Halliburton Bruised Amid Economic Woes

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Against a backdrop of economic headwinds, upstream oil and gas services firm Halliburton Company (NYSE:HAL) (Houston, Texas) said Tuesday it was confident about its future, even after taking a drop in profits during the first quarter.

Halliburton was among the first major energy companies out with earnings for a quarter that saw major economic headwinds emerge in response to economic policies from U.S. President Donald Trump, who has touted a strategy of stiff import taxes. Drawing a sharp rebuke from the president, Federal Reserve Chairman Jerome Powell last week hinted at a potential contraction in the U.S. economy.

"The level of the tariff increases announced so far is significantly larger than anticipated," Powell said. "The same is likely to be true of the economic effects, which will include higher inflation and slower growth."

Those impacts already are apparent in the energy sector, where commodity prices are below the point at which many drillers can make a profit. Halliburton on Tuesday reported total revenue for the first quarter of $5.4 billion, compared to $5.8 billion during the same period last year. Adjusted net income of $517 million was sharply lower than the $679 million realized during the first quarter of 2024.

Jeff Miller, the top executive at Halliburton, said in the company's fourth-quarter report that he expected North American operations would be "softer" this year. But even against headwinds during the first quarter, Miller now says he's optimistic.

"I firmly believe that despite recent pressures on the energy macro, Halliburton's consistent focus on technology, collaboration and service quality execution create value for our customers and drive long-term success for Halliburton and its shareholders," he said.

Halliburton actually realized a 6% gain in revenue to $775 million from European and African operations, where the increase was driven primarily by operations in Norway. North American revenue, however, was down 12% to $2.2 billion due to lower activity in U.S. shale basins and in the Gulf of Mexico (designated by the Trump administration as the Gulf of America).

The slump for Halliburton follows signs of a slowdown in the U.S. energy sector. Drillers are already doing more with less by using miles-long laterals and multi-bore wells, though the economy is slowing and dragging upstream activity with it.

"Job growth slowed in March due to declines in oil and gas, leisure, manufacturing and professional and business services jobs," said Luis Torres, a senior business economist at the Federal Reserve Bank of Dallas.

The Fed's index on job prospects declined during the first quarter due to a drop in equities, oil prices and well permits. Oil prices are well below year-ago levels and demand for petroleum products in the U.S. economy is down nearly 2% from this time last year.

By mid-March, before Trump unveiled a sweeping tariff agenda that targeted nearly every U.S. trading partner, about 57% of the executives surveyed by the Dallas Fed expected job levels to stay the same this year.

"However, focusing on the oilfield services sector, only 38% of executives surveyed expected head counts to be unchanged," the Dallas Fed reported. "The oilfield services sector is where most of the industry employment resides, and it is traditionally the first to hire or lay off workers when changes in oil prices drive shifts in spending."

Upstream, and the Dallas Fed said the rig count in the Permian Basin was down 6.7% from the same period last year. From this year, meanwhile, the federal government is only expecting a net 0.4% increase in total crude oil production.

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