Halliburton Company (HAL) is a global leader in the energy industry, providing a comprehensive range of products and services that enable its customers to maximize asset value throughout the lifecycle of the reservoir. With a rich history spanning over a century, Halliburton has established itself as a trusted partner in the exploration, development, and production of oil and natural gas resources worldwide.
Business Overview and History Halliburton was founded in 1919 by Erle P. Halliburton in Duncan, Oklahoma, initially offering a new oil well cementing service. The company was incorporated under the laws of the State of Delaware in 1924. Despite facing early challenges, including the Great Depression, Halliburton continued to grow and diversify its business. The company made its first international expansion in 1926 by opening an office in Venezuela.
Throughout the 1930s and 1940s, Halliburton expanded its product and service lines, introducing its first drilling fluids in 1926 and perforating guns in 1932. The post-World War II era saw significant growth for the company, driven by increasing demand for oil and gas. Halliburton made strategic acquisitions, such as the purchase of Welex in 1962, which expanded its well completion services.
Halliburton has consistently invested in research and development, introducing new technologies like its first downhole drilling motor in 1957 and the first commercially successful measurement-while-drilling tool in 1963. The company's diverse portfolio of products and services, international presence, and commitment to technological advancement have been instrumental in its long-term success and evolution over the past century.
Throughout its history, Halliburton has demonstrated resilience in the face of industry challenges. The company weathered industry downturns, including the oil price crash of the 1980s, through disciplined cost management and continued innovation. By the late 20th century, Halliburton had firmly established itself as a global leader in the oilfield services industry.
Today, Halliburton operates under two primary business segments: Completion and Production, and Drilling and Evaluation. The company is one of the world's largest providers of products and services to the energy industry, helping customers maximize asset value throughout the lifecycle of the reservoir.
Financial Performance and Ratios Halliburton's financial performance has been resilient, even in the face of industry challenges. In the fiscal year 2024, the company reported total revenue of $22.94 billion, a slight decrease from the previous year's $23.02 billion. However, the company's net income for the year came in at $2.50 billion, reflecting its ability to maintain profitability.
The company's financial ratios paint a picture of a well-managed organization. Halliburton's current ratio stood at 2.05 as of December 31, 2024, indicating a strong liquidity position. The quick ratio was 1.54, further supporting the company's ability to meet short-term obligations. The debt-to-equity ratio was 0.82, suggesting a balanced capital structure. Additionally, the company's return on equity (ROE) was a healthy 24.71%, demonstrating its efficiency in utilizing shareholder capital.
Halliburton's free cash flow generation has been a notable strength, with $2.42 billion in free cash flow during the fiscal year 2024. This robust cash flow has enabled the company to invest in strategic initiatives, maintain a disciplined capital allocation strategy, and provide returns to shareholders. In 2024, Halliburton returned $1.6 billion, or about 60% of free cash flow, to shareholders through stock repurchases and dividends.
For the most recent quarter, Halliburton reported revenue of $5.61 billion and net income of $615 million. Revenue decreased 2% year-over-year, primarily driven by lower stimulation activity in North America and decreased pressure pumping services in Latin America, partially offset by improved artificial lift activity in North America and increased stimulation activity in Africa and the Middle East.
Geographical Footprint and Segmental Performance Halliburton's global presence is a key competitive advantage, allowing the company to capitalize on opportunities across diverse markets. In 2024, the company derived 40% of its revenue from North America, with no other country accounting for more than 10% of revenue. The company's international business grew 6% year-over-year in 2024, led by 8% growth in the Middle East/Asia region.
The company's two operating segments, Completion and Production (C&P) and Drilling and Evaluation (D&E), have delivered solid performance. In 2024, the C&P segment generated $13.25 billion in revenue, while the D&E segment contributed $9.69 billion. Both segments demonstrated their ability to adapt to market conditions and meet customer demands.
The Completion and Production segment offers a wide range of services including cementing, stimulation, intervention, pressure control, artificial lift, and completion products and services. In 2024, this segment saw a 3% decrease in revenue compared to 2023, driven by lower pressure pumping services in U.S. land. However, this was partially offset by increased activity across multiple product service lines in Mexico and the Middle East, improved artificial lift activity in U.S. land, and higher cementing activity in Brazil and Norway. The segment's operating income was $2.71 billion in 2024, a 4% decrease from 2023.
The Drilling and Evaluation segment provides field and reservoir modeling, drilling, fluids, evaluation, and precise wellbore placement solutions. This segment saw a 4% increase in revenue in 2024 compared to 2023, driven by increased drilling activity in the Western Hemisphere, higher drilling-related services in Qatar and the United Arab Emirates, as well as improved activity across multiple product service lines in Kuwait and the North Sea. These improvements were partially offset by declined wireline activity in North America, decreased fluid services in Brazil, and lower activity across multiple product service lines in Asia Pacific. The segment's operating income was $1.61 billion in 2024, a 4% increase from 2023.
The international markets have been a particularly important growth driver for Halliburton, with the company's revenue from these regions increasing by 6% in 2024 compared to the previous year. The Middle East/Asia region, in particular, has been a standout, with an 8% year-over-year revenue growth. Halliburton's focus on delivering innovative technologies and collaborating closely with its customers has been instrumental in driving this international expansion.
Guidance and Outlook Halliburton's management has provided a positive outlook for the company's future performance. For the fiscal year 2025, the company expects its North America revenue to decline by low to mid-single digits compared to 2024 levels, or approximately flat with the second half of 2024. This is primarily due to lower negotiated prices for a portion of its fleet. However, the company remains confident in its ability to outperform the competition, driven by its strong customer relationships, technology leadership, and operational efficiency.
Internationally, Halliburton expects flat revenue in 2025, with growth in most markets offset by activity reduction in Mexico. Excluding Mexico, the company expects its international franchise to grow low to mid-single digits. The company sees long-term growth opportunities in its international business, particularly in areas such as drilling technology, unconventionals, well intervention, and artificial lift, where Halliburton holds a strong competitive position. These growth engines are expected to collectively generate an additional $2.5 billion to $3 billion of annual revenue in three to five years.
For the first quarter of 2025, Halliburton expects its Completion and Production division revenue to decline 3-5% sequentially and margins to decline 175-225 basis points. The Drilling and Evaluation division revenue is expected to decline 8-10% sequentially, with margins flat to down 50 basis points. Corporate expenses are expected to decrease slightly, with SAP expenses of around $25 million. Net interest expense is projected to be around $90 million, with other net expense of around $40 million. The effective tax rate is expected to be approximately 23%.
Halliburton expects to return at least $1.6 billion of cash to shareholders in 2025, continuing its commitment to shareholder returns.
Sustainability and Future Focus In 2024, Halliburton continued to execute on its priorities to drive down its emissions intensity. The company announced a target to achieve a 40% reduction in its Scope 1 and 2 emissions by 2035 from the 2018 baseline. Halliburton is also focused on accelerating the success of clean tech start-ups via Halliburton Labs, which allows it to participate in the energy mix transition at relatively low risk.
The company expects energy to continue playing a critical role in economic growth and prosperity, with per capita energy consumption growing for decades to come. It believes the accessibility, affordability, and dependability of oil and gas are too compelling to ignore, and that pragmatic approaches to hydrocarbon development will prevail.
Liquidity and Capital Resources As of December 31, 2024, Halliburton maintained a strong liquidity position with $2.62 billion in cash and equivalents. The company also had access to a $3.50 billion committed revolving credit facility, with the full amount available as of the end of 2024. This robust liquidity position provides Halliburton with financial flexibility to pursue growth opportunities and navigate potential market uncertainties.
Risks and Challenges As with any industry, Halliburton faces a range of risks and challenges that could impact its future performance. The volatility of oil and natural gas prices, which can significantly affect exploration and production activities, is a primary concern. The company's heavy exposure to the North American market also makes it vulnerable to regional market fluctuations.
Additionally, Halliburton operates in a highly competitive environment, with numerous global, regional, and local providers vying for market share. The company's ability to maintain its technological edge and deliver innovative solutions is crucial to maintaining its competitive advantage.
Geopolitical tensions, regulatory changes, and environmental concerns are other factors that could impact Halliburton's operations and financial performance. The company's global footprint also exposes it to currency exchange rate fluctuations and potential political and economic instability in certain regions.
Conclusion Halliburton's long history, diversified service offerings, and global reach have positioned the company as a resilient leader in the evolving energy landscape. The company's strong financial performance, robust cash flow generation, and strategic focus on international expansion and technological advancements suggest a promising future.
While the company faces industry-specific risks and challenges, Halliburton's management team has demonstrated the ability to navigate these obstacles and deliver value to its shareholders. As the energy industry continues to evolve, Halliburton's adaptability and innovative spirit will be crucial in maintaining its competitive edge and capitalizing on emerging opportunities. The company's commitment to sustainability, coupled with its confidence in the long-term outlook for energy demand, positions Halliburton well for continued success in the years to come.