Can Halliburton Fight Industry Headwinds To Repeat Strong 2018 Performance This Year?

by Trefis Team
Halliburton Company
Rate   |   votes   |   Share

Halliburton (HAL) is an American multinational company that operates in over 70 countries, employs 55,000 people and owns hundreds of subsidiaries.  It is headquartered out of Houston and Dubai. Trefis highlights trends in Halliburton’s revenues over recent years in an interactive dashboard along with our forecast for the next three years. Additionally, you can see more of our data for Energy Companies here.

An Overview of Halliburton’s Business

Halliburton generated $24 billion in revenue in 2018, which would translate into an increase of 16% from 2017. The company’s North American business, which is largely centered around shale, was primarily responsible for the strong revenue growth.

Geographically, North America is the primary source of Halliburton’s revenue – providing 40% of the revenue. The rest of the revenue is split between Europe, Latin America, and the Middle East. Weakness in key areas of its business has negatively affected the stock, but we expect that weakness will even out in the second-half of the year.

The company has two main operating segments:

  1. Completion and Production segment
  2. Drilling and Evaluation segment

Completion and Production:

  • This division revolves around bonding and cementing. Cementing services involve bonding wells – ensuring safety and stability for well-bores.
  • Besides this, the segment provides completion tools, product enhancement, pipeline processing and artificial lift, and are the key services provided by the company.
  • The segment primarily serves shale companies.
  • The division largely benefits from an increase in rig count, which the company has taken advantage of over the past couple of years.
  • As a result, the segment witnessed a 22% increase in revenue YoY in 2018.

Outlook for the division:

  • Oil prices remain key to the success of this division, with range-bound oil prices around the $60-mark being ideal for growth.
  • With consolidation in the shale industry, shale rig count has come down significantly. In addition to lower rig counts, shale companies are increasingly facing headwinds in raising capital, with only 10% of the shale industry in the United States being free cash flow positive. The industry will have to improve its operational outcomes in order to continue to attract capital.
  • European operations, which are far more robust, may face a demand slowdown with the EU economy looking increasingly tepid.
  • Middle East is increasing foray into shale, and offers opportunities for the company. But it may not witness the shale boom that was seen in North America, with OPEC looking to keep supply tight.
  • Latin America remains a key source of weakness for the company, with weakness in revenues from the region playing a role in Halliburton’s stock falling in recent times.


Drilling and Evaluation:

  • The drilling and evaluation segment largely revolves around providing modeling, drilling, and evaluation services.
  • The company also provides sub-sea testing and consultancy services.

Outlook for the division:

  • Drilling and evaluation segment has seen some weakness over recent quarters.
  • Halliburton’s global business witnessed softer demand for these services – resulting in growth of just 6% in 2018.
  • While the company has won key contracts in recent quarters (particular its deepwater services contract in Senegal), it is expected to grow in the high single-digits to low double-digits in 2019 due to a slower uptake in its international business.

What’s behind Trefis? See How it’s Powering New Collaboration and What-Ifs

For CFOs and Finance Teams | Product, R&D, and Marketing Teams

All Trefis Data

Like our charts? Explore example interactive dashboards and create your own.

Rate   |   votes   |   Share


Name (Required)
Email (Required, but never displayed)
Be the first to comment!