Halliburton Earnings: Weakened North American Activity Offset by International Markets

Halliburton HAL delivered a solid performance in the second quarter, posting modest sequential revenue growth of 2% with a 17% firmwide operating margin. The firm’s operations are roughly evenly split between North America and international geographies, with international markets expected to lead the charge for global activity growth in the future. We maintain our outlook for decelerating top line growth—though still averaging 7% growth per year—and expect operating margins will remain steady at 17% over the next five years. Our $40 per share fair value estimate and narrow moat rating are unchanged following results.

Constrained production activity across North America led to a 2% sequential drop in revenue from the region this quarter. The land drilling rig count declined roughly 15% compared with last quarter, and a material rebound is unlikely over the near term. The international rig count, on the other hand, continued its steady expansion, averaging 4% sequential growth since the first quarter of 2021. Halliburton’s international operations more than offset quarterly declines in North America, and we expect international markets will provide most of Halliburton’s growth prospects through year-end. The Middle East and Latin America were key contributors to drilling revenue this quarter, which bodes well for Halliburton’s completion and production services.