Halliburton Company
HAL · NYSE
Next quarter
Consensus is $0.58 EPS for Sep 2026 across 9 estimates, ranging $0.58 to $0.59.
HAL Jun 2026
- 1.85%
- -0.48%
- $0.54
- $0.55
- —
- $5.71B
Reported results
- $5.71B
- $778.00M
- 13.62%
- $534.00M
- $0.64
Highlights
- Adjusted earnings: Adjusted EPS was $0.55, $0.01 above the $0.54 consensus estimate, a 1.85% surprise; GAAP EPS was $0.64.
- Sequential recovery: Revenue rose 6% to $5.71 billion from $5.40 billion, while operating income increased 15% to $778 million from $679 million.
- Underlying margins: Adjusted operating income was $683 million, implying a 12% adjusted operating margin versus reported operating margin of 14%, which benefited from a $95 million pretax credit.
- Segment mix: Completion and Production revenue increased 6% sequentially to $3.20 billion and operating income rose 8% to $474 million; Drilling and Evaluation revenue rose 5% to $2.51 billion, but operating income fell 4% to $338 million.
- Geographic momentum: North America revenue rose 7% sequentially to $2.28 billion, Europe/Africa increased 19% to $1.02 billion, and Latin America rose 3% to $1.12 billion; Middle East/Asia declined 2% to $1.30 billion amid geopolitical disruption.
- Year-over-year growth: Revenue increased 4% from $5.51 billion, led by 7% growth in Drilling and Evaluation; segment operating income before corporate items, SAP costs and credits declined 2% to $812 million.
- Cash generation and returns: Operating cash flow was $824 million and free cash flow was $668 million; Halliburton repurchased approximately $200 million of stock and paid a $0.17-per-share dividend.
- Forward indicators: Management expects incremental North American improvement and sees international demand growth, supported by multi-year Aramco awards covering approximately 285 planned wells and unconventional gas development.
Analysis
Halliburton's second quarter was a sequential activity recovery that narrowly beat the EPS benchmark, with adjusted EPS of $0.55 versus $0.54 expected. Revenue of $5.71 billion rose 6% from the prior quarter and 4% from a year earlier, while reported operating income increased 15% sequentially and 7% year over year to $778 million. GAAP EPS was $0.64, up from $0.55 in both the first quarter and year-ago quarter, although the comparison benefited from a $95 million pretax credit. Excluding that item, adjusted EPS was unchanged from both periods at $0.55.
The defining feature was broad geographic improvement outside the Middle East. North America returned to sequential growth, Europe/Africa surged 19%, and Latin America increased 3%, while Middle East/Asia contracted 2% as conflict disrupted activity in Kuwait, Iraq and Qatar. Segmentally, Completion and Production drove the sequential rebound, but its 15% operating margin remained pressured by mix, lower stimulation pricing and the chemical-business sale. Drilling and Evaluation grew revenue 5%, though profit fell 4% as seasonal software sales rolled off. Cash conversion was strong, with $668 million of free cash flow supporting $200 million of repurchases and the quarterly dividend.
Sequential activity recovery
The quarter showed a meaningful rebound from the first-quarter trough, helped by higher oil prices and improved activity in North America and international markets. Revenue increased from $5.40 billion to $5.71 billion, and operating income rose from $679 million to $778 million. However, the underlying improvement was smaller than the reported figures suggest because the quarter included a $95 million pretax credit, primarily investment gains and a government refund recovery, partly offset by a $17 million loss on the chemical-business sale. Adjusted operating income was $683 million, versus $679 million in the first quarter.
- North America: Revenue rose 7% sequentially to $2.28 billion, driven by higher US Land stimulation and well-construction activity and stronger Gulf of America fluids activity.
- International: Revenue increased 5% to $3.44 billion. Europe/Africa was the standout, rising 19% to $1.02 billion, while Latin America increased 3% to $1.12 billion.
- Middle East/Asia: Revenue declined 2% to $1.30 billion as conflict reduced activity across several product lines in Kuwait, Iraq and Qatar, despite improved well construction in Saudi Arabia and the UAE.
Segment profitability
Completion and Production supplied most of the sequential earnings improvement, while Drilling and Evaluation's revenue growth did not translate into higher profit because of software seasonality. The mix also remains less favorable than the headline revenue growth implies.
- Completion and Production: Revenue increased $186 million, or 6%, to $3.20 billion, and operating income rose $35 million, or 8%, to $474 million. Stimulation in the Western Hemisphere and well intervention in Asia led the improvement, partly offset by lower specialty chemicals activity, Latin American cementing and Middle East activity.
- Pricing and mix: Completion and Production operating income was still down 8% year over year, as reduced stimulation pricing in US Land and Latin America and activity mix offset revenue growth.
- Drilling and Evaluation: Revenue increased $126 million, or 5%, to $2.51 billion, driven by drilling-related services and wireline in North America and Europe/Africa. Operating income fell $13 million, or 4%, to $338 million because software sales seasonally rolled off.
Cash flow and capital returns
Halliburton continued to convert earnings into cash while maintaining its stated capital-return framework. Second-quarter operating cash flow was $824 million and free cash flow was $668 million after $235 million of capital expenditures and $79 million of proceeds from property sales.
- Shareholder returns: The company repurchased approximately $200 million of stock, equivalent to 5 million program shares in the quarter, and paid $143 million of dividends at $0.17 per share.
- Balance sheet: Cash was $2.05 billion at June 30, down from $2.21 billion at year-end 2025; total debt was $7.16 billion, including $90 million due in February 2027.
- Spending outlook: Six-month capital expenditures were $427 million versus $656 million a year earlier, while full-year 2026 capital spending is expected to be approximately $1.1 billion. Halliburton expects another $45 million of SAP S4 migration expense in the third quarter.
International contract pipeline
Management emphasized contract awards as evidence that international growth can extend beyond the current quarter's activity recovery. The awards span integrated well delivery, unconventional gas, digital execution and long-term offshore development.
- Saudi Arabia: Lump-sum turnkey Aramco awards cover approximately 285 planned onshore wells, including re-entry, drilling, completions and workovers. A separate multi-year stimulation and completion award supports Aramco's broader multi-billion-dollar unconventional gas program.
- Suriname and Iraq: Halliburton won integrated well-construction work for TotalEnergies' GranMorgu deepwater development offshore Suriname and field-management and EPCM work for the Bin Umar and Sindbad fields in southern Iraq.
- Digital portfolio: The company acquired Norway-based InformatiQ AS, extending Landmark's cloud-native subsurface, drilling, well and logistics applications, and announced a collaboration with Shape Digital on asset-level performance management and applied AI.
Outlook and constraints
Management expects incremental improvement in North America through the rest of the year and demand growth in every international region it serves. The 10-Q nevertheless describes an outlook dependent on commodity prices, customer capital discipline, trade policy, inflation and geopolitical developments. Middle East operations remain exposed to conflict-related disruptions, higher logistics costs and an uncertain recovery pace.
- Commodity backdrop: Average WTI increased 33% sequentially to approximately $96 per barrel and Brent rose 29% to approximately $103 per barrel, generally supportive of customer spending.
- Activity environment: Second-quarter average worldwide rig count was 1,759, down from 1,777 a year earlier; US Land was 540 versus 558, while Canada increased to 149 from 128.
- Tax exposure: Halliburton continues to contest an IRS proposal concerning the tax treatment of its $3.5 billion Baker Hughes termination fee. If the IRS ultimately prevails, the company estimates cash taxes of approximately $640 million plus interest, though no payment is currently required.
