earnings Published Oct 22, 2026, 9:24 AM UTCUpdated Oct 22, 2026, 9:24 AM UTC

Halliburton Sees 15% Margins Without a Fracking Recovery

Halliburton expects mid-single-digit revenue growth and an operating margin near 15% in 2027, even if North American hydraulic fracturing stays flat. International growth and restructuring benefits must offset continued weakness in pressure pumping.

Halliburton's early 2027 outlook rests on an unusually important assumption: the company does not need a recovery in North American hydraulic fracturing to reach its target. Management expects mid-single-digit revenue growth and an operating margin of about 15%, roughly two percentage points above its current outlook.

The third quarter showed why that mix shift matters. Revenue was $5.7 billion, broadly unchanged from the second quarter. North American revenue fell 5% to $2.2 billion, primarily because of weaker pressure-pumping activity. International revenue rose 3% to $3.5 billion, including an 8% increase in the Middle East and Asia to $1.4 billion.

Segment results reinforced the contrast. Drilling and Evaluation revenue increased 4% to $2.6 billion, while operating income rose 16% to $391 million. Completion and Production revenue declined 4% to $3.1 billion, and operating income fell 4% to $457 million as stimulation activity weakened in the Western Hemisphere.

Reported and adjusted results also moved in different directions. Net income attributable to Halliburton fell to $417 million from $534 million in the second quarter. Adjusted net income rose to $501 million from $461 million, and adjusted earnings per share increased to $0.60 from $0.55.

The difference reflects $107 million of pre-tax charges, mainly severance costs from a global restructuring and inventory write-downs. Investors should not ignore those costs, but the adjusted improvement suggests the underlying business performed better than the reported decline alone implies.

Cash conversion remains a near-term watchpoint. Operating cash flow was $368 million and free cash flow was $156 million, while share repurchases totaled about $250 million. That means buybacks exceeded quarterly free cash flow.

The 2027 margin target is credible only if international growth continues, restructuring savings appear and North American pressure pumping does not deteriorate further. A flat fracking market may be enough for management's plan, but a deeper decline would test the claim that international activity can carry the whole improvement.