Halliburton (HAL) Deep Research Report: Cyclical Upside, Cash Returns, and What Could Break the Thesis

Halliburton sits in a familiar but uncomfortable spot for energy investors: still highly profitable, still returning cash at a healthy clip, but clearly past the peak of a cyclical upturn.

From our deep research, we see a business that used the last several years wisely. It paid down debt, strengthened free cash flow (FCF), and leaned into high-return service lines like North American frac and integrated well services. At the same time, the macro environment is now working against it: oilfield activity is slowing, pricing is softening, and the 2025 numbers already show how quickly earnings can compress when E&P capex cools.

So the key question for investors isn’t whether Halliburton is a “good” business. It’s whether you’re being paid enough today to underwrite a mid‑cycle downturn in a structurally cyclical, politically sensitive industry.

In this piece, we’ll walk through how we see Halliburton’s risk/reward skew today, where the numbers are starting to crack, and what we’d watch most closely before getting more aggressive on the stock.

Halliburton’s Setup: A Strong Franchise Hitting a Downshift

Halliburton is the world’s #2 oilfield services (OFS) provider, behind SLB, with 2024 revenue of about $22.9 billion and operating income of $3.8 billion, according to its latest 10-K filing for the year ended December 31, 2024 (Halliburton 10-K 2025, p.44). It operates in more than 70 countries with two major segments:

• Completion & Production (C&P) – cementing, stimulation, chemicals, artificial lift, and intervention
• Drilling & Evaluation (D&E) – drilling services, bits, fluids, wireline, testing, and digital/drilling software

In 2024, C&P generated $13.3 billion of revenue with $2.7 billion of operating income, while D&E posted $9.7 billion of revenue and $1.6 billion of operating income (10-K 2025, pp.29,53). Regionally, Halliburton is still heavily skewed to North America, which delivered $9.6 billion of revenue versus $6.1 billion in Middle East/Asia, $4.2 billion in Latin America, and $3.0 billion in Europe/Africa/CIS.

That footprint matters. Halliburton’s dominant share in North American hydraulic fracturing – historically the largest frac provider by horsepower, with ~3 million hydraulic horsepower in the region (SPE, 2017) – gives it real scale and cost advantages. But it also maximizes exposure to the most brutally cyclical basin in the global oil market.

A Clear Turn in the Cycle

The 2025 numbers make the shift from up‑cycle to down‑cycle easy to see. For the nine months ended September 30, 2025:

• Revenue fell 5% to $16.5 billion
• Completion & Production revenue declined 6%
• Drilling & Evaluation revenue declined 3%
• Operating income dropped from $2.9 billion to $1.5 billion

That operating income collapse is even starker once you factor in $748 million of impairments and charges versus just $116 million a year earlier. Essentially, in less than a year Halliburton went from healthy mid-cycle profitability to seeing roughly half its operating earnings vanish.

Regionally:

• North America revenue was down 7%
• Latin America revenue was down 12%
• Europe/Africa/CIS revenue grew 10%
• Middle East/Asia slipped 2%

Management now expects both international and North American revenue to decline in 2025, with particular weakness in Saudi Arabia and Mexico, only partially offset by pockets of strength in Brazil and Norway (10-Q Q3 2025, p.22).

This isn’t a company‑specific issue. It lines up neatly with macro indicators. The U.S. Energy Information Administration (EIA) projects Brent crude in the mid‑$50s per barrel in 2026 and inventory builds that imply a fairly loose market (EIA Short-Term Energy Outlook; EIA STEO July 2025 archive). That kind of pricing backdrop usually means:

• Lower or flat E&P capex budgets
• Tougher pricing for OFS providers
• Overcapacity in equipment-heavy lines like U.S. land frac

From our perspective, the cycle is clearly in a downshift phase, not a collapse – but that distinction can still hurt a stock whose earnings are highly sensitive to activity and pricing.

Is HAL Stock a Buy in 2025–2026?

This is the question most investors are really asking. On one hand, Halliburton screens reasonably cheap. On the other, it’s a cyclical name where “cheap” can quickly get cheaper if the cycle overshoots to the downside.

Where the Valuation Sits Today

Based on recent data from FMP:

• Share price: roughly $29.60
• Market cap: about $25.5 billion
• P/E: ~19.4x
• EV/EBITDA: ~6.7x
• Trailing EPS: about $2.83

An FCF-based discounted cash flow (DCF) model using historical FCF, a 10% discount rate, and a 2.5% terminal growth rate suggests intrinsic value around $37.50 per share. That puts the stock at roughly a 21% discount to that estimate.

So this isn’t a bargain-basement 60–70% discount typical of a deep distressed cycle name. It looks more like a modest margin of safety in a business that is:

• Clearly cyclical
• But structurally stronger than in past downturns
• And still generating meaningful cash through the slowdown

The share price is also up about 9.8% over the last 12 months, which tells us the market hasn’t capitulated. Instead, it’s adjusting expectations from “strong up‑cycle” to “mid‑downturn” and asking how long that mid‑downturn lasts.

What’s Supporting the Floor?

For us, three pillars underpin the downside protection here:

1. Balance sheet strength

FMP data show net debt/EBITDA around 1.29x and interest coverage around 6.79x. According to the 10-K, Halliburton has staggered debt maturities with only about $472 million due from 2025–2027 and a $3.5 billion undrawn revolver (10-K 2025, p.24; 10-Q Q3 2025, p.20). That’s a very different posture from prior down-cycles when leverage was more of a concern.

2. Free cash flow profile

Halliburton has racked up strong FCF over the last several years. Macrotrends’ free cash flow data show record FCF in 2023–2024 after a prolonged improvement trend since 2021 (Macrotrends – FCF; [FMP, 2025]). The embedded SPARK_JSON in the report also reflects multiple quarters of FCF well above $1 billion in 2023–2024 and still healthy (though lower) FCF into 2025.

3. Capital return framework

Management has a formal policy to return at least 50% of annual FCF via dividends and buybacks (10-K 2025, p.1; 10-Q Q3 2025, p.19). In 2024, Halliburton returned about $1.6 billion to shareholders and repurchased $100 million of debt. As of Q3 2025, roughly $2.3 billion remained under the share repurchase authorization, and the company had already bought back 32.9 million shares for $757 million year‑to‑date (10-Q Q3 2025, p.19).

As long as FCF remains positive and leverage stays in check, that 50%+ payout policy can provide a yield-plus-buyback underpinning for the equity.

Where the Risk Lies

The risk isn’t so much that today’s earnings look stretched; it’s that today’s mid‑cycle assumptions might still be too optimistic.

• The EIA’s mid‑$50s Brent outlook and inventory build scenario could prove too rosy if global growth disappoints or OPEC+ cohesion frays (EIA global oil outlook).
• Regulatory pressure around methane, flaring, and fracking chemistry is intensifying, particularly in North America (Halliburton 10-K 2025, p.9; API methane policy updates; Wikipedia – fracking in the U.S.).
• Customer capex could shift more quickly toward lower‑carbon projects, bypassing parts of the traditional OFS suite.

Our base case is that 2025–2026 represent a mid‑downturn rather than a 2014–2016-style collapse, thanks in part to better industry discipline and Halliburton’s improved balance sheet (Macrotrends – FCF; Macrotrends – operating income). But value investors should be honest about the range of possible outcomes. If oil prices undershoot EIA forecasts and global budgets retrench hard, previous trough revenue and FCF levels come back into play.

From a pure risk/reward standpoint, we’d characterize HAL at current levels as a potential buy on weakness for cyclical and value-oriented investors who are comfortable underwriting that mid‑cycle risk – not a “back up the truck” deep-value situation.

Will Halliburton Deliver Long-Term Growth or Just Cyclical Bounces?

One of the more subtle questions with Halliburton is how much of the bull case is just “buy the cycle” versus “own a structurally advantaged compounder.” Our view is somewhere in the middle: this is a high-quality cyclical, not a secular compounder.

Competitive Position and “Moat”

Halliburton’s moat isn’t the same as a software company’s or a consumer brand’s, but there are real competitive advantages:

• Scale in North American frac – Historically the largest frac provider by horsepower (SPE, 2017). That scale drives cost advantages and utilization benefits when the basin is healthy.
• Breadth of services across the well lifecycle – Cementing, stimulation, drilling, wireline, intervention, digital workflows, and more (10-K 2025, pp.1–2). This enables integrated offerings and cross-selling that smaller peers can’t match.
• Technology and digital platforms – Halliburton has invested in differentiated technologies like Zeus electric frac fleets and the ExpressFiber downhole monitoring system (SPE, 2024; 10-K 2025, p.1). These can improve efficiency and emissions for customers, which is increasingly important as regulations tighten.

Over a decade, Halliburton reports that its return on capital employed (ROCE) has outpaced the OFS index and key peers, and management ties both long‑term pay and shareholder returns to that ROCE outperformance (Halliburton DEF 14A 2025, pp.54,57–58). The 2022 performance unit plan paid out at 192% of target based on three‑year ROCE of 15.5%, near the top of the peer group.

That tells us there is at least some embedded process advantage—in how Halliburton deploys capital and runs its operations.

But the Moat Is Contested

At the same time, we don’t want to overstate the defensibility here:

• SLB is larger globally, with about $36.3 billion of revenue vs Halliburton’s $22.9 billion in 2024 (Macrotrends – SLB revenue).
• Technology gaps in digital completions, subsurface analytics, and automation can close quickly. SLB and others are aggressively investing in these themes, narrowing any edge (SPE, 2022).
• Customer capex is gradually being shaped by decarbonization and ESG mandates, which can redirect spending away from some traditional OFS lines (10-K 2025, p.9; API climate collaboration).

Halliburton is trying to adapt. It has a “Sustainable Energy Future” strategy and is building out adjacencies in carbon capture, utilization & storage (CCUS), geothermal, and climate-tech incubation via Halliburton Labs, which counted about 40 participants/alumni by September 2025 (10-K 2025, p.24; 10-Q Q3 2025, p.19; SPE, 2021). These could become meaningful over a 5–10 year horizon.

But right now, these “new energy” lines are not yet material in revenue, so Halliburton’s moat is still largely tied to hydrocarbons and the E&P capex cycle.

Long-Term Demand Context

From a secular standpoint, Halliburton’s own disclosures and third‑party data paint a nuanced picture:

• Management expects oil and gas demand to continue growing through 2030, with natural gas demand supported by rising power needs from data centers, AI, and electrification (10-K 2025, p.28).
• API data indicate that oil and gas remain more than 50% of world energy supply by 2050, with the U.S. as the largest producer and consumer of both (API – industry explained).
• EIA’s long‑term natural gas outlook reinforces ongoing relevance of gas infrastructure and services (EIA Natural Gas Annual).

We read that as: hydrocarbons will be around for a long time, but growth from here is modest and increasingly constrained by policy. That means OFS names like Halliburton will likely be cyclical cash generators with limited secular volume growth, unless their new-energy initiatives scale significantly.

For investors, that suggests a playbook: own HAL for the cycle and the cash, not because you expect it to compound like a software platform for 20 years.

Management, Capital Allocation, and Discipline

One of the underappreciated aspects of Halliburton’s story is management discipline. In cyclical businesses, who is running the company and how they think about capital matters a lot.

Jeff Miller’s Track Record

Jeff Miller has been president since 2014 and CEO since 2017, steering Halliburton through:

• The brutal 2014–2016 oil crash
• The 2020 COVID shock
• The subsequent 2021–2024 recovery

According to Wikipedia and the company’s proxy statement, he has overseen a strategy focused on:

• Deleveraging after prior cycles
• Sharpening returns on capital
• Building out differentiated technologies and integrated services

In 2024, Halliburton returned $1.6 billion to shareholders (dividends plus buybacks) and repurchased $100 million of debt (10-K 2025, pp.1,24). The capital-return framework adopted in 2023 targeting ≥50% of annual FCF to shareholders is aligned with a mature, cash‑oriented cyclical.

The one critique we’d raise is timing: buybacks continued aggressively into late‑cycle 2024–2025. As of Q3 2025, $757 million of shares had been repurchased year‑to‑date with $2.3 billion still authorized (10-Q Q3 2025, p.19). With hindsight, some of that capital could arguably have gone to faster deleveraging in the face of a weakening market.

Incentives Tied to ROCE

We like the fact that Halliburton’s incentive structure is heavily ROCE-centric:

• Annual bonus: 60% based on NOPAT, 20% on Asset Turns
• Long-term performance units: 70% based on relative ROCE, plus a TSR modifier

This design helps align management with through‑cycle value creation, not just top-line growth. The strong payout on the 2022 performance unit plan (192% of target) tied to three-year ROCE of 15.5% indicates that Halliburton did, in fact, outperform on capital efficiency during the recent up‑cycle (DEF 14A 2025, p.58).

From our perspective, that’s a positive signal that the company is less likely to chase low-return projects or overpay for acquisitions when the cycle is hot.

Key Watch Items and Thesis Breakers

Even with a reasonably attractive valuation, we think HAL is a name you need to monitor actively. Several variables can swing the thesis from “solid cyclical value” to “value trap.”

1. Macro and E&P Capex Cycle

What to watch:

• Brent and WTI prices versus EIA’s mid‑$50s base case (EIA STEO)
• Global and U.S. rig counts
• Budget announcements and commentary from key E&P customers, especially in:
• U.S. land
• Saudi Arabia
• Mexico

If we see evidence of stabilization or modest recovery in prices and capex from 2026 onward, that would support the view that 2025–2026 are a mid‑downturn and help justify upgrading HAL toward a stronger buy stance. A further leg down in prices and budgets, by contrast, would increase downside risk materially.

2. Cost Savings, Margins, and FCF Resilience

Management is targeting around $100 million per quarter in cost savings and plans to idle, relocate, or retire under‑earning equipment (10-Q Q3 2025, p.22). Capex is guided at about 6% of revenue in 2025 with a 30% cut in 2026 to around $1.0 billion, focusing on digital, automation, Zeus electric frac, ExpressFiber diagnostics, and international growth areas (10-Q Q3 2025, pp.19–20,22; 10-K 2025, p.1).

Evidence we’d like to see:

• Segment margins stabilizing or improving despite lower activity and pricing
• FCF remaining positive and reasonably robust through the downturn
• Returns on that trimmed capex showing up in higher-margin, more differentiated service lines

If Halliburton can prove that its structural cash margins and ROCE are higher in this downturn than prior ones, that would strengthen the long‑term thesis.

3. Balance Sheet and Capital Allocation Discipline

We’d keep an eye on:

• Net debt/EBITDA staying near or below the current ~1.3x
• Interest coverage holding at comfortable levels
• The pace and size of share repurchases relative to evolving FCF
• Any larger acquisitions or unusual capex/spending

The IRS Notice of Proposed Adjustment (NOPA) around the 2016 Baker Hughes termination fee is another important variable. If Halliburton ultimately loses that dispute, it could owe roughly $640 million in cash taxes plus interest (10-Q Q3 2025, p.25). That’s manageable but not trivial; combined with late‑cycle buybacks, it could slow deleveraging if not handled carefully.

Red flags for us would include:

• Leverage creeping well above 1.5–2.0x
• Aggressive buybacks even as the macro picture deteriorates
• A significant, negative cash outcome from the IRS dispute without offsetting discipline elsewhere

4. Structural Erosion vs. Cyclical Softness

From our perspective, these are the thesis invalidation triggers that would suggest something more than just a cycle:

• Multi‑year negative or near‑zero FCF despite cost actions (Macrotrends – FCF; [FMP, 2025])
• Sustained ROCE below peers over a full cycle, undermining the capital‑efficiency story (DEF 14A 2025, p.57)
• Clear share loss or pricing erosion in key franchises like North American frac or digital completions (SPE, 2022)

If those begin to show up in the data, we’d treat HAL less as “temporarily cheap” and more as a name whose structural economics are deteriorating.

How We’d Think About Positioning HAL in a Portfolio

For investors using a value or quality‑at‑a‑reasonable‑price lens, this is how we’d frame Halliburton:

• Type of name: High-quality cyclical with real competitive advantages, but structurally exposed to policy and commodity cycles.
• Valuation: Around a 21% discount to a DCF grounded in FCF history is “good but not great” – enough to consider, but not enough to ignore macro risk.
• Role in portfolio: Satellite or tactical cyclical exposure rather than a core long‑term compounder.
• Time horizon: Multi‑year, with an explicit willingness to live through a mid‑cycle downturn in exchange for upside if/when E&P activity stabilizes or recovers.

We’d be more inclined to scale into HAL:

• On further macro-driven weakness, where the discount to intrinsic value widens toward 30–40%
• When there’s clearer evidence that international activity and U.S. land spending have bottomed or stabilized
• Once cost savings and capex discipline are visibly flowing through into resilient FCF

For investors doing broader deep value or cyclical baskets, it can also make sense to pair HAL with:

• Less cyclical energy infrastructure names
• Other OFS players with different regional or service line exposures
• Non-energy cyclicals, to avoid overconcentration in one macro driver

Finally, if you find yourself struggling to keep up with evolving filings, budgets, and macro assumptions across multiple names, it’s worth thinking about how to scale your research.

Read our AI-powered value investing guide to see how tools like DeepValue can automate the heavy lifting of parsing SEC filings, industry publications, and financial data, so you can focus on judgment rather than data gathering.

Sources

• Halliburton 10-K (2025) – Year Ended Dec. 31, 2024
• Halliburton 10-Q (Q3 2025) – Nine Months Ended Sept. 30, 2025
• Halliburton 8-K (Dec. 3, 2025)
• Halliburton DEF 14A (2025 Proxy Statement)
• Halliburton Revenue History – Macrotrends
• Halliburton Free Cash Flow – Macrotrends
• Halliburton Operating Income – Macrotrends
• SLB Revenue – Macrotrends
• FMP Financial Data on HAL (2025–2026)
• EIA Short-Term Energy Outlook – Main Report
• EIA Short-Term Energy Outlook – July 2025 Archive
• EIA Global Oil Outlook
• EIA Short-Term Energy Outlook – Main Page
• EIA Natural Gas Annual
• API – Industry Explained and Statistics
• API – 2024 Record Year for U.S. Energy Production (Chart Gallery)
• API – Methane Fee Resolution (2025)
• API – Methane Reduction Collaboration (2024)
• Wikipedia – Halliburton
• Wikipedia – Weatherford International
• Wikipedia – Fracking in the United States
• SPE – Schlumberger and Weatherford Joint Venture (Frac Market Context)
• SPE – Halliburton and the Energy Transition
• SPE – ExpressFiber Downhole Monitoring System
• SPE – Deep Convolutional Network Improves Completion Design