Halliburton Reports Q3 Revenue of $5.7 Billion, Sets 2027 Outlook

Halliburton (NYSE: HAL ) reported third-quarter financial results on Tuesday. The transcript from the company's third-quarter earnings call has been provided below. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

View the webcast at Summary Halliburton Company reported third-quarter 2026 revenue of $5.7 billion, exceeding expectations, with an adjusted operating margin of 12.8%. International revenue increased by 9% year-over-year to $3.5 billion, while North America revenue decreased by 9% to $2.2 billion. The company repurchased $250 million of common stock during the quarter. Halliburton expects mid-single-digit revenue growth and a 200 basis point improvement in operating margins to about 15% in 2027.

Strong performance was noted in the Middle East with expected sequential and year-over-year revenue growth despite geopolitical uncertainties. Operational highlights include increased activity in international markets, with significant wins in Brazil and Cyprus due to technological strengths. Halliburton's growth engines, including production services, drilling unconventionals, and artificial lift, are projected to add $3 billion in annual revenue by 2028. The company expects Q4 2026 revenue to remain flat at around $5.7 billion, with a slight improvement in operating income margin.

SAP S/4 implementation is expected to drive cost reductions, contributing to the anticipated margin expansion in 2027. Management expressed confidence in the company's strategic positioning and the potential for upside in North America, particularly in the hydraulic fracturing market. Full Transcript OPERATOR Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Halliburton Company's third quarter 2026 earnings conference call.

At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question, you will need to press Star 11 on your telephone keypad. At this time I would like to turn the conference over to Mr.

David Coleman, Senior Director, Investor Relations. Sir, please begin. David Coleman (Senior Director, Investor Relations) Hello and thank you for joining the Halliburton third quarter 2026 conference call. We will make the recording of today's webcast available for seven days on Halliburton's website after this call.

Joining me today are Jeff Miller, Chairman, President and CEO; Shannon Slocum, Executive Vice President and COO; and Eric Carre, Executive Vice President and CFO. Some of today's comments may include forward-looking statements that reflect Halliburton's views about future events. These matters involve risks and uncertainties that could cause our actual results to materially differ from our forward-looking statements. These risks are discussed in Halliburton's Form 10-K for the year ended December 31, 2025, quarterly reports on Form 10-Q, current reports on Form 8-K, and other Securities and Exchange Commission filings.

We undertake no obligation to revise or update publicly any forward-looking statements for any reason except as required by law. Our comments today also include non-GAAP financial measures. Additional details and reconciliation to the most directly comparable GAAP financial measures are included in our third quarter earnings release and in the quarterly results and presentation section of our website. Now I'll turn the call over to Jeff.

Jeff Miller (President and Chief Executive Officer) Thank you, David, and good morning, everyone. I am pleased with Halliburton's third quarter results. Our revenue exceeded our expectations, and we took important steps towards improving our margins. Here are a few highlights from the third quarter.

We delivered total company revenue of $5.7 billion and adjusted operating margin of 12.8%. International revenue was $3.5 billion, an increase of 9% year over year. North America revenue was $2.2 billion, a decrease of 9% year over year. During the third quarter, we repurchased approximately $250 million of our common stock.

Before Shannon covers our operations, let me share my thoughts on the market and early view of the year ahead and Halliburton's business today. Let's start with the market. We are another three months into one of the largest energy disruptions in history. Commodity prices remain elevated and geopolitical uncertainty is high.

The world has lost an enormous amount of oil supply and the shortfall continues to grow. Current estimates are that nearly 3 billion barrels of supply have been lost since the conflict began and that about 1 billion barrels have been drawn from global inventories. I expect the work to restore production, rebuild inventories, and strengthen energy security will drive multi-year demand growth for oilfield services. Turning to our outlook for the business, our early view of 2027 for Halliburton is revenue growth in the mid-single digits and operating income margins to expand about 200 basis points, or to about 15%.

Let me share with you what underpins my view and how Halliburton's business today makes me confident we will achieve those results. First, as a result of years of deliberate strategy and investment, our international business, in fact all of our businesses outside of North America hydraulic fracturing, are the strongest they have been in many years. These businesses are growing, profitable, and winning on technology and our collaborative value proposition. My confidence is rooted in their strong execution, and I am excited about the pipeline of opportunities in 2027 and beyond.

Second, I want to put North America hydraulic fracturing in the proper context for 2027. I could tell you anecdotes about pricing adjustments and list the reasons I think the North America frac market should improve. But what's important to understand is that Halliburton's path to growth and improved profitability that I just described does not require any recovery in North America frac. To us it is purely upside.

Shannon is going to take you through the operational details of this quarter, but I will leave you with this. I see growing multi-year demand for oilfield services, I see Halliburton delivering growth and margin improvement, and I see any North America frac business recovery as upside. With that, let me turn the call over to Shannon. Shannon Slocum (Executive Vice President and Chief Operating Officer) Thanks, Jeff.

Let me start with international. Third quarter revenue was $3.5 billion, up 3% sequentially. Much of the strength this quarter came from growth in our D&E division, which significantly outperformed our expectations on the top line and improved operating income margins 150 basis points sequentially. Let's get into the details.

I'll start with Middle East. The conflict clearly creates near-term uncertainty, but I am pleased with our third quarter performance. Middle East results improved sequentially despite inflationary headwinds, which we expect to persist for some time. In the fourth quarter, I expect Middle East revenue to grow both sequentially and year over year.

Of the many things driving those expectations, I'll highlight two: a full quarter of completions activity and an expanded share across integrated and discrete services in Saudi Arabia. Outside of Middle East, Halliburton's international business is winning work and we are delivering on our growth engines in a healthy market. We expect 2026 year-over-year growth in these regions to be about 12%. Let me say a word on why we win.

Our value proposition is simple but powerful. We collaborate with our customers and we engineer solutions that maximize the value of their assets. We differentiate on technology and we deliver on execution. When customers award work on technical merit and total cost of ownership, Halliburton wins.

I'll give you two examples from this quarter: the Boomerang appraisal program for BP in Brazil and the Cronos ultra-deepwater gas development for Eni in Cyprus. In each case, customers chose Halliburton for our technology in drilling automation, formation evaluation, fluids, cementing, and completions, and importantly, our ability to collaborate with our customers early in the development cycle. Next, let me give you a brief update on our growth engines: production services, drilling unconventionals, and artificial lift. Each is a market we believe will grow faster than the industry as a whole.

We are tracking to our target of $3 billion of added annual revenue by 2028. This is a global target, but we see concrete evidence of it materializing as awards move to startup. In production services, we expect our North Sea frac vessel to begin operations at year end, and in unconventionals, we expect our first Zeus fleet in Argentina to start up in the fourth quarter as planned. I want to take a moment to highlight artificial lift.

In Argentina, we won a multi-year ESP rental contract with a major operator, our largest award of the quarter, and with another customer we delivered our first unconventional installation. This quarter we also made our first installations in UAE and offshore Congo, and we received our first order for an offshore ESP in Brazil. I'm excited about the accelerating growth of our international footprint. One more market I want to mention is Venezuela, where we are open for business.

Our management team is in place, our facilities are open, key equipment has moved, and we generated revenue in Q3 in multiple product lines. Venezuela is a market we know well. Based on customer conversations, I expect to see solid growth moving forward. To conclude on international, our value proposition is winning, our growth engines are delivering, and I am excited about the year ahead.

Turning to North America, third quarter revenue was $2.2 billion, down 5% sequentially. The frac market did not recover as strongly as anticipated, and results reflect this. We run North America frac for returns, not share, and in the third quarter we moved several crews to new customers at better pricing. These moves created more downtime than we anticipated and weighed on our performance in the region and our C&P division in North America land.

Our Sperry Drilling Services, drill bits, and drilling fluids businesses grew 23% year over year, well ahead of the rig count. Let me tell you what that looks like at each business. In drilling services, the trend is clear: longer laterals, more complex wells, and more rotary steerable drilling. iCruise delivers on all three, and we see strong demand in all sales channels.

In drilling fluids, Baroid also wins in long laterals where wellbore stability can decide how fast a well gets drilled. We see growing adoption of our high-performance fluid systems. I expect to see this growth continue as wells get more complex and customers demand greater efficiency. In drill bits, our performance-driven technology is paying off.

One example of this is HyperSteer, a bit engineered to run with iCruise and deliver maximum steerability and speed. Our North America drill bit revenue per rig is up double digits from the first quarter. Bottom line, North America production requires progressively more complex wells, and more complex wells means more growth for Halliburton. Let me close on North America with how I think about this business as a whole.

It generates solid cash flow, and over the last several years we have made deliberate choices to reduce our exposure to commoditized activity and differentiate through technology. Today both our drilling and completion businesses are more differentiated than ever before. Before I turn the call over, I want to thank our employees in more than 70 countries for their focus on our customers, safety, and execution. With that, I will turn the call over to Eric to provide more details on our financial results.

Eric Carre (Executive Vice President, Chief Financial Officer) Thanks, Shannon, and good morning. Our Q3 adjusted net income per diluted share was $0.60. Q3 revenue was $5.7 billion, adjusted operating income was $731 million, and adjusted operating income margin was 12.8%. Let me share what we saw in Q3 relative to our expectations.

First, in our C&P division, revenue and operating margins were both below our expectations. This was primarily due to lower-than-expected activity in hydraulic fracturing in North America land and Argentina, and a slower startup of a new contract in Saudi Arabia. Turning to D&E, we delivered better-than-expected revenue and operating margins led by U.S. land, Middle East, and Latin America.

As expected, we saw a more favorable revenue mix during Q3 and higher incremental margins, resulting in stronger overall margins than anticipated. Turning to other financial items in the quarter, consistent with our expectations, free cash flow in Q3 was down from Q2 levels, but we expect sequentially higher free cash flow in Q4. Capital expenditures for Q3 were $266 million. For the full year 2026, we expect capital expenditures to be about $1.1 billion.

Moving on to our forward-looking expectations, starting with an early view of 2027, we expect Halliburton to deliver revenue growth in the mid-single digits. This assumes flat North America, Middle East activity in line with the second half of 2026, and steady growth in other regions. We expect operating income margins to expand about 200 basis points to about 15%, driven by margins firming up in our core business, the startup of new work, our cost reduction program, and the ramp-down of SAP S/4. On this last point, I am pleased to announce that we are now live on SAP S/4, completing a major global transformation.

I expect this is the beginning of further simplifying our business processes, adopting AI at scale in our back-office functions, and driving further cost reductions. I want to thank the teams around the world who made this possible. Turning to Q4, we expect total company revenue to remain approximately flat to Q3 around $5.7 billion, and operating income margin to improve about 70 basis points. As a result, we expect Q4 earnings per share to be approximately $0.62 to $0.64.

Let me provide some color on the guidance. In our C&P division, we expect Q4 revenue to increase 3% to 5% and operating margins to improve 75 to 125 basis points. The main drivers are stronger performance in Latin America and the Middle East, higher seasonal completion tool sales, and steady frac activity in North America land. In our D&E division, after a strong Q3, we expect Q4 revenue to be 3% to 5% lower and operating margins to be flat to up 50 basis points.

We expect margin improvement across several product lines and a more favorable product mix. I will now turn the call back to Jeff. Jeff Miller (President and Chief Executive Officer) Thanks, Eric. Here are the important takeaways from today's call.

Halliburton delivered a solid third quarter, revenue exceeded expectations, and we took important steps towards improving our margins. Based on our early view of 2027, we expect mid-single-digit top-line growth and operating margins of about 15%. I am confident we will deliver revenue growth, margin expansion, and leading returns for our shareholders. Let's open it up for questions.

OPERATOR Ladies and gentlemen, if you have a question or comment at this time, please press star-1-1 on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, simply press star-1-1 again. Again, if you have a question or comment, please press star-1-1 on your telephone keypad. Please stand by while we compile the Q&A roster.

Our first question or comment comes from the line of David Anderson from Barclays. Mr. Anderson, your line is open. David Anderson (Analyst) Thank you, and good morning, gentlemen.

So within your 2027 framework that you provided, can you talk a little bit about the Middle East in terms of how you see that trending? You're having it increasing this quarter and in fourth quarter, which seems to be kind of going against trend. So how does that sort of play out in your mind over the next couple of quarters? And also within that guidance, that 200-basis-point margin improvement, I'm curious how much international unconventionals are impacting that.

Is that starting to be a driver for margins yet? Eric Carre (Executive Vice President, Chief Financial Officer) Hi, David. Let me kind of provide some high-level view on the margin improvement first, and then I'll hand it over to Shannon to discuss the Middle East part of your question. So again, important to understand that the view on 2027 is an early view.

It is based on two major assumptions: one, which is our business in North America is flat, and our business in the Middle East is flat to H2 2026. So if we walk through the numbers from a very, very high-level perspective, we should finish 2026 at about $22.5 billion. That for '27 means about a billion dollars and change additional revenue. Two hundred basis points in margin means about $500 to $600 million in operating profit.

About half of it is going to come from cost savings—operating cost savings, structural cost savings—and the ramp-down of the SAP S/4 program. What remains is basically incremental margins on the additional revenue of about 20% to 30% range. So we think that's a very reasonable assumption. So that's, at this stage, how we get to the 200-basis-point improvement in margins.

Shannon Slocum (Executive Vice President and Chief Operating Officer) Yeah. Dave, good morning. You know, what we see in the Middle East—I'll start there, then I'll move to the unconventional question—is that region has been incredibly resilient. It's obviously highly fluid right now, but we see a good market moving forward.

As Eric said, H2 flat to H2 next year.