Executive Summary / Key Takeaways

• Strategic Resilience Through Innovation: Halliburton is strategically leveraging its differentiated technology, particularly the Zeus platform for completions and advanced drilling solutions, to drive efficiency and maximize asset value for customers, positioning it for outperformance even in a softer market.
• Disciplined Capital Allocation & Shareholder Returns: Despite near-term market headwinds, Halliburton maintains a strong focus on capital discipline, targeting 6% of revenue for capital expenditures and committing to return at least $1.6 billion of free cash flow to shareholders in 2025.
• International Growth Engines Counter Regional Softness: While facing activity reductions in key international markets like Saudi Arabia and Mexico, Halliburton's "growth engines" – unconventionals, artificial lift, intervention, and advanced drilling – are expected to drive significant long-term revenue growth and provide resilience.
• North America Value Maximization: Halliburton's strategy in North America prioritizes economic returns over market share, with 90% of its fracturing fleets committed for 2025 and a focus on high-value, technology-driven work.
• Near-Term Headwinds & Long-Term Fundamentals: The company anticipates short-to-medium term market softness, particularly in North America, but remains confident in the fundamental long-term demand for oil and gas, driven by global economic growth and declining production.

The Bedrock of Energy: Halliburton's Enduring Strategy

Halliburton Company, founded in 1919, stands as a global titan in the energy services industry, providing a comprehensive suite of products and services across the reservoir lifecycle. From locating hydrocarbons and managing geological data to drilling, well construction, completion, and optimizing production, Halliburton's enduring presence spans over 70 countries. The company's strategic evolution has consistently centered on a core value proposition: to collaborate and engineer solutions that maximize asset value for its customers. This deep-rooted commitment to operational excellence and technological leadership has shaped its resilient business model.

The global energy landscape is currently characterized by significant volatility. Commodity markets have experienced fluctuations driven by trade and tariff uncertainties, geopolitical unrest, and the accelerated return of OPEC+ production. Despite these near-term pressures, Halliburton's management firmly believes in the robust long-term demand fundamentals for both oil and natural gas. Global consumption continues to reach record highs, and the inherent decline curves of existing wells necessitate continuous investment in new production. This fundamental need for accessible, affordable, and dependable energy underpins Halliburton's confidence in its future.

Technological Moats: Driving Value and Outperformance

Halliburton's competitive edge is significantly sharpened by its differentiated technology portfolio, which consistently delivers tangible benefits to its customers and reinforces its market position. This technological prowess is a foundational element of its strategy, enabling superior performance and efficiency across its two primary segments: Completion and Production, and Drilling and Evaluation.

In the Completion and Production segment, the Zeus electric fracturing platform stands out as a market leader. This platform integrates electric pumping units with advanced automation, including Octiv Auto Frac and Sensori subsurface measurement. Octiv Auto Frac represents a significant leap forward, enabling the world's first closed-loop autonomous fracturing operations. This technology utilizes real-time feedback from the reservoir to precisely direct pump activity, controlling water and sand placement without human intervention. This capability is critical for improving productivity and production per lateral foot, offering a transformative advantage in unconventional plays. By the end of 2025, Halliburton expects its market-leading e-fleets to comprise 50% of its active fracturing fleet, with up to one-third of these operating with Zeus IQ, the advanced closed-loop system. Sensori fracture monitoring, deployed on over 2,500 frac stages in North America in Q4 2024, provides crucial diagnostics for optimizing well completion designs. These integrated technologies allow Halliburton to generate more "reps" (operational cycles) on less capital, driving capital efficiency and supporting margins.

Within the Drilling and Evaluation segment, Halliburton's advancements are equally impactful. The Sperry Drilling business has seen a step change in competitiveness through organically developed tools like iCruise and iStar directional drilling and logging tools, and the LOGIX automation and remote operation platform. These systems enable customers to consistently deliver complex curve and lateral sections on today's longer wells, contributing to double-digit revenue growth in North America drilling services even amidst rig count declines. Globally, LOGIX closed-loop automation has surpassed 0.5 million feet drilled, including the longest well in the Norwegian continental shelf at over 10 kilometers. Furthermore, the recent launch of EarthStar 3DX, the industry's first 3D horizontal look-ahead resistivity service, provides geological insights up to 50 feet ahead of the bit. This allows for proactive steering around hazards and precision wellbore placement, optimizing drilling efficiency and recovery.

Halliburton's commitment to innovation extends to Well Intervention and Artificial Lift. The acquisition of Optime Subsea in Q1 2025 and the development of riserless coiled tubing intervention service are set to transform deepwater interventions, enabling economic servicing of thousands of marginal offshore wells previously deemed uneconomical. In Artificial Lift, the TrueSync hybrid motor combines reliability with efficiency, while the Intelevate service uses AI for remote pump management, leading to a 50% increase in international wells monitored since the start of 2025. These technological advancements are not merely incremental; they are designed to create significant value for customers, allowing Halliburton to command premium pricing and maintain strong margins even in competitive environments.

Competitive Positioning: A Differentiated Approach

Halliburton operates in a highly competitive landscape, facing formidable rivals such as Schlumberger , Baker Hughes (BKR), TechnipFMC (FTI), and Weatherford International (WFRD). While direct quantitative market share figures for all niche competitors are not publicly detailed, Halliburton's strategic positioning and technological advantages allow it to differentiate itself.

Halliburton's focus on operational reliability and cost efficiency, particularly in its Completion and Production segment, provides a strong competitive stance. Its proprietary drilling fluids technology, for instance, offers significantly higher efficiency in waste management, providing a cost advantage in price-sensitive markets. This contrasts with Schlumberger's often faster innovation cycles in digital integration, where Halliburton, while making strides with Zeus IQ and LOGIX, may still be catching up in the breadth of its digital offerings. However, Halliburton's disciplined approach to not working equipment at uneconomic rates, even if it means stacking frac fleets, sets it apart from competitors who might prioritize market share at the expense of profitability. This strategy, as demonstrated in the North American gas markets previously, underpins its commitment to superior returns.

In the subsea and integrated project management space, Halliburton's well testing and subsea services offer greater flexibility in reservoir management compared to TechnipFMC's specialized subsea installations. While TechnipFMC may lead in mega-project execution, Halliburton's collaborative model and integrated services, as evidenced by recent contract wins in Brazil and Norway, are gaining traction. The company's artificial lift offerings, with technologies like TrueSync, provide notably better performance in high-temperature environments, differentiating it from Weatherford International, though Weatherford may have an edge in digital monitoring for smart field applications. Halliburton's increased ownership in VoltaGrid also signals a strategic move into the power business, addressing the growing demand for natural gas in electrification and AI, an area where indirect competitors like renewable energy providers are also vying for market share.

Financial Performance: Navigating Volatility with Discipline

Halliburton's financial performance in the first half of 2025 reflects the challenging market conditions, yet demonstrates the underlying resilience of its strategic execution. For the second quarter of 2025, total company revenue was $5.51 billion, a 6% decrease compared to Q2 2024. Operating income stood at $727 million, a 30% year-over-year decline. Net income for the quarter was $472 million, or $0.55 per diluted share.

The Completion and Production segment saw revenue decrease by 7% year-over-year to $3.17 billion, with operating income falling 29% to $513 million, resulting in a 16.2% operating margin. This was primarily due to lower pressure pumping services in the Western Hemisphere and reduced completion tool sales, exacerbated by pricing pressure for stimulation services in U.S. Land. The Drilling and Evaluation segment's revenue declined 4% year-over-year to $2.34 billion, with operating income at $312 million (down 23% year-over-year), yielding a 13.3% operating margin. This segment was impacted by decreased drilling services in Mexico and Saudi Arabia, along with startup and mobilization costs. North America revenue decreased 9% year-over-year, while international revenue saw a 3% decline, largely due to activity reductions in Mexico and Saudi Arabia.

Despite these headwinds, Halliburton's financial health remains robust. As of June 30, 2025, the company held $2.0 billion in cash and equivalents. Cash flows from operating activities for the first six months of 2025 were $1.3 billion, with a positive $100 million impact from working capital improvements. Capital expenditures for the period were $656 million. For the full year 2024, Halliburton generated $2.42 billion in free cash flow, a 16% increase over 2023, and returned $1.6 billion to shareholders through buybacks and dividends, representing a 60% return of free cash flow.

Halliburton's TTM (Trailing Twelve Months) financial ratios highlight its competitive standing. Its Gross Profit Margin is 17.09%, Operating Profit Margin is 13.32%, and Net Profit Margin is 8.37%. While these are competitive, they generally lag Schlumberger's higher margins (Gross 21%, Operating 17%, Net 12%), indicating Schlumberger's (SLB) efficiency in scaling digital services. However, Halliburton's disciplined cost management and focus on high-return work are designed to maintain profitability even in a softer market, as evidenced by its commitment to keep C&P margins above double digits. The company's Debt/Equity ratio of 0.81 is favorable compared to some peers, and its current ratio of 2.00 indicates strong liquidity.

Outlook and Strategic Responses

Halliburton's management has adjusted its short-to-medium term outlook for 2025, anticipating a softer oilfield services market. Full year 2025 international revenue is now expected to contract by mid-single digits year-on-year, primarily due to reductions in Saudi Arabia and Mexico. North America revenue is forecast to decline by low double digits year-over-year. For Q3 2025, the Completion and Production segment is expected to see sequential revenue decrease by 1% to 3%, with margins declining by 150 to 200 basis points due to North America pressure pumping softness and reduced international completion tool deliveries. The Drilling and Evaluation segment's sequential revenue is also expected to decline by 1% to 3%, but margins are projected to improve by 125 to 175 basis points, driven by software improvements and reduced mobilization costs.

Despite these near-term challenges, Halliburton's strategic priorities remain clear. The company will continue to "reduce costs and retire, stack or reallocate underperforming assets" to right-size its business to market conditions. This includes not working equipment that does not earn economic returns, particularly North America frac fleets. Management expects full year 2025 capital expenditures to remain at approximately 6% of revenue, demonstrating continued capital discipline. The free cash flow outlook for 2025 is set between $1.8 billion and $2.0 billion, and the commitment to return at least $1.6 billion of cash to shareholders through dividends and share repurchases remains unchanged.

Halliburton's long-term confidence is rooted in its "growth engines" – unconventionals, drilling, production services, and artificial lift. These areas are projected to collectively generate an additional $2.5 billion to $3 billion in annual revenue over the next three to five years. The company's investment in technologies like Zeus IQ and EarthStar 3DX, along with its strategic partnerships and acquisitions (e.g., Optime Subsea, VoltaGrid), underscores its commitment to driving this growth.

Risks and Considerations

While Halliburton's strategic positioning is robust, investors should be mindful of several risks. The ongoing market softness, particularly in North America with planned schedule gaps and pricing pressure, could impact profitability. International activity reductions, especially in Mexico and Saudi Arabia, present headwinds, though Halliburton expects growth in other regions like Brazil and Norway to partially offset these. Tariffs, particularly impacting the artificial lift business, are expected to have a negative impact on operating income, with an estimated $35 million impact in Q3 2025.

The company is also contesting an IRS Notice of Proposed Adjustment from 2023, which seeks to reclassify a $3.5 billion termination fee paid in 2016 as a capital loss. If the IRS prevails, this could result in approximately $640 million in cash taxes plus interest, though Halliburton does not anticipate a material adverse impact on its liquidity or ability to meet financial commitments. Supply chain lead times and inflationary cost increases also remain ongoing challenges, though Halliburton aims to pass these on to customers.

Conclusion

Halliburton stands at a pivotal juncture, demonstrating a clear and disciplined strategy to navigate a volatile energy market. Its core investment thesis is built on a foundation of technological leadership, operational excellence, and a commitment to maximizing shareholder value through resilient free cash flow generation. The company's differentiated technologies, such as the Zeus platform for intelligent fracturing and advanced drilling solutions like iCruise and EarthStar 3DX, are not merely incremental improvements; they are transformative tools that enhance efficiency, optimize production, and create outsized value for customers. This technological moat, coupled with a strategic focus on high-growth international segments like unconventionals, artificial lift, and well intervention, positions Halliburton to outperform its peers and capture significant long-term revenue opportunities.

Despite near-term market softness and regional activity reductions, Halliburton's proactive cost management, disciplined capital allocation, and unwavering commitment to economic returns underscore its financial resilience. The company's ability to secure long-term contracts for its high-value assets and its strategic investments in emerging energy solutions further solidify its competitive standing. For discerning investors, Halliburton represents a compelling opportunity to invest in a market leader that is not only adapting to current challenges but is actively shaping the future of energy services through innovation and strategic foresight, promising attractive returns through the cycles.