Oct 20, 2026 earnings call — International growth and margin outlook
Halliburton reported Q3 revenue of $5.7 billion and adjusted operating margin of 12.8 percent.
Revenue $5.7B (est $5.6B) · EPS $0.60 (est $0.58)
Key quotes
"The third quarter revenue was $3.5 billion up 3% sequentially."
"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 percent."
"The frac market did not recover as strongly as anticipated, and our results reflect this."
Analyst Q&A 10
Middle East trends and margin drivers
Q (David Anderson · Barclays): Analyst asked how Middle East revenue is trending and whether international unconventionals are starting to drive margins inside the 2027 guidance.
A: Eric said the 2027 view is early and assumes North America flat and Middle East flat into H2 of 2026. He said 200 basis points of margin equates to about $500 to $600 million of operating profit, with roughly half from cost savings and SAP ramp-down and the rest from incremental margins on revenue. Shannon said the Middle East is resilient, with wins in Jafurah, Iraq work, offshore and expanded artificial lift, and unconventionals growing across countries driven by technology.
"200 basis points in margin, means about $500 to $600 million in operating profit." — Eric J. Carre (CFO)
Why provide early outlook; NA demand
Q (Arun Jayaram · JPMorgan): Analyst asked why management felt confident giving 2027 revenue and margin guidance early and how confident they are to deliver mid-single-digit growth and 200+ bps margin expansion. He also asked about the disconnect between rising rig counts and measured completion activity, and when that will convert to frac demand.
A: Jeffrey said he wanted to share his view early, is not happy with current margins, has made specific cost choices, and is confident margins will improve; the outlook does not depend on a North America frac recovery. Shannon gave on-the-ground examples: tenders with only one service company, extensions of fleets at price, and price increases this quarter, saying the market is tight and they see real opportunity for North America frac growth next year.
"For example, we just had a big customer go to tender and only 1 service company showed up." — Jeffrey Shannon Slocum (COO)
Frac pricing momentum and Middle East costs
Q (Stephen Richardson · Evercore): Analyst asked whether big customers must increase activity for pricing to improve, how unusual Q3 repricing was, and what incremental costs the Middle East business is absorbing and upside if hostilities cease.
A: Shannon said Q3 showed whitespace that allowed moving crews at higher prices and that some large customers are already reviewing next year's frac schedules; just 1–2 customers putting together spud-to-spud programs could change outcomes materially. He added Middle East logistics have increased costs, those costs are built into 2027, and normalization would create upside beyond their current assumptions.
"All it takes is really 1 or 2 of these guys to put together a spud-to-spud program and that changes things for Halliburton and will benefit in a big way." — Jeffrey Shannon Slocum (COO)
Sources of 200 bps margin improvement
Q (Saurabh Pant · BofA): Analyst asked Eric to split the 200-basis-point improvement between S/4 SAP rolloff and cost cuts, and how margins can rise amid inflation and limited pricing. He also asked Shannon about the Venezuela opportunity size and timing.
A: Eric said about half the 200 bps comes from cost reduction from rightsizing and SAP savings, estimating $100 million to $150 million from rightsizing and $120 million to $150 million from SAP savings, totaling roughly $250 to $300 million. He said inflationary pressures were largely built into Q3 and Q4 and they are not assuming meaningful pricing; Shannon said Venezuela is open for business, teams and equipment are in place, they will deliver a dozen-plus ESPs, and Venezuela was larger than a $5 billion business before they left and could be sizable again over time.
"So give or take, will be around, you know, $250 to $300 million coming from cost savings." — Eric J. Carre (CFO)
Middle East upside; U.S. frac cycle
Q (James West · Melius): Analyst asked what growth could look like in the Middle East if conflict resolves and whether North American frac pricing improvements are widespread or isolated and what part of the pricing cycle they are in.
A: Jeffrey said an immediate resolution would likely produce solid growth but they base guidance on what they have clear line of sight to today. Shannon said since late Q2 there has been a steady progression of conversations and foundational contracts, with commodity pricing appearing sticky; anecdotes and steady indicators have created tightness, and they are early but encouraged about a recovery in North American frac.
"What we see right now is more foundational kind of contracts being looked at and believing that commodity pricing is sticky." — Jeffrey Shannon Slocum (COO)
International growth engines and Saudi status
Q (Derek Podhaizer · Piper Sandler): Analyst asked for an update on the international growth engines (drilling, unconventionals, offshore, lift) and visibility toward prior multi-year targets, and asked how recent disruptions affected onshore and offshore rigs, specifically in Saudi.
A: Shannon said the growth engines are on track or ahead: drilling awards in Brazil and EastMed, unconventionals in many countries with added spreads, production services vessel startup, and lift expanding into 21 countries, all multi-year. On recent disruptions, he said the reported events have not had a material impact on operations, rig counts are holding steady, a small unconventional dip in Saudi is unrelated to the crisis and should rebuild, and they are watching the fluid situation closely.
"Well, I would say that the events you have read about have not had a real material impact on operations." — Jeffrey Shannon Slocum (COO)
Iraq ramp timing and offshore benefits
Q (Josh Silverstein · UBS): Analyst asked for timing and ramp details for the Iraq award called transformational, and whether offshore automation wins drive share and margin.
A: Shannon said the Iraq award is multiyear, will start probably H1 of next year with subsurface and landmark studies as part of a full-field development, will run 5 to 8 years and build over time, and the win should structurally improve that market. He added offshore is strong, with nearly $4 billion of work won year-to-date they view as accretive, and automation and acquisitions have helped win and strengthen their global offshore position.
"The start of that project will begin sometime probably H1 of next year, and it will start with more subsurface, landmark studies, those sort of things." — Jeffrey Shannon Slocum (COO)
International pricing and free cash flow outlook
Q (Scott Gruber · Citi): Analyst asked what needs to happen for broader international pricing gains, and asked about free cash flow in Q4 and early read on 2027 free cash conversion as margins improve.
A: Shannon said pricing has continued to improve, the market is tight, and they have won roughly about $14 billion of work year-to-date, which supports further tightening and price improvement. Eric said Q3 cash was below expectations due to collections and inventory buildup related to S4 and projects, they expect Q4 cash flow from operations of about $1 billion and about $1.6 billion of free cash flow for the year after CapEx net of sales, and they expect free cash flow margins to improve in 2027.
"This year, we have won roughly about $14 billion of work year to date." — Jeffrey Shannon Slocum (COO)
Mexico drivers and election impact
Q (Keith MacKey · RBC): Analyst asked what drove Mexico's quarter-over-quarter improvement across product lines and whether U.S. midterm election results could affect the 2027 guide.
A: Shannon said Mexico continued to improve and that software sales really drove the quarter; he expects 2027 macro to support further activity and that more recovery is possible in H2 of 2028. Jeffrey said politics is not factored into their outlook and he is confident the business performs under any political outcome; energy demand and macro support their multi-year view for the industry.
"But what has driven really the quarter has been software sales." — Jeffrey Shannon Slocum (COO)
What underpins international growth and NA base
Q (Sebastian Erskine · Rothschild): Analyst asked how much of the implied 7–10% international growth for 2027 is already contracted versus new wins, especially in the Middle East, and whether the flat North America assumption is based on 2026 average or Q4 exit rate.
A: Shannon said the Middle East business is contracted and they have real good line of visibility to that, while North America frac spreads are working and busy but they are modeling North America flat for 2027. He clarified the flat North America assumption is total year to total year, not based on Q4 exit.
"We have real good line of visibility to that." — Jeffrey Shannon Slocum (COO)