Halliburton: Q2 TAKE THREE

Halliburton expects short- to medium-term softness in the oilfield services market, particularly internationally, but will focus on unconventionals, drilling, and artificial lift. Q2 revenues grew modestly in North America, with Latin America and Europe/Africa driving gains, while the Middle East underperformed. Net income rebounded 1.3x quarter-over-quarter. Share repurchase continued.

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Key Innovations and Operating Highlights: Halliburton’s (HAL) management expects the oilfield services market to soften further “over the short to medium term.” The international market, which dominates HAL’s portfolio (with 59% of its sales mix), will remain uneven, as activity can weaken in a few large markets while other regions will exhibit growth. The company will focus on unconventionals, drilling, production services, and artificial lift in the changed scenario.

Notable among Halliburton’s key innovations and initiatives in Q2 was an intelligent fracturing process that combines automated stage execution with subsurface feedback. In Q2, HAL and NBR achieved the first fully automated surface and subsurface execution of rotary and slide drilling operations in Oman. It received a five-year contract to support the full well lifecycle in the UK North Sea. It also won a contract for a geothermal and direct lithium extraction project.

Q2 Performance Indicates Strength : Quarter-over-quarter, revenues in the company's Completion and Production operating segment increased by 1.6% in Q2. The top line in the Drilling and Evaluation segment increased by a similar amount, 1.8%. Geographically, Latin America witnessed the sharpest rise (9% up), followed by Europe/Africa/CIS (5.8% up). North America, in comparison, was relatively resilient from Q1 to Q2.

Improved activity in Mexico and Brazil, and increased well intervention services in Argentina, primarily drove the Q2 sales in Latin America. In Europe/Africa, Norway led the growth. The company’s Middle East/Asia region underperformed in Q2 due to lower demand in Saudi Arabia and Kuwait. Quarter-over-quarter, the company’s net income turned around, zooming up by 1.3x after the 67% dip in the previous quarter.

Share Repurchase Amidst Cash Flow Weakness : HAL's cash flow from operations continued to weaken (19% down) in 6M 2025 compared to a year ago. As a result, its FCF decreased by ~31%. Debt-to-equity (0.72x) remained unchanged compared to the previous quarter. During Q2, it repurchased shares worth $250 million to improve shareholder returns. The share buyback has been a consecutive exercise for the past six quarters.

Thanks for reading the HAL take three, designed to give you three critical takeaways from HAL's earnings report. Soon, we will present a second update on HAL earnings highlighting its current strategy, news, and notes we extracted from our deeper dive.

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