Service & Supply | Top Story | Oilfield Services | Second Quarter (2Q) Update

Halliburton Warns of Deepening U.S. Frac Slowdown

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Halliburton's Q2 earnings call confirmed what we said in our recent Intel-Bits report: the back half of 2025 is shaping up to be significantly weaker than expected, particularly in North America. CEO Jeff Miller pulled no punches in describing a market that looks “very different today than it did only 90 days ago,” citing unexpected schedule gaps from even large operators, worsening pricing conditions, and growing uneconomic pressure in both frac and drilling operations.

Below is a breakdown of the key themes from the call, including market commentary, operational trends, tough analyst questions, and what Halliburton’s guidance implies for the remainder of the year.

North America: White Space Widens in Frac Calendars

Halliburton’s North America revenue was flat sequentially at $2.3B, but underlying signals were concerning. Seasonal strength in Q2 masked deeper issues in U.S. land:

• Frac activity is expected to decline materially in H2, with Halliburton forecasting more "white space" on its frac calendars.

• Service pricing erosion continues, especially in pressure pumping. Margins in the Completion & Production (C&P) segment were down to 16% from Q1, and further margin compression is forecasted in Q3 (down 150–200 bps).

• Frac fleet stacking is underway. Miller was explicit: “We will not work equipment where it does not earn economic returns.” Lower-performing fleets are being retired or reallocated.

• Artificial lift is also under pressure, hit by both lower activity and rising tariffs—especially impacting U.S. land operations.

Drilling Activity: Holding Up Better, but Not Immune

While frac is decelerating, Halliburton’s Drilling & Evaluation (D&E) segment offered a mixed picture:

• Q2 D&E revenue rose 2% sequentially to $2.3B, but margins declined 11% due to startup and mobilization costs.

• Automation tools like iCruise and LOGIX drove strong performance in technically demanding environments, including Norway and the Middle East.

• U.S. rotary steerable drilling saw double-digit growth, even as rig counts dropped.

Yet even here, the forecast is cautious:

• Halliburton expects Q3 D&E revenue to decline 1%–3%, but margins should recover due to the fading of Q2 mobilization costs and stronger software sales.

• Q4 is likely to see flattish revenue at best, with C&P margins still soft and D&E buoyed only by software seasonality.