Halliburton Company (HAL) Last Update 11/3/22
Related: SLB
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Halliburton Company
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Potential upside & downside to trefis price

Halliburton Company Company


  1. North America Rig Services constitute 55% of the Trefis price estimate for Halliburton Company's stock.
  2. Middle East / Asia Rig Services constitute 19% of the Trefis price estimate for Halliburton Company's stock.
  3. Europe / Africa / CIS Rig Services constitute 14% of the Trefis price estimate for Halliburton Company's stock.


Halliburton Tops Q3 Estimates on Strong Drilling Activity

Halliburton saw better-than-expected Q3 results with revenues jumping 39% year-over-year (y-o-y) to $5.36 billion and net income surging to $544 million, or $0.60 per share from $109 million, or $0.26 per share, in the year-earlier period. HAL's Q3 adjusted operating margin of 16% rose 393 basis points from the year-earlier figure. To break down the revenues by geography, North American business grew more than 63% y-o-y to 2.6 billion, Middle East/Asia rose by 31% y-o-y to 1.2 billion, and Latin America grew by 35% y-o-y to $841 million. The Europe/Africa/CIS business was down 5% to $639 million in Q3.

Halliburton also mentioned that it was hurt by the wind-down and sale of its Russia business to its local management team. In the nine months that ended September 30, the company recorded $366 million in charges and impairments, largely due to the sale of its Russia assets and the impairment of assets in Ukraine.


Below are the key drivers of Halliburton’s value that present opportunities for upside or downside to the current Trefis price estimate for Halliburton Company's stock:

  • Halliburton EBITDA Margins: Halliburton’s EBITDA margins for the North American region have varied considerably. While they stood at about 16.5% in 2019, they grew to about 17.9% in 2021, as oil prices recovered, with drilling demand also rising.
    However, with the expected rise in oil prices to continue over the near term, we expect margins to grow to 26% in FY2022 and then stabilize over our forecast period. Accordingly, we forecast EBITDA margins to reach about 23.6% by the end of the Trefis forecast period. If pricing pressures are put in place and margins stand at about 21%, this would reduce our price estimate for the stock by around 15%. On the other hand, if margins improve to 25%, this would result in an upside of 9% to our price estimate Trefis price estimate for Halliburton Company's stock

For additional details, select a driver above or select a division from the interactive Trefis split for Halliburton at the top of the page.


Halliburton provides upstream drilling and exploration services to oil and gas production activities required by firms such as Exxon Mobil and National Oil Companies (NOCs) like Saudi Aramco to explore, develop, and service their oil resources. The company has extensive geographical coverage, conducts business in approximately 80 countries, and provides products and services for oil and gas exploration, drilling, and post-drilling services.


We believe the North American division of Halliburton is more valuable than the other geographical divisions primarily because of:

The large market for exploration and production services in North America

North America accounts for approximately 50% of the total rig count published by Baker Hughes. While the Revenue per Rig is the lowest in this region, the size of the market in terms of the number of rigs exceeds the combined size of the other three geographic divisions of Latin America, Europe / CIS / Africa, and the Middle East / Asia. Production growth in North America has been strong over the past few years.

The push towards unconventional sources

The strong push towards exploiting unconventional sources of hydrocarbons such as shale gas, tar sands, and heavy oil in North America increases the potential for additional revenues to Halliburton as exploration for these sources requires complex technology and more intensive processes. The shift has also increased the service intensity of the rigs in North America, which should result in higher Revenue per Rig in the region. Tight oil plays accounted for 60% of all U.S. crude oil production and shale gas accounted for more than half of the proven reserves of U.S. natural gas.

Gulf of Mexico Provides A Long-Term Growth Opportunity

A large portion of the Gulf of Mexico remains under-tapped. It could hold a total of around 48 billion barrels of oil compared to the 13 billion barrels of reserves estimated for onshore, as well as coastal oilfields. Since many of these untapped resources are located in deep and ultra-deep waters, they will call for a high level of technical expertise as well as a higher service intensity translating into more activity for oilfield services companies.


High Oil Prices Pushing Drilling Demand

Oil prices started plummeting in mid-2014 due to the demand-supply mismatch in the global oil markets. This resulted in weaker oilfield service activity throughout 2015 and 2016, as oil and gas companies curtailed upstream spending due to falling cash flows. This severely hit the business of oilfield services companies till 2019. Then, The impact of the COVID-19 pandemic hammered the oil industry in 2020, as governments closed businesses and restricted travel. But the oil prices saw a rebound on the news of the planned rollout of multiple COVID-19 vaccines by the beginning of 2021.

Oil prices rose sharply in early 2022 as a surprising economic rebound drove demand for oil after several months of lockdowns. Secondly, the supply was not able to respond to increased demand as OPEC was probably cautious not to oversupply the market again, and the fact that oil production has long investment cycles. Lastly, oil prices also increased sharply due to the conflict in Ukraine and sanctions on Russia. While oil prices saw a downward trend through July and mid-September, it has been rising again since October as OPEC+ agreed to reduce oil production by 2 million barrels a day, the first proposed target reduction since the Covid-19 pandemic. The organization is likely looking to raise oil prices in the face of slowing global economic growth. Given the growing geopolitical uncertainty due to the Russia-Ukraine war, energy prices are likely to remain high in 2022. Thus, demand for oil field services is likely to remain high for a couple of quarters.

Exploration of deepwater and other remote sources of oil and gas

Increasingly over the past few years, significant oil and gas finds have been in deepwater and other remote locations such as the CIS and Iraq. The exploitation of these sources adds tremendous logistical and technical complexity to the exploration projects that translate into revenues for upstream products and services firms such as Halliburton.

The marginal reduction in the number and size of new finds

The IEA estimates that non-OPEC oil production peaked in 2010. This means that future oil and gas finds will get increasingly rarer, and the size of the discoveries will decline, which will lead to higher exploration and drilling costs to maintain historical outputs of oil.

The oversupply of natural gas in North America

Natural gas prices continue to remain suppressed because of the perceived high storage levels and the oversupply of gas in the market. The lagging demand will translate into lower investments in natural gas exploration in the short term.

Exploration for unconventional sources in Europe, Latin America, the Middle East, and Asia

Exploration for unconventional sources such as shale and tight gas are expected to pick up in Argentina, Mexico, Poland, China, and Saudi Arabia over the next 1-5 years resulting in higher revenues and operating profits for Halliburton in these regions.

Efforts to arrest decline rates in aging fields

Oil firms are investing in technology to help them reduce the decline rates seen in major fields over their lifetime. Pemex has been engaged in efforts to arrest the decline in its Canterall fields, while Saudi Aramco has also made it a priority to reduce the decline in its fields at 2-3% per annum.

Shift towards fully integrated offerings

Halliburton has been veering towards offering more fully integrated offerings, which include an entire suite of services for integrated well construction and intervention. Among its competitors, only SLB has a comparable offering, giving Halliburton an edge in this area.