Halliburton has issued a caution over its upcoming second-quarter earnings as tariffs and reduced oilfield work in North America weigh on operations. The announcement comes as oil companies reassess drilling and completion schedules amid oil prices that struggle to stay above profitability thresholds. An unexpected market slack and cautious sentiment among operators have raised concerns regarding the company’s near-term performance. Additional market signals and economic factors add to the evolving landscape for oilfield services.
Reports from various sources reveal a consistent trend in the oilfield services industry. Side-by-side observations indicate that pressure on equipment demand and trading costs has been anticipated in earlier releases from major players, suggesting that weaker oil prices and logistics challenges are not isolated issues. Past accounts also note similar market hesitancies, reinforcing the present scenario’s continuity.
How will service customers adjust to declining drilling activity?
Customers are revising their operational plans as activity reductions become more common.
“Many of our customers are in the midst of evaluating their activity scenarios and plans for 2025 activity reductions could mean higher than normal white space for committed fleets and in some cases, the retirement or export of fleets to international markets,”
stated Halliburton Chief Executive Jeff Miller. Service providers are preparing for potential underutilization and adapting their resource allocation as projects slow down.
Will trade tariffs aggravate equipment costs?
Trade tariffs on imported steel and parts are expected to raise operational expenditures, affecting equipment such as drilling rigs and well casings. This pressure adds another layer of cost uncertainty for companies relying heavily on imported components. The combined effect of tariffs and lower demand could pressure profit margins further.
Financial performance has reflected these challenges, with Halliburton shares declining around 6% as the company forecasts a minor per share impact from trade tensions. The company reported a quarterly profit of $204 million, markedly lower than prior figures, and endured severe one-off charges, including significant severance costs.
North American revenue figures dipped by 12% to $2.2 billion, and international revenues faced mild declines amid decreased drilling and project management activities, especially in Mexico.
“I think they have a plan, but I also think it will be tough for a while… I don’t see immediate recovery in Mexico,”
added Miller, emphasizing continued uncertainty in regional markets.
Halliburton projects slight revenue gains in its completion and production division alongside a modest dip in the drilling and evaluation segment. The interplay of reduced activity and tariff pressures underscores a period of volatile market conditions. Detailed scrutiny is essential for stakeholders considering the operational adjustments in a market sensitive to price fluctuations and trade policies.
