-level spend.
Q:Why is the Middle East a key focus for power opportunities, and what constraints exist in scaling AI there?
A:Jeffrey Miller emphasized the Middle East's available energy, capital, and developing capabilities, making it an attractive region for investment. He did not provide specific details on constraints but highlighted the region's potential for growth.
Q:What are your early thoughts on the macro environment for North America in 2026?
A:Jeffrey Miller described 2026 as flattish overall, with North America likely below maintenance-level spend. He noted factors like OPEC+ barrels entering the market, Mexico's production decline, and oil demand growth, which could create tightness and a strong market snapback.
Q:How much of the $100 million cost reduction was realized in Q3, and what drove the margin outperformance?
A:Eric Carre stated that about half of the cost reduction came from labor cost savings realized earlier than expected. Margin outperformance was driven by strong North American performance, Gulf of America operations, and international completion tool and cementing business.
Q:What does Halliburton bring to the VoltaGrid partnership, and what is the scale of the projects?
A:Halliburton contributes industrial scale, international expertise, and project management capabilities. The projects are aligned with VoltaGrid's scale, potentially large, and supply chain tightness is not a concern. Specific project sizes were not disclosed.
Q:How will the power collaboration with VoltaGrid be funded, and what is the CapEx outlook?
A:Eric Carre clarified that the $1 billion CapEx budget for 2024 does not include power projects with VoltaGrid, which will be funded incrementally on a project-by-project basis. Halliburton aims to share total project economics.
Q:How is Halliburton targeting the North American market to maximize value?
A:Halliburton focuses on efficiency, technology, and targeting sophisticated customers who value their offerings. They avoid competing in the spot market and have idled diesel dual-fuel fleets to maintain returns, with plans to redeploy them when the market tightens.
Q:What is Halliburton's role in the VoltaGrid collaboration in the Middle East?
A:Jeffrey Miller emphasized Halliburton's global industrial scale, customer relationships, and execution history as key contributions to the partnership, enabling successful international scaling.
Q:How is Halliburton progressing with its growth engines, and what is the outlook for Brazil?
A:Jeffrey Miller stated that growth engines like artificial lift, drilling technology, and unconventionals are on track, with significant traction globally. In Brazil, Halliburton has a strong position with IOC and Petrobras, focusing on technology for the deepwater market.
Q:What is the status of idling frac crews, and how does it impact the market?
A:Halliburton idled some crews in Q3 and plans to keep them idle until margins improve. Jeffrey Miller noted that this disciplined approach could lead to market tightness and pricing recovery in North America.
Q:What is the CapEx budget for 2024, and how will it support strategic investments?
A:The 2024 CapEx budget is $1 billion, reflecting a 30% reduction. Halliburton will continue investing in R&D and differentiating technology while managing within the budget.
Q:Is the VoltaGrid collaboration exclusive, and what are Halliburton's obligations?
A:The collaboration is exclusive in certain areas for a significant period. Halliburton will co-invest in projects, and any announced capital investments by VoltaGrid likely include Halliburton's participation.
Q:What is the outlook for North American frac activity and E&P reactions in 2026?
A:Jeffrey Miller expects North American activity to be flattish to down in 2026, with E&Ps conserving capital. He anticipates a quick recovery in North America when the market tightens.
Q:How does Halliburton view the competitive landscape for growth areas like artificial lift and chemicals?
A:Jeffrey Miller sees opportunities for growth in artificial lift due to performance and technology advantages, particularly in ESPs. Halliburton's unique position and international footprint provide an edge in these areas.
Q:How does Halliburton plan to manage CapEx in 2024, and what is the expected impact on growth?
A:The $1 billion CapEx budget reflects disciplined spending while supporting strategic initiatives. Halliburton aims to continue delivering growth and market share gains in D&E and C&P.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on constraints in scaling AI in the Middle East, the exact size and timeline of VoltaGrid projects, and the mechanics of the exclusive agreement with VoltaGrid. Additionally, they did not clarify the precise number of idled frac crews or the exact impact of idling on market dynamics.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
America Europe
America fleet
Completion Production
Director Investor
Drilling Evaluation
Drilling Services
ESP contract
Oil
Production division
action
activity Gulf
agreement
capacity
change tax
cost structure
division increase
drilling service
equipment return
formation evaluation
generation
hole size
iCruise Force
income increase
increase income
offering
oilfield service
opportunity VoltaGrid
penetration
power solution
production service
requirement
saving
space activity
term condition
wireline activity
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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