Shale Slowdown?
Halliburton Sounds the Alarm
- Halliburton: U.S. customers are re-evaluating drilling activity plans for 2025.
- Halliburton saw a drop in North American revenue for Q1 2025.
- The macroeconomic uncertainty, the cost of equipment with the Trump Administration’s tariffs, and the oil prices barely at breakeven levels at some fields and wells have prompted analysts to lower their estimates of U.S. oil production growth.
The heightened oil market and macroeconomic uncertainties in recent weeks are baffling not only analysts. Halliburton, the oilfield services giant with the highest exposure to the U.S. fracking market, has just warned investors that its U.S. customers are re-evaluating drilling activity plans for 2025.
“Looking forward, many of our customers are in the midst of evaluating their activity scenarios and plans for 2025,” Halliburton’s chairman, president, and CEO, Jeff Miller, said on the first-quarter earnings call this week.
Halliburton reported Q1 revenues, beating analyst expectations. Earnings, excluding a pre-tax charge of $356 million, were in line with estimates.
However, North America revenue in the first quarter of 2025 fell by 12% from a year earlier to $2.2 billion. Halliburton said the decline was primarily driven by lower stimulation activity in U.S. onshore operations and decreased completion tool sales in the Gulf of Mexico.
International revenue also fell, but only slightly, by 2% versus the first quarter of 2024.
Analysts were closely watching Halliburton’s Q1 figures – which kicked off the earnings reporting season of the big oilfield services providers – for clues about where North America drilling is heading amid uncertainties about the economy and the willingness of oil producers to keep drilling activity levels as U.S. benchmark oil prices fell into the low $60s per barrel.
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The macroeconomic uncertainty, the cost of equipment with the Trump Administration’s tariffs, and the oil prices barely at breakeven levels at some fields and wells have prompted analysts to lower their estimates of U.S. oil production growth this year and next.
“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,” Halliburton’s Miller said on the earnings call.
“The last three weeks have been highly dynamic as the trade environment injected uncertainty into markets, raised broad economic concerns, and along with faster than expected return of OPEC production weighed on commodity prices,” the executive added.
Apart from heightened macro and oil price uncertainties, Halliburton flagged it would be hit by the U.S. tariff policies—in the region of $0.02 to $0.03 per share impact on the earnings per share for the second quarter of the year.
“We are doing a lot of work on mitigating the impact of tariffs. We have a well diversified supply chain,” Eric Carre, Executive Vice President and Chief Financial Officer at Halliburton, said on the earnings call.
“We have a lot of levers we can pull. But really, to be more clear in terms of the overall impact, we need a bit more clarity and stability in the structure of tariffs, so that we can really understand what levers we can pull and then what the overall outcome is going to be,” the executive added.
“So there’s just a lot of moving parts right now. And I think we’ll be able to give you more color in three months from now.”
Halliburton’s warnings about uncertain drilling plans by U.S. onshore producers, the impact of the tariffs, and concerns about the macro environment sent its shares plunging by 5.5% at close on Tuesday in New York.
While public statements from the U.S. oil lobby and oil producers welcome President Donald Trump’s rollback of regulations and eased permitting processes, executives are privately fuming about the administration’s perceived target to bring oil prices down to $50 a barrel.
U.S. Energy Secretary Chris Wright, the former boss at fracking firm Liberty Energy, remains bullish on U.S. oil production—and believes that the industry will not only survive but thrive even with oil at $60 or below.
Yet, the industry begs to differ—at least that’s what executives wrote anonymously in March in comments to the quarterly Dallas Fed Energy Survey for the first quarter.
“There cannot be "U.S. energy dominance" and $50 per barrel oil; those two statements are contradictory. At $50-per-barrel oil, we will see U.S. oil production start to decline immediately and likely significantly (1 million barrels per day plus within a couple quarters),” an executive at an exploration and production firm said.
Another executive put it even more bluntly, “The administration’s chaos is a disaster for the commodity markets. "Drill, baby, drill" is nothing short of a myth and populist rallying cry. Tariff policy is impossible for us to predict and doesn't have a clear goal. We want more stability.”
Stability and clarity are what Halliburton’s executives say they need to assess how the oilfield services giant should approach the new market realities.
By Tsvetana Paraskova for Oilprice.com
Tariff Concerns Weigh on Baker Hughes Outlook
Oilfield service major Baker Hughes is going to be cautious about its financial performance outlook this year, due to “broader macro and trade policy uncertainty,” most likely meaning tariffs, the company said in its first-quarter financial report.
Baker Hughes booked net profits of $509 million, which was down from $694 million for the last quarter of 2024 on a GAAP basis, which represented a 27% decline. Cash flow from operating activities was down by 40%, to $709 million from $1.189 billion three months earlier. Free cash flow stood at $454 million at the end of March 2025, down 49% from the $894 million booked for the final quarter of 2024.
The company also reported a decline in both its domestic and international operations during the first quarter. The North American decline stood at 5% and the international hit 11% during the period, after a year when international operations growth largely offset domestic declines for the oilfield service sector.
“Although our outlook is tempered by broader macro and trade policy uncertainty, we remain confident in our strategy and the resilience of our portfolio. We believe Baker Hughes is well positioned to navigate near-term challenges and deliver sustainable growth in shareholder value,” CEO Lorenzo Simonelli said.
Reuters cited the company as saying at the presentation of its first-quarter results it had estimated a potential minimum impact of the tariffs at between $100 million and $200 million for its business. That impact calculation was based on tariff application during the 90-day pause period that President Trump granted trade partners with the exception of China.
The effect of tariffs on Baker Hughes’ operations beyond that 90-day window have not been estimated. Still, analysts believe Baker Hughes is more immune to the adverse effects of tariffs than its peers thanks to its thriving Industrial and Energy Technology business division that focuses on LNG.
By Irina Slav for Oilprice.com
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