Halliburton reported Q4 2025 revenue of $5.7 billion, flat sequentially, with full-year revenue reaching $22.2 billion. The company achieved an adjusted operating margin of 15% in Q4 and 14% for the full year, demonstrating solid operational execution. For the full year, Halliburton generated $2.9 billion in cash from operations and $1.9 billion in free cash flow, returning 85% of FCF to shareholders through $1 billion in share repurchases. While North America revenue declined 6% year-over-year to $9.1 billion, international revenue proved more resilient at $13.1 billion, down only 2% despite a 7% rig count decline. Looking ahead to 2026, management characterized the year as a 'rebalancing' period, expecting North America revenue to decline high-single digits while international revenue remains flat to up modestly. The company remains focused on maximizing value over market share, leveraging differentiated technologies like ZEUS IQ and iCruise, and pursuing international growth opportunities in power and Venezuela.
| Metric | Value | Change |
|---|---|---|
| Q4 Revenue | $5.7 billion | Flat sequentially |
| FY 2025 Revenue | $22.2 billion | N/A |
| Q4 Adjusted Operating Margin | 15% | N/A |
| FY 2025 Adjusted Operating Margin | 14% | N/A |
| Q4 Adjusted EPS | 69¢ | N/A |
| FY 2025 Free Cash Flow | $1.9 billion | N/A |
| FY 2025 Share Repurchases | $1.0 billion | N/A |
| North America FY Revenue | $9.1 billion | -6% YoY |
| International FY Revenue | $13.1 billion | -2% YoY |
Management emphasized a decisive shift toward 'maximizing value' over market share in North America. This involves actively stacking uneconomic fleets rather than lowering prices to keep them working. This strategy is designed to preserve capital and equipment for the next upcycle, which Miller believes will start in North America. By prioritizing returns, Halliburton aims to maintain margins and free cash flow generation even as activity softens, signaling a mature, disciplined approach to capital allocation.
Halliburton is leveraging its 'collaborative value proposition' to drive international growth. This strategy, which began with independents and has expanded to IOCs and NOCs, involves deep integration with customer operations. Management cited this as a key differentiator that allowed them to outperform a 7% rig count decline internationally, keeping revenue down only 2%. This positions HAL to capture market share as international activity stabilizes or grows in 2026.
Technology differentiation remains a core strategic pillar, specifically the ZEUS IQ platform for completion and iCruise for drilling. Miller noted that ZEUS IQ directly measures and automates sand placement, a critical capability for improving recovery in unconventional wells. Adoption of these technologies increased 8% in the quarter. This focus on high-tech solutions allows HAL to command premium pricing and protect margins even in a softer pricing environment.
The strategic partnership with VoltaGrid for power generation is gaining significant traction. Management announced securing manufacturing capacity for 400 megawatts of modular power systems and highlighted a rapidly expanding opportunity pipeline in the Eastern Hemisphere. This move diversifies HAL's revenue stream and capitalizes on the global power shortage and electrification trends, potentially creating a 'very big business' over time.
Venezuela represents a potentially high-impact re-entry opportunity. Miller stated that 'early steps are already well underway' and expressed confidence in scaling up quickly once commercial and legal terms, including payment certainty, are resolved. He noted his phone is 'ringing off the hook' with interest. While currently a small market compared to a decade ago, a successful re-entry could provide a significant unexpected growth vector for 2026 and beyond.
North America activity is expected to decline 'high single digits' in 2026, driven by reduced customer activity and the company's own decision to stack uneconomic fleets. This creates a near-term headwind to revenue growth that will likely persist through the first half of the year. Management's admission that they expect 'moderate softness' in key markets suggests the downturn in the Lower 48 could be deeper or more prolonged than current consensus estimates.
Q1 2026 margins are expected to contract significantly, with Completion and Production margins declining approximately 300 basis points and Drilling and Evaluation margins down 25-75 basis points. This is driven by the roll-off of strong year-end completion tool sales and seasonal international softness. This sharp margin reset in Q1 could pressure earnings estimates and signals that the margin expansion seen in Q4 may not be sustainable in the immediate term.
Ongoing SAP S/4HANA migration costs will act as a drag on 2026 earnings. Management guided for $40-$45 million in quarterly expenses related to this project until completion in Q4 2026. While these costs are expected to yield $100 million in annual savings post-completion, the consistent quarterly drag will impact operating income throughout the year, masking underlying operational performance.
Pricing power appears to have plateaued in North America. Miller described pricing as 'fairly stable' and noted that companies are 'not investing' in the market at current price levels. The lack of upward pricing momentum, combined with the decision to stack fleets, suggests that the dayrate increases seen in prior upcycles are unlikely to return in the near term, limiting potential upside to revenue per unit.
Overall: Management exhibited a tone of disciplined confidence and pragmatic optimism. CEO Jeff Miller was candid about the near-term challenges in North America, framing 2026 as a 'rebalancing' year, but expressed high conviction in the company's long-term positioning and technology differentiation. There was a notable emphasis on capital discipline ('maximizing value') and a refusal to chase market share at uneconomic returns, contrasting with a bullish outlook on international expansion and the eventual return of the upcycle.
Confidence: HIGH - Management displayed high confidence in their strategic positioning, technology suite, and ability to outperform the market. Miller used definitive language regarding the company's ability to 'outperform in 2026' and 'capitalize on future growth,' while CFO Eric Carre provided specific financial guidance that suggests control over the business levers despite macro uncertainty.
Expected to decline high single digits compared to 2025
Expected to be flat to up modestly
Expected to decrease 7% to 9% sequentially
Expected to decline approximately 300 basis points
Expected to decline 2% to 4% sequentially
Expected to decline 25 to 75 basis points
Approximately $1.1 billion
Approximately 21%
Hedging & Uncertainty: Management employed hedging language primarily regarding the timing of the market recovery and specific regional performance. Miller used phrases like 'absent geopolitical disruptions' and 'unlikely to rise' when discussing commodity prices, acknowledging external risks. Regarding Saudi Arabia, he stated he was 'taking a bit more conservative view of the timing,' effectively lowering expectations for immediate growth. However, hedging was notably absent regarding their own strategy; Miller was definitive about 'maximizing value' and 'stacking fleets,' showing no ambiguity in their operational response to the market.
I expect 2026 to be a year of rebalancing. - Jeffrey Miller, Chairman, President and CEO
We will maximize value, meaning we will stack fleets that do not make adequate return. - Jeffrey Miller, Chairman, President and CEO
I am confident Halliburton will outperform in 2026. - Jeffrey Miller, Chairman, President and CEO
The shift from idealism to pragmatism is refreshing. - Jeffrey Miller, Chairman, President and CEO
Pricing is fairly stable at this point. - Jeffrey Miller, Chairman, President and CEO
We anticipate moderate softness in some key markets, particularly North America. - Jeffrey Miller, Chairman, President and CEO
Analyst Sentiment: Analysts were highly focused on the near-term demand outlook, specifically the mechanics of the North America downturn and the potential upside from Venezuela. There was a clear interest in understanding the durability of margins amidst the revenue decline and the specific growth drivers in the international segment.
Management Responses: Jeff Miller handled questions with a high degree of specificity, particularly regarding Venezuela and the strategic rationale for stacking fleets. He deflected questions about precise timing of the upcycle but remained firm on the 'rebalancing' narrative. Eric Carre provided detailed financial color, particularly on the SAP spending drag and the specific composition of the margin decline in Q1.
Venezuela Re-entry: Analysts probed the speed and scale of a potential return. Miller confirmed they could move equipment in 'weeks' and that interest was high, but cited the need for payment certainty.
2026 Margin Trajectory: Analysts sought comfort on full-year margins given the weak Q1 guide. Management confirmed H2 will be better than H1 and that Street estimates ($4B EBITDA) were 'within the range.'
North America Pricing & Attrition: Discussion centered on whether the market had bottomed. Miller argued that rational behavior (stacking fleets) and equipment wear-out meant the market was at a bottom, though he wouldn't predict the exact timing of the recovery.
VoltaGrid & Power: Analysts inquired about the returns profile and scale of the power business. Management indicated returns could be higher than current North American service returns due to long-term contracts.
Halliburton presents a compelling investment case based on its disciplined capital allocation and superior technology differentiation. While 2026 faces headwinds from a rebalancing North American market, management's commitment to 'maximizing value' over volume—evidenced by stacking uneconomic fleets—should protect margins and free cash flow. The company is effectively pivoting growth drivers to international markets and adjacent technologies like power (VoltaGrid) and digital solutions (ZEUS IQ). The potential re-entry into Venezuela offers a high-upside optionality that is not currently priced in. With a strong balance sheet, consistent share buybacks (85% of FCF), and a clear path to outperforming when the cycle turns, HAL remains a top-tier holding in the OFS space.
Management views 2026 as a 'rebalancing' year where abundant supply (OPEC spare capacity, non-OPEC production) keeps prices from rising. However, medium-term tailwinds are strong due to steep decline rates in unconventional basins and 'anemic' exploration success, setting up a future supply deficit.
Expectations for 'moderate softness' in North America with a 'high single digit' revenue decline. The market is characterized by rational behavior where operators are not investing in new capacity, leading to equipment attrition.
International activity is expected to be 'stable year over year' with growth led by Latin America (Brazil, Argentina, Guyana) and stability in the Middle East and Asia Pacific. The market structure is evolving to favor integrated, collaborative services.
The potential normalization of relations with Venezuela represents a significant geopolitical shift that could unlock substantial reserves and OFS activity, though execution risks remain.