Outlook Signals Early North America Recovery: Halliburton’s (HAL) management highlighted early signs of recovery in North America, even as current activity remains below prior levels due to weaker stimulation demand. International markets continued to outperform, with growth in Latin America and Europe/Africa offsetting weakness in the Middle East. However, geopolitical disruptions, particularly in the Middle East, weighed modestly on earnings during the quarter. Management expects its continued focus on capital discipline and returns to drive performance as activity gradually improves through 2026.
Among the key projects in Q1, Halliburton launched new technologies, including the HyperSteer MX drill bit and the XTR CS injection system, aimed at improving drilling efficiency and supporting carbon capture applications. It also expanded innovation efforts through a joint lab with Singapore’s A*STAR to accelerate next-generation completion technologies. In addition, the company achieved a milestone in offshore automation with a fully automated well placement project in Guyana.
Segment Performance Mixed
Completion & Production revenue declined ~7.7% quarter-over-quarter, while operating income fell ~23%, reflecting weaker pressure pumping and lower completion activity in North America and the Middle East. In contrast, Drilling & Evaluation revenue was flat sequentially, with operating income also broadly stable as stronger international drilling activity offset regional softness.
It highlighted weaker stimulation (frac) activity in North America, which was a key driver behind the decline in Completion & Production performance. It also pointed to reduced pressure pumping services in the Middle East, reinforcing that completions demand remains uneven globally. On the positive side, pressure pumping activity improved in Africa. HAL’s net income declined sequentially by ~22% in Q1, reflecting the absence of Q4 tax benefits and slightly weaker activity levels.
Cash Flow and Capital Returns Remain Steady: Halliburton generated positive free cash flow in Q1, broadly flat year-over-year, supported by disciplined capital spending despite lower operating cash flow. The company continued returning capital to shareholders, repurchasing approximately $100 million of stock during the quarter while maintaining dividend payouts. However, working capital outflows weighed on operating cash flow, highlighting the need for sustained activity recovery to support stronger cash generation through the year.
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.
