On Tuesday, Halliburton issued a warning regarding its second-quarter earnings, citing the impact of tariffs and decreased oilfield activity in North America. This development occurs as producers reassess drilling and completions amidst weak oil prices, causing a 6% drop in Halliburton’s stock. As the first of the major U.S. oilfield services providers to report earnings under these conditions, Halliburton highlights ongoing challenges, with U.S. crude prices staying below $64 per barrel. Many industry players assert that they cannot drill profitably if prices decline below $65 per barrel, which affects the demand for services and equipment from companies like Halliburton.
Jeff Miller, Halliburton’s Chief Executive, remarked on the expectations in North American markets, indicating that several customers are currently evaluating their activity plans for 2025, which could lead to increased gaps in the schedule for committed fleets or even the retirement or export of fleets to international markets. These gaps, referred to as white spaces, represent periods when the company lacks scheduled work for its equipment.
Halliburton’s shares suffered a decline of about 6%, standing at $20.62 per share, after projecting a 2 to 3 cents per share impact from trade tensions in the second quarter. The projected earnings for the second quarter were 63 cents per share, as per LSEG data. Throughout the session, shares had dropped as much as 10% and saw a 24% decrease year-to-date. In contrast, competitor SLB’s shares experienced an 11% decrease this year.
The oilfield service sector is apprehensive about the tariffs imposed by former President Donald Trump on imported steel and parts, which could potentially disrupt the supply chains and escalate equipment costs such as drilling rigs and well casings.
In the first quarter, Halliburton incurred a severance cost of $107 million. A similar charge of $63 million was recorded in the third quarter of 2024. The company did not provide further details on the severance charge when requested.
Halliburton reported that first-quarter revenue from North America amounted to $2.2 billion, a 12% decrease from the same period the previous year. International revenue saw a minor decrease of 2%, mainly due to reduced drilling and project management activity in Mexico. The company anticipates international revenue for the year to be flat or slightly lower compared to the prior year.
The Mexican government is proposing new contractual models for the oil industry while simultaneously attempting to address substantial debt owed to oil service companies. State-owned Pemex’s oil production has continued to decline this year to approximately 1.62 million barrels per day, down from 1.76 million barrels per day the previous year.
Miller noted that while there might be a plan in place, recovery in Mexico may not be immediate.
Halliburton forecasts that its completion and production division revenue will grow by 1% to 3% in the second quarter compared to the first, with relatively stable margins. Meanwhile, drilling and evaluation division revenue could remain flat or drop by 2%, with margins expected to decline by 125 to 175 basis points.
The Houston-based company reported a profit of $204 million, or 24 cents per share, for the three months ending March 31, down from $606 million, or 68 cents per share, during the same period last year. Excluding a $356 million pre-tax charge, which includes the severance charge, the adjusted earnings were 60 cents per share, aligning with analysts’ expectations. The company’s revenue of $5.42 billion surpassed the analysts’ average estimate of $5.28 billion.
