Halliburton's New Energy Cycle: A Structural Pivot in Digital, Minerals, and Power

Halliburton's pivot begins with a core business that is leaner and more disciplined than it has been in years. The company's first-quarter 2025 results set the baseline: revenue of $5.4 billion and an adjusted operating margin of 14.5%. That margin figure, while solid, reflects a company navigating a tough environment. CEO Jeff Miller has been clear that the North American market is a tough market today, with exploration and production customers focused on efficiency and returns. The anticipated recovery, he says, will be super strong when it comes, but it is not immediate. For now, the outlook for 2026 is flattish overall, with some bright spots.

This is the reality the company is building from. To protect returns and generate cash, Halliburton is taking aggressive steps. The strategy is one of selective withdrawal: uneconomic diesel and dual-fuel fleets are being idled rather than chasing short-term, low-margin work. As Miller stated, there's no good reason to burn up dual-fuel equipment in a market that's not making returns. This disciplined approach extends to capital allocation. The company has slashed its 2026 capital budget to prioritize free cash flow, a clear signal that growth is being subordinated to financial strength in the near term.

The bottom line is a company in a state of controlled contraction. It is not waiting passively for a market snapback. Instead, it is actively reshaping its fleet and its spending to emerge from the downturn with a stronger balance sheet and a more focused cost structure. This lean foundation is the essential prelude to the structural investments in digital, minerals, and power that will define Halliburton's next cycle.

The New Energy Cycle: Interconnected Strategic Shifts

Halliburton's pivot is not a collection of isolated bets, but a deliberate, interconnected strategy to redeploy its century-old engineering prowess into the structural shifts of the new energy economy. The company is moving beyond simply serving hydrocarbons to becoming the foundational partner for a broader range of energy projects, leveraging its core strengths in subsurface mastery and project execution.

The first pillar is digital transformation, which has evolved from internal optimization to a commercial product. In 2025, Halliburton launched the first fully automated hydraulic fracturing program in North America. This isn't just a tech demo; it's a direct application of its AI platforms like DS365.ai to a core service, promising to enhance efficiency and reduce costs for customers. This digital edge is the engine that will power its expansion into new markets.

The second pillar is the commercial application of its subsurface expertise to new energy commodities. Halliburton is leveraging its global footprint and decades of experience to target high-growth, critical minerals. A landmark June 2025 contract with GeoFrame Energy to design wells for a direct lithium extraction (DLE) and geothermal project is the clearest signal. This move transforms Halliburton from a service provider into an enabler of the battery materials supply chain. Its low-carbon solutions portfolio, which includes carbon capture, utilization, and storage (CCUS), geothermal energy, and hydrogen storage, shows a systematic effort to apply its engineering rigor to the full spectrum of the energy transition.

The third pillar is strategic partnerships to capture adjacent growth. The collaboration with VoltaGrid is a masterstroke in this regard. By combining Halliburton's global operational footprint and local infrastructure expertise with VoltaGrid's modular power platform, the companies are targeting the AI infrastructure boom. They have secured manufacturing for 400 megawatts (MW) of modular natural gas power systems for delivery in 2028, specifically to support data centers. This venture allows Halliburton to monetize its project execution capabilities in a high-demand, lower-emission power segment without building a new business from scratch.

Together, these pillars form a cohesive structural shift. The digital platform enhances core margins and provides a competitive moat. The subsurface expertise is being redeployed to capture value in critical minerals and carbon management. And strategic partnerships like the one with VoltaGrid allow Halliburton to scale rapidly into adjacent, high-growth markets. This is the blueprint for a company that is not just waiting for the oil cycle to turn, but is actively engineering its way into the next one.

Financial Integration and Valuation Implications

The financial integration of Halliburton's pivot is a classic tale of a mature business funding a future it cannot yet see. The core operations, while under pressure, are generating the cash needed to finance the structural shift. The company's first-quarter 2025 results show this resilience: despite a year-over-year revenue decline, North America revenue climbed 5% sequentially, driven by completions strength and Gulf of Mexico work. That sequential improvement is a sign of underlying operational discipline and some market stability. More importantly, the company is prioritizing returns over growth, as evidenced by its slashed 2026 capital budget to prioritize free cash flow. This disciplined approach ensures the core business remains a cash generator, providing the fuel for the new ventures.

Yet the timeline for those new ventures to contribute materially is a multi-year horizon. Success in areas like direct lithium extraction and data center power is years away. The landmark June 2025 contract with GeoFrame Energy for a DLE project is a clear signal of intent, but commercial deployment and revenue recognition will follow a long development cycle. Similarly, the strategic collaboration with VoltaGrid to deliver 400 megawatts of modular power systems is for delivery in 2028. These are not near-term revenue drivers. For now, the financial story is one of controlled contraction in the core funding a long-term bet on the future.

This creates a clear valuation risk. The market is being asked to value Halliburton on a dual-track future: a leaner, digitalized oilfield services business today, and a diversified energy engineering firm tomorrow. The primary risk is a prolonged period of low oil prices and subdued exploration and production capital expenditure. As CEO Jeff Miller noted, North America is a tough market today, with customers focused on efficiency. If this environment persists longer than anticipated, it will pressure the core business's returns and cash generation for an extended period. This could force Halliburton to extend its period of financial discipline, delaying the payoff from its strategic investments and testing investor patience.

The bottom line is a company navigating a high-stakes transition. Its ability to fund the pivot from its core is proven, but the valuation will hinge on the speed and strength of the energy market recovery. Investors must weigh the structural advantages of its digital platform and new energy bets against the tangible risk of a drawn-out period of low activity in the very business that is paying for the future.

Catalysts, Risks, and the Path to the Cycle

The success of Halliburton's new energy cycle hinges on a delicate interplay of external catalysts and internal execution. The most potent near-term trigger is a sustained increase in oil prices above $80 per barrel. CEO Jeff Miller has framed the North American market as tough today, but he also anticipates a "snapback will be super strong for us" as capacity tightens. This is the delayed CAPEX rebound that would finally validate the company's disciplined wait. Higher prices would ease customer caution, allowing exploration and production firms to prioritize returns and efficiency-exactly the environment Halliburton's lean, digitalized operations are built to serve. Without this price catalyst, the core business may remain in a state of controlled contraction for longer, testing the patience of investors funding the future.

The primary risk, however, is not a lack of catalyst but the execution of the new ventures themselves. The company is making substantial bets on high-growth, capital-intensive frontiers like direct lithium extraction and modular power for data centers. The landmark June 2025 contract with GeoFrame Energy is a clear signal, but commercial deployment is years away. Similarly, the strategic collaboration with VoltaGrid to deliver 400 megawatts of power systems is for delivery in 2028. The danger is that these projects face execution hurdles or market saturation, diverting capital and management focus from the core business without creating new, scalable growth. Success requires Halliburton to master not just the technology but the entire project lifecycle in these unfamiliar markets.

The watchpoint, therefore, is the pace of capital discipline. The company has shown it can slash its budget to prioritize free cash flow, a necessity while waiting for the oil cycle to turn. Yet it must also invest enough in new technologies to avoid obsolescence. This is the central tension of the transition. Halliburton must balance generating cash for dividends and share repurchases with funding the digital platforms and low-carbon solutions that will define its next cycle. The path forward is clear in theory: let the core business fund the pivot while the new ventures ramp. The risk is that prolonged market weakness forces a deeper, more extended period of financial restraint, delaying the payoff from these strategic investments and leaving the company exposed to technological disruption. The cycle will only turn if Halliburton can navigate this balance.