Halliburton’s 2026 Outlook: Contradictions on North America Activity, Middle East Recovery, and CapEx Guidance

Date of Call: Jan 21, 2026

Financials Results

• Revenue: $5.7 billion, flat compared to Q3 2025
• EPS: $0.69 adjusted net income per diluted share
• Operating Margin: 15% adjusted operating margin

Guidance:

• Q1 2026: Completion & Production revenue expected to decrease 7-9% sequentially; margins to decline ~300 basis points. Drilling & Evaluation revenue expected to decline 2-4%; margins to decline 25-75 bps.
• Full-year 2026: Expect capital expenditures of ~$1.1 billion.
• International revenue for 2026 expected flat to up modestly.
• North America revenue for 2026 expected to decline high single digits compared to 2025.

Business Commentary:

Revenue Performance and Market Activity:

• Halliburton reported total company revenue of $22.2 billion for 2025, with an adjusted operating margin of 14%. International revenue was $13.1 billion, down 2% year-over-year, while North America revenue was $9.1 billion, a decrease of 6%.
• The company generated $2.9 billion of cash flow from operations and repurchased $1 billion of common stock, returning 85% of free cash flow to shareholders.
• Despite market declines, Halliburton outperformed expectations due to strong activity in Completion and Production businesses in North America and internationally.

North America and International Outlook:

• For 2026, Halliburton expects North America revenue to decline high single digits compared to 2025, reflecting reduced customer activity and equipment stacking.
• The company anticipates international activity to be stable year-over-year, with a focus on unconventionals, drilling, and production services.
• The strategic collaboration with VoltaGrid is expected to expand, with opportunities in the Eastern Hemisphere.

Technology and Market Position:

• Halliburton's ZEUS platform, particularly ZEUS IQ, has seen an 18% increase in customer adoption, enhancing sand placement and improving recovery.
• The company's drilling services business grew despite a 6% decline in rig count, attributed to the performance of iCruise and LOGIX automation.
• Halliburton is positioned to lead in the evolving market with its collaborative value proposition and differentiated technology.

Sentiment Analysis:

Overall Tone: Positive

• CEO expressed being "pleased with Halliburton's fourth quarter performance" and "excited about Halliburton's opportunities now and in the years ahead." He stated, "I am confident in the outlook for our business and Halliburton's ability to deliver leading returns."

Q&A:

• Question from Saurabh Pant (BofA Securities): Could you detail the timeline and potential size of the Venezuela opportunity?
  Response: Management can scale up fairly quickly (equipment mobilization in weeks); the market was historically ~$0.5B for Halliburton but is now smaller. They are optimistic for a longer-term bigger business.

• Question from Saurabh Pant (BofA Securities): What is the margin outlook for 2026 and the SAP spending trajectory?
  Response: CFO clarified SAP run rate is $40-45M per quarter through Q4 2026; project completion expected in Q4 with ~$100M annual savings thereafter. Margin outlook is for second half to be stronger than first half.

• Question from Neil Mehta (Goldman Sachs): Can you provide a geographic breakdown of the 2026 international outlook?
  Response: Latin America leads with growth (Brazil, Argentina, Ecuador, Guyana); Middle East/Asia expected flattish to down slightly (cautious on Saudi Arabia timing); Asia Pacific expected flattish.

• Question from Neil Mehta (Goldman Sachs): How significant is the VoltaGrid power business and its growth potential?
  Response: Management is excited; they see a solid pipeline and potential for it to become a very big business over time, citing a 400MW capacity deal already secured.

• Question from John Anderson (Barclays): How is the North American stimulation market rebalancing and what is the pricing trend?
  Response: Frac pricing is stable. Management expects it to improve over time, noting equipment is moving internationally, being stacked, and there is rational behavior due to lack of investment.

• Question from John Anderson (Barclays): Can you detail the C&P margin progression and impact of the Multi-Chem sale?
  Response: C&P margin decline in Q1 is driven by completion tool sales roll-off (~50% of drop), typical international seasonality (~25% of drop), and geographic mix. The Multi-Chem sale is expected to be completed this quarter with a positive but not material margin impact.

• Question from Arun Jayaram (JPMorgan): Does the 2026 outlook imply Street EBITDA estimates are reasonable?
  Response: CFO stated that the ~$4B Street EBITDA estimate for 2026 is within the range of outcomes they are looking at, with margins expected to progress through the year.

• Question from James West (Melius Research): Where could you see upside surprises in a higher oil price environment?
  Response: Potential upside pockets include Argentina, the Caribbean, West Africa, and Algeria, where activity is responding positively to market conditions.

• Question from James West (Melius Research): How are you thinking about additional investments in the power market beyond VoltaGrid?
  Response: Management is taking a step-by-step approach; they are aligned with VoltaGrid in the U.S. and have built a team for international power, expecting to grow the business as deals are done.

• Question from Stephen Gengaro (Stifel): Why was Q4 stronger than expected, and what does it imply?
  Response: Attributed to weather, operator activity, and customers taking a long view on unconventionals; suggests the market may remain solid, with potential inflection if commodity prices rise.

• Question from Stephen Gengaro (Stifel): What are expectations for completion efficiency and U.S. production sustainment?
  Response: Currently at or below maintenance levels; technology (like ZEUS IQ) is key for better recovery. Drilling services are strengthening due to technology adoption for longer, more complex wells.

• Question from Scott Gruber (Citigroup): How do returns on power projects compare to organic investments, and how does that affect capital deployment?
  Response: Returns vary by opportunity and country; typically long-term contracts with low risk. Early indications in North America suggest returns may be higher than current organic projects.

• Question from Scott Gruber (Citigroup): What factors will impact cash conversion in 2026?
  Response: Too early to detail working capital or collections, but noted improved collections in Mexico. Will provide more details on free cash flow drivers later.

• Question from Derek Podhaizer (Piper Sandler): Is all equipment deployed in U.S. land, and what is the tightness outlook?
  Response: Company has stacked fleets that could return for acceptable returns; market tightness could come quickly due to high performance/technology requirements and limited fleet availability.

• Question from Derek Podhaizer (Piper Sandler): What is the 2026 outlook for the Middle East, and which regions are key?
  Response: Middle East outlook is flattish to slightly down. UAE and Kuwait are strong; Iraq is a growth story; cautious on Saudi Arabia timing.

• Question from Marc Bianchi (TD Cowen): What is the offshore market outlook and any second-half uptick potential?
  Response: Offshore is very strong for Halliburton, with an all-time high completion tool order book; expect it to stay strong in 2026.

• Question from Marc Bianchi (TD Cowen): What is the timeline for returning to Venezuela, and who will lead the re-entry?
  Response: Can mobilize in weeks; timing depends on resolving commercial/legal terms (including payment certainty) with IOCs and operators already there. Expect to move fairly quickly as opportunities arise.

Contradiction Point 1

2026 North America Activity Outlook

Contradiction on whether North America activity will be below maintenance or flattish, affecting expectations for capital spend and production sustainment.

What are the expectations for completion efficiency's impact on U.S. production, and is current activity sufficient to sustain it? - Stephen Gengaro (Stifel)

2025Q4: Current activity is likely at or below maintenance levels. - Jeffrey Miller(CEO)

With frac activity below sustainment levels, how are E&Ps planning for 2026? - Stephen Gengaro (Stifel, Nicolaus & Company)

2025Q3: North America activity and capital spend are expected to be flattish to slightly down in 2026. - Jeffrey Miller(CEO)

Contradiction Point 2

2026 Middle East Outlook

Contradiction on the expected timing for a recovery in Saudi Arabia, impacting international growth forecasts.

What is the geographic breakdown of the international outlook for 2026? - Neil Mehta (Goldman Sachs)

2025Q4: Middle East is flattish to slightly down due to cautious timing on Saudi Arabia's recovery. - Jeffrey Miller(CEO)

In 2026, is Saudi Arabia expected to bottom and recover in H1, with deepwater in H2? - James West (Melius Research LLC)

2025Q3: Saudi Arabia (Middle East) is expected to pick up in 2026, though not necessarily a full recovery. Improvement is expected around mid-2026. - Jeffrey Miller(CEO)

Contradiction Point 3

2026 Capital Expenditure Guidance

Contradiction on the nature of the $1 billion CapEx guide (absolute vs. ratio), potentially altering investment priorities and financial planning.

How do returns on power projects versus organic investments affect capital deployment into power? - Scott Gruber (Citigroup)

2025Q4: The $1 billion 2026 capital expenditure budget for Halliburton’s oil and gas business is separate from the power projects. - Eric Carre(CFO)

Is the $1 billion CapEx guide a percentage of revenue (5-6%) or an absolute number? - Keith MacKey (RBC Capital Markets)

2025Q3: It is an absolute dollar number, not a ratio. - Eric Carre(CFO)

Contradiction Point 4

North American Stimulation Market Outlook and Timing of Market Bottom

Contradiction on market outlook and the near-term recovery of activity, influencing equipment and investment strategies.

How is the North American stimulation market rebalancing, considering frac pricing stability, potential firming, and equipment attrition or movement to other regions? - John Anderson (Barclays)

2025Q4: This rational behavior (equipment wear-out, movement, stacking) indicates the market is at a bottom and should improve over time. - Jeffrey Miller(CEO)

Can you discuss customer insights on white space in North America's frac business for H2 and early 2026? - Neil Mehta (Goldman Sachs)

2025Q2: Activity is expected to pick up earlier in the year from current Q3/Q4 levels, but a significant rebound or 'doubling down' is unlikely without catalysts that change the price outlook. - Jeffrey Miller(CEO)

Contradiction Point 5

C&P Margin Progression for 2026

Contradiction on the direction and timing of C&P margin movement throughout 2026, affecting financial performance expectations.

What is the 2026 margin outlook considering pricing, operating leverage, costs, and SAP spending? - Saurabh Pant (BofA Securities)

2025Q4: Margins are expected to be stronger in the second half of 2026 than the first. - Jeffrey Miller(CEO)

How much visibility do you have on the Q4 revenue decline from Q3 and annual outlook, and is the softness more pronounced in international or North America? - Marc Bianchi (TD Cowen)

2025Q2: C&P margins will likely soften further due to U.S. frac white space. - Eric J. Carre(CFO)