tapebrief

HAL · Q2 2025 Earnings

Cautious

Halliburton

Reported July 22, 2025

30-second summary

Halliburton printed $5.51B revenue (-5.5% YoY, +1.7% QoQ) and $0.55 EPS, with operating margin at 13.2% and C&P margins running 80bps below the company's own prior guide. The bigger signal is forward: management now expects the oilfield services market to be "softer than previously expected over the short to medium term," guided Q3 revenue down 1-3% sequentially with another 150-200bps of C&P margin compression, and is targeting ~1% structural cost reduction over the next couple of quarters. Capital returns are unchanged ($250M buybacks, $0.17 dividend) — management is absorbing the downturn through cost and fleet stacking rather than touching the shareholder return framework.

Headline numbers

EPS

Q2 FY2025

$0.55

Revenue

Q2 FY2025

$5.51B

-5.5% YoY

Free cash flow

Q2 FY2025

$0.58B

Operating margin

Q2 FY2025

13.2%

Key financials

Q2 FY2025
MetricQ2 FY2025YoY
Revenue$5.51B-5.5%
EPS$0.55—
Operating margin13.2%—
Free cash flow$0.58B—

Guidance

Prior quarter data unavailable — comparison not possible.

Segment KPIs

Q2 FY2025
SegmentQ2 FY2025YoY
Completion and Production$3.171B+1.6%
Drilling and Evaluation$2.339B-3.8%

Other KPIs

Q2 FY2025
SegmentQ2 FY2025YoY
North America$2.259B+1.0%
Latin America$0.977B+9.0%
Europe/Africa/CIS$0.82B+5.8%
Middle East/Asia$1.454B-3.0%
Completion and Production Operating Income$513 million—
Drilling and Evaluation Operating Income$312 million—
Operating Cash Flow$896 million—
Adjusted Operating Margin13.2%—
Share Repurchases$250 million—
Dividends Per Share$0.17—

Management tone

Management's posture this quarter is best read as disciplined retrenchment rather than retreat. Jeff Miller explicitly framed Halliburton's response in returns-maximization language rather than market-share language: the company will stack uneconomic frac fleets rather than work at losses, will not "burn equipment or create HSE risk at uneconomic rates," and is replicating the approach it took in the gas market a year prior. The verbatim anchor: "make a choice" territory on pricing — meaning Halliburton has decided which choice it is making. This is a meaningful philosophical statement for a company whose competitors often cite share defense as a justification for absorbing pricing concessions.

The second tonal signal is the acknowledged miss on the company's own near-term forecasting. Eric attributed the 80bps C&P margin miss to two specific drivers — Saudi frack slowdown ahead of the tender award and U.S. land pricing headwinds — and then guided another 150-200bps of margin compression for Q3. Walking down a guide that was itself missed, in the same call, is a meaningful confidence reset; management is now anchoring expectations lower rather than defending the prior trajectory.

The third signal is structural rather than cyclical framing of the response. The ~1% cost reduction is described as structural cost actions over a couple of quarters, paired with active portfolio evaluation (chemicals business under review for potential divestiture, ESP lift identified as the most attractive growth opportunity). Management is not waiting out the cycle — it is right-sizing the cost base and pruning the portfolio while continuing to invest in differentiated technology (Zeus IQ, UAE unconventional showcase starting Q4). The tone is not panic; it is acknowledgement that the next few quarters will be worked rather than ridden out.

Q&A highlights

Neil Mehta · Goldman Sachs

C&P margins softened in Q2 and analyst seeks breakdown of drivers and path to margin recovery, plus customer perspectives on 2026 activity outlook.

Eric detailed that Q2 margins were 80 bps below guidance due to Saudi frack slowdown ahead of tender award and U.S. land pricing headwinds. For Q3, guided 1-3% revenue decline and 150-200 bps margin compression driven by North America land pressure pumping softness, international completion delivery cycle, and Saudi frack reduction. Jeff noted customers are cautious on 2026 budgets pending commodity price catalysts.

Q2 C&P margins 80 bps below guidanceQ3 revenue guidance: -1% to -3% sequentialQ3 margin guidance: -150 to -200 bpsSaudi frack activity slowing ahead of new tender award

Dave Anderson · Barclays

Analyst probes timing of market bottom in North America, pricing pressure trajectory (whether E&Ps seeking further concessions), and whether Halliburton is exiting diesel fleet business entirely.

Jeff stated no clear bottom visible yet; will monitor supply-demand signposts (spare capacity absorption, production rollover in key markets). Confirmed pricing is 'make a choice' territory—will stack uneconomic fleets strategically rather than work at losses. Emphasized commitment to not burning equipment or creating HSE risk at uneconomic rates.

North America operating below maintenance production levelsMexico also below maintenance levelsWill stack fleets not meeting returns thresholdStrategic decision to avoid uneconomic work, not market-share driven

Aaron Jayarum · J.P. Morgan

Questions on unconventionals positioning in Middle East, UAE testing, Jafura tender strategy, importance of technology in competitive bidding, and portfolio pruning approach.

Jeff stated Halliburton well-positioned in Middle East unconventionals from equipment and technical standpoint, with UAE work starting Q4 as technology showcase. Declined to comment on Jafura specifically, reiterating disciplined, returns-focused bidding approach. On portfolio, confirmed focus on high-return businesses; evaluating chemicals business marketing; identified ESP lift as most attractive opportunity.

UAE unconventional work starting Q4Zeus IQ and other technology to be showcased in UAEJafura tender in process; disciplined bidding focused on returns not volumesInternational LST/collaborative work represents >20% of international business

Roger Reed · Wells Fargo Securities

Questions on whether recent tax reforms (Big Beautiful Bill) will drive E&P budgets higher, visibility to year-end guidance, and whether returns/margins focus represents strategic shift vs. historical market-share mentality.

Jeff stated tax reforms unlikely to materially impact near-term customer plans, which remain commodity and budget-driven. Reiterated strategic commitment to returns maximization, not market-share pursuit; confirmed this mirrors approach taken in gas markets a year prior. Emphasized want good equipment to capitalize on snapback.

Tax reform not expected to significantly boost near-term E&P budgets2026 plans for customers remain largely unsetStrategic focus on returns maximization, replicating prior gas market approachWill maintain pricing discipline and stack equipment strategically

Rob Pont · Bank of America

Questions on cost reduction magnitude and timeline, how Halliburton protects margins in DNE and C&P divisions, and strategic implications if Saudi market shifts to more LSTK/collaborative models.

Jeff outlined targeting ~1% cost reduction in early stages over couple of quarters as business right-sizes. Noted structural cost actions underway similar to customer efficiency efforts. Confirmed LST/collaborative work already represents >20% of international business and is strength for Halliburton; all done under disciplined, returns-focused tendering discipline.

Targeting ~1% structural cost reductionCost actions likely to take couple of quarters to fully implementLSTK/collaborative work already >20% of international revenueProject management organization described as 'strongest it's been'

What to watch into next quarter

Q3 C&P margin landing point — management guided 150-200bps sequential compression off the Q2 base. Watch whether the actual print lands inside that band or, like Q2, comes in below management's own guide. A second consecutive miss against a freshly-lowered guide would meaningfully damage forward credibility.

Jafura tender outcome and Saudi frack reactivation — Saudi softness was the largest single driver of the Q2 miss. The tender award timing and Halliburton's share of it will define the Middle East/Asia trajectory into 2026; track whether management quantifies its expected share when the award is announced.

North American frac fleet stacking actions — Jeff was explicit that uneconomic fleets will be stacked. Watch for a specific count of stacked fleets disclosed on the Q3 call as evidence the pricing discipline is being enforced rather than rhetorical.

Structural cost reduction execution — ~1% target over the next couple of quarters. Track whether Q3 SG&A and cost-of-services lines show measurable decline, or whether the savings get absorbed by activity declines.

Chemicals divestiture decision — management confirmed the business is under evaluation. A decision either way (sale, retention, structural change) is a near-term portfolio catalyst.

2026 customer budget commentary — both Jeff and Eric flagged 2026 visibility as low. The first concrete customer budget signals typically emerge on the Q3 call; watch for tone shift on the early 2026 framing.

Sources

  1. Halliburton Q2 2025 press release / 10-Q filing, SEC EDGAR — https://www.sec.gov/Archives/edgar/data/45012/000004501225000053/livemastererdocument.htm
  2. Halliburton Q2 2025 earnings call Q&A (analyst exchanges with Goldman Sachs, Barclays, J.P. Morgan, Wells Fargo, Bank of America)

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