Halli

Sup, mother fucks, it's Gabe Azar, Managing Director and Head of Burrito rolling of the infamous Azar Capital Group. Your grandma's favorite investor. Currently writing to you nerds from my L desk. Today, I am writing about Halliburton, you heard that right, Dick Cheney used to be the CEO of these apes. Now sit back, you greasy bastards, and enjoy. And remember, buy low and sell high, my friends.

Founded in 1914, Halliburton (Hali) has become one of the world's largest oilfield service providers. The company also has the largest piece of the pie in upstream exploration, drilling, completion, and production activities. Hali’s completion and production segment accounts for 58% of its revenue, while drilling and evaluation accounts for 42%. QUICK MATHS. This enables the lads to capture multiple revenue opportunities across the development, from a well's initial moves through its full build-out. Hali’s business is linked to global crude oil and natural gas plays, OPEC+ production decisions, North American rig count trends, and the broader energy transition shaping capital allocation across the sector. 

Hali was initially founded around a single innovation, oil well technology that solved a critical technical problem early in the game. In 2016, regulators cucked Hali by blocking its merger with Baker Hughes, forcing them to pay a $3.5 billion termination fee. This beef is still being litigated, which could result in a $640 million cash tax liability plus interest if the government lads catch a W. While the deal fell through, it preserved Halliburton’s independence and strategic flexibility. This allowed the company to pursue a different technology path through its Zeus electric fracturing systems, iCruise rotary platforms, and LOGIX automation rather than forced synergies through integration. The company announced a strategic collaboration with VoltaGrid in 2025 to expand into distributed power generation for data centers. 

Halliburton’s mission is to maximize asset value for its customers through its lifecycle, from locating hydrocarbons and managing geological data through drilling, completion, and production optimization. This positions them as a technology driven parter rather than a commoditized service partner. The company’s capex in 2025 was $1.25 billion, representing 5.6% of revenue, which was slightly below the 6% target and below historical norms during expansion cycles. Hali management has also stated that 2026 capex will be $1.1 billion. The company’s capital return framework targets 50%+ of annual free cash flow returned to shareholders. In 2025, the company returned $1.6 billion through share buybacks and dividends. 

A bull case for Halliburton rests on several pillars, including international activity, North American market reacceleration, technology monetization, margin expansion, and shareholder capital return acceleration. Despite the revenue decline in 2025, international markets represented 59% of revenue, with fundamentally different market dynamics than those in North America. International markets have slightly higher operating margins than the company’s North American unit. Management has observed that the North American cycles are shorter, which forces them to maximize value by stacking uneconomic fleets, maintaining pricing discipline, and optimizing crew utilization. Halliburton’s Zuez electric fracturing systems represent close to 50% of its North American frac fleet. This enables them to offer customers lower emissions, reduce noise, eliminate fuel price exposure, and improve operational efficiency. 

A bear case against Hali lies around its prolonged North American weakness and efficiency gains, international growth disappointments, government beef caused by Baker Hughes termination fee, and potential margin compression. Also, while the near-term oil and gas demand stays strong, in the 10-15 year outlook, the industry could see a decline due to external energy sources like nuclear and other renewable energy sources. Prolonged capital deployment discipline and efficiency gains in North America could reduce demand for Halliburton's services. If the efficiency trend continues or even accelerates due to AI optimization and automation could lead to slowed North American revenue growth even if production grows. While management has emphasized its international strength, there could be slowed growth from project delays, customer budget cuts, geopolitical beef, and the competitive landscape of the industry. 

Over the next few years, several growth catalysts could propel Hali’s growth, including an increase in North American activity driven by commodity price recovery, offshore contract awards, the increased adoption of Zeus electric fracking, the SAP S4 migration completion, and the company's Multi-Chem divestiture plans. Historically, when crude prices are above or near $75-80 a barrel, E&P budgets have increased, which has led to increased capacity and demand for Halliburton products. Venezuela's commercial and legal resolutions could unlock a major revenue opportunity for Halliburton, along with other countries looking to increase energy output. The value proposition from Zeus is large as it lowers emissions, reduces diesel fuel exposure, reduces noise, and increases operational efficicial all of which are aligned with the ESG commitments that have been made by many fools. Hali’s Multi-Chem divesture which is almost completed, will create a one-time cash inflow and strategic clarity around the company's portfolio. 

Several key risks that Halliburton currently faces include the company needing to pay out $640 million plus interest due to the company's Baker Hughes termination fee, decreased demand in North America thats driven by efficiency gains and capex discipline, and international credit deterioration. The IRS Notice of Proposed Adjustment is seeking to reclassify the Baker Hughes termination fee from an ordinary expense to capital loss, which would represent the single largest financial risk on the company's timeline. Historically, production growth requires an increase in drilling and completion acidity which drives equipment and service demand. Though this relationship is breaking down as operators are now able to achieve production targets with fewer rigs by drilling deeper, optimizing designs, improving wellbore placements, and leveraging data analytics. Hali’s international operations span across 70+ countries, many of which have challenging credit environments, currency fluctuations, political instability, and customer payment delays that create working capital headwinds. 

The oilfield services business is fairly relationship-driven, capital-intensive, with revenue generating spanning short-cycle services and long-term project contracts. The company’s primary revenue is split into two core segments: services and product sales. Services represent nearly 70% of the company's revenue, which creates strong advantages from customer relationships, technical expertise barriers, pricing power, and labor intensity. While product sales mainly consist of completion tools, drilling bits, and downhole tools, software licenses, materials, and specialty chemicals. This combo has created high switching costs for customers and positions Hali to capture revenue from multiple segments across a well's lifecycle. \

Halliburton has historically focused on long-term contracts with national oil companies. This enables them to serve as a project manager and service provider. Short-term contracts create earnings challenges that expose the company to rapid demand deterioration during market downturns and limit the ability to lock in favorable pricing during price spikes. Longer term projects offer higher revenue per project, strengthen customer relationships, provide more opportunities to monetize, and offer better visibility for capital allocation and workforce planning. However, longer contracts also carry more risks related to cost overruns, geopolitical instability, supply chain risk from third-party providers, and potential liquidated damages for schedule delays.

The oilfield service industry is a massive global market, with a TAM reaching $350 billion annually based on combining upstream capex across drilling services, completion, production services, subsea and offshore engineering, seismic and reservoir characterization, and production across all geographic and reservoir types. Although this TAM number has historically been volatile, it reached $750 billion in 2014. The lads at ACG don’t think TAM is a number worth caring about, but many investors do, so we will add it for those bozos. Halliburton's service addressable market likely sits around $120 billion, which excludes several large segments where the company lacks a meaningful presence. Within these numbers Halliburtons market share sits around 19% globally, with a meaningful percentage coming from its North American business segment. 

The industry has oligopolistic dynamics among Schlumberger, Halliburton, and Baker Hughes, who control nearly 65% of the global market. The Herfindahl-Hirschman Index (HHI) for oilfield services varies per segment, with each piece having fairly different scores. This creates different competitive market dynamics, pricing power, and profitability profiles across a company's product portfolio. The big three players' advantages come from global footprints, comprehensive product lines, large R&D budgets, and financial strength that allows them to weather commodity price cycles and maintain equipment during downturns. Chinese competitors operate under different expectations due to state-backed economics. 

The oilfield industry is currently sitting at a crossroads, as it still is in major demand, and emerging energy industries are growing like weeds. Global rig counts have seen a major decline since 2014 (3900 to 1816 in 2025). This limits pricing power and intensifies competition with companies focusing on returning cash flow over reinvesting capital into R&D. If electric vehicles, renewable energy, and climate policies advance faster than expected, oil demand could peak in 2030 and start taking off right after that. Though if energy advances slow than expected due to emerging markets still needing lots of oil and gas products, the industry could remain stable for decades. 

The oilfield services supply chain starts with commodity supplies like sand, chemicals, steel, and electronics, then it moves through services companies that combine the raw materials with equipment and expertise. The upstream suppliers have thin margins during normal times because their products are standardized, and buyers have loads of alternatives. This gives companies like Halliburton negotiating leverage due to the large number of suppliers. Oilfield service companies sit in the middle and are able to capture decent margins by adding value through technology, equipment, and expertise. Though each segment has drastically different margins, like hydraulic fracturing has 15-25% margins, completion tools make 30-40%, and software may reach up to 70% margins. If a barrel of oil costs $70, service companies might get $15, the oil company may spend up to $35 on internal costs + capex, and the remaining will be split between profit and taxes. 

Completion and production services are the largest segment, worth over $150 billion annually, and are expected to grow 3-5% per year, driven by international developments and optimizing older plants. The hydraulic fracturing market is the largest segment within that, mostly in North America. Cementing is a stable segment that is seeing solid growth with better margins than hydraulic fracturing. Other growing segments include artificial lift systems, well intervention work, and production chemicals that help aging fields produce more oil. Drilling and evaluation services are worth $130 billion and growing 4% annually as wells get more complex and companies are willing to pay good money for tech that saves time and places wells more precisely. The most exciting emerging tools are digital services and AI optimizations that are growing 12% annually and offering software like margins. Longer-term opportunities include geothermal drilling and carbon capture services, both of which could be great opportunities for Halliburton to secure more revenue. 

Oilfield services are closely tied to global economic growth, but during downturns, services can see large drops as oil companies are quick to slash spending. The transition from economic growth to oil service demand takes several months as economic growth drives energy demand, which affects several oil prices, which impact oil company profits, which determine capital budgets, which then finally translate to drilling activity and service demand. While there is a several-month delay, oil prices dominate everything when it comes to oilfield services. Currency fluctuations are also big as the major oilfield services companies operate across the globe, most firms hedge currency exposure by using forward contracts, but they can’t hedge everything because its expsnvie and some currencies don’t have good hedging markets. 

The US oilfield services industry is regulated AF, and are heavily regulated by multiple agencies like the EPA, OSHA, and the Department of Transportation. Though the biggest regulatory battles over the past two decades stem from hydraulic fracturing. In 2005, the Energy Policy Act was passed, which left states to set their own rules. This enabled states like Colorado and Pennsylvania to require groundwater testing and chemical disclosure, impose distance regulations from homes, and monitor earthquakes related to wastewater disposal. Although the recent administration has shifted in support of oil and gas development. This opens more federal offshore areas for leasing, speeding up permitting, rolling back methane regulations, and streamlining environmental reviews. The big oilservice players spend billions per year on federal lobbying, focusing on hydraulic fracturing exemptions, supporting offshore leasing, and protecting favorable tax positions. 

Artificial intelligence and machine learning have moved from experiences to real use cases in several segments that have created real value for companies. A major opportunity includes optimizing drilling time in real time, enabling firms to drill faster and avoid problems, and designing more efficient well completions using data from thousands of past wells. Halliburton has an advantage in this area because it has data from thousands of wells that can train AI models, enabling it to forecast production more accurately, predict equipment failures, and build better reservoir models. Experts are predicting that automation and robotics will drastically change the labor economics of oilfield services as automated systems can reduce crew sizes while also improving safety. This brings up questions about long-term employment opportunities in the industry.

Trade policy and tariffs have also become a high cost of oilservice companies. These costs are coming from importing specialized gear from China or Mexico. Oil service spread manufacturing globally to optimize costs and meet local rules, though it introduces tariff exposure when the companies need to move goods across borders. Companies are trying to mitigate costs to avoid tariffs by shifting to suppliers in lower-tariff countries, while others are passing on costs to customers. U.S sanction programs also may damage companies' revenue while increasing compliance costs. While these restrictions increase costs and complexity, they also create barriers prevvents new players from entering the market easily. 

Pricing power in oilfield services swings with the ever-changing market conditions. During booms, equipment utilzaion reaaches 90%, and service companies can raise prices because customers urgently need equipment and crews. But during downturns, price competition takes over as companies cut prices just to keep equipment working rather than it sitting idle. Input costs also create profit pressure as companies can’t pass all cost increases to customers. Major costs include sand for fracturing, with price swings immediately showing up on and hurting a company's profit. Labor intensity varies, as high labor projects like fracturing and cementing face wage pressure, while lower labor services like completion tools and software have more stable margins. 

The oilfield services industry has experienced significant boom and bust cycles over the past 20 years. The 2004-2008 expansion was excellent as oil prices for the industry as oil prices rose from $30 to $147 per barrel, oil rig counts doubled, and industry revenue grew by up to 25% annually for those several years. Though the 2008/9 financial crisis crushed everything when oil fell below $40, this led to rig counts dropping significantly, service revenue falling big time, and negative margins for some players. Followed by a major rip in 2014, which was driven by the U.S. shale boom, this pushed global service revenue to over $400 million for the industry. Though this boom was short-lived and the industry saw a quick collapasse short after, when Saudi Arabia (shoutout to the Crown Prince Mohammed bin Salman) decided to defend its market share instead of cutting production, which sent oil to below $30 per barrel. More recently, in 2021-2023, when oil prices ripped to $120 in mid 2022, though oil company spending remains lower than 2014 levels. 

The bull, the base, and the bearly, three potential scenarios that could play out over the next 10 years. A base case would reflect modest profitability with slow growth. In this scenario, oil demand peaks during the 2030s, natural gas keeps growing annually due to increased power generation and LNG demand, oil companies maintain spending, and international markets see a majority of the growth compared to North America. Technology improvements also help lead companies to expand their margins even if commodity prices swing. In an excellent scenario, an energy transition takes longer than expected, emerging markets see oil demand grow faster than forecasted, and renewable energy players face setbacks due to grid integration or costs. Natty gas will become essential for data centers and power generation, carbon capture allows continued fossil fuel use, or geopolitical disruptions keep oil prices high. In a dog water case, EV adoption gets massive adoption, renewable energy costs keep following, and idiotic climate policies tighten worldwide, which would lead to investors and lenders cutting off capital to oil and gas companies. 

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Hali's primary competitors include Schlumberger (SLB), which is the largest player with around 25% market share, and Baker Hughes, which has about 18% market share. Combined, these companies control nearly 65% of the global integrated services market and compete head-to-head in most product lines. SLB dominates technical services and reservoir analysis, Hali leads in North American cementing and completion, while Baker Hughes stands out in industrial equipment. Smaller players include Weatherford International, NOV Inc, Liberty Energy, ProFrac, along with smaller regional players and Chinese companies that will not be named. Companies like Exxon Mobil and Chevron are doing a lot more work in-house to handle their own drilling engineering and completion designs. Large tech companies like Microsoft, Google, and Amazon are now offering cloud-based AI tools for reservoir optimization. 

Halliburton's global market share has been down several percent over the past few years to 16-19%. Though its Fracturing, cementing, and competition tools segment in North America has nearly 25% market share. It’s Zeus electric fleet is growing as they capture a share in environmental preferences. Where Haliburton falls behind is in its directional drilling segment in the global markets; SLB dominates this market with nearly 40% market share. Halliburton is dominant in the international markets, with 59% of its revenue coming from non-North American assets. The company has a long-standing relationship in the Middle East due to its relationship with Saudi Aramco and other national oil companies that provide advantages. The company has a small presence in the Asia-Pacific region, this is where SLB dominates. Though the company is seeing a slippage in its North American market share, it is making up for these losses with continued growth in international markets. Hali also believes that future growth will stem from its Zeus Electric, LOGIX automation, and digital services as these drive gains in high-value segments. 

The threat of new entrants varies per segment. The highest barriers are in product segments like directional drilling and deepwater operations, which are protected due to the years of R&D and hundreds of millions of dollars that are needed to invest in infrastructure. Commodity services, however, are constantly facing new competition, with the entry capital for these services being more manageable for PE folks, as regulatory barriers are low and brand matters less when a service is commoditized. Supplier power is also weak because Halliburton’s inputs are heavily commoditized and sourced from highly competitive markets. For example, frac sand comes from dozens of different suppliers, and the price fell massively due to a massive oversupply. Specialty chemicals and steel are also heavily commoditized, as they come from large manufacturers and global mills. It is fairly easy for Halliburton to switch suppliers, as sand suppliers could be swapped out overnight, chemicals within a few weeks, and most components within a few quarters. 

Buying power is a major challenge for Halli, with no major customer exceeding 10% of revenue. Though major customers like Saudi Aramco, Pemex, and Petronas yield significant leverage due to their size and sophistication. These larger customers can maintain technical staff who understand Halliburton's product line and quality; they are also able to shift volume to Halliburton’s major competitors as they coordinate services across regions to maximize negotiating power. Switching costs are pretty low as customers can change providers within weeks with minimal downtime or disruption. Substitution threats operate across the board as oil companies begin building out in-house projects like drilling engineering, competition design, and reservoir modeling, as well as cloud-based AI platforms. This removes potentially 5-10% of addressable market opportunities for the service providers 

Network effects are basically non-existent in Halliburton’s business, as a customer using one of their products can easily switch to a competitor with little to no effect on the outcome. Though, due to artificial intelligence and machine learning, the larger companies can accumulate more data that can be used for demand prediction and well analysis. This means that Halliburton must compete on execution and technology rather than self-reinforcing network dynamics. Despite being hated by many, Halliburton has strong global awareness from its 100-year history and pioneering key technologies. Although this awareness does not equal a pricing premium in commodity services where customer priotize costs. Customer loyalty can be seen with repeat business, reflecting a major percentage of the company's revenue. 

Halli has around 8,000-12,000 active patents that cover drilling, completion, and production technology. Some of these protect fundamental technological innovations, while a majority of them cover incremental improvements that can easily be worked around. Patents from the 1990s and early 2000s also create expiration challenges as they enter the public domain, while these are older technologies it still enable competitors to use or deconstruct previously protected designs to further their own projects. Trade secrets from chemical formulations and manufacturing processes add additional protections but are fragile due to employees jumping ship, reverse engineering, and independent developments. Halliburton is also able to benefit from its scale in areas like R&D spending, corporate overhead, and IT costs, as well as procurement costs related to buying sand, chemicals, and equipment through its massive volume. 

Halliburton's gross margins are 40-42%, which are slightly lower than SLB and Baker Hughes. Halliburton's margins vary per product segment, with slightly lower margins from commodity pressure pumping to higher margins in directional drilling, specialized tools, and software. While it's hard to measure, sales and marketing costs account for barely 1% of revenue, while smaller players' sales and marketing costs are closer to 3% of revenue. Halliburton's revenue per employee is roughly $480 million, which is higher than the industry average. Pricing power is also evident with several of Halliburton's products, offering significant pricing premiums from products like iCruise, Zeus, and its Landmark software, all of which command 10-20% premiums. 

Schlumberger, aka SLB, leads the market with its technology offerings, as SLB invests nearly $1.5 billion annually versus Hali’s $500 million. Due to this SLB, often able to bring products to market months ahead of its competitors, forcing Halliburton into fast follower mode rather than a market leader. 41% of Halliburton's revenue comes from North America, versus SLBs 25%. Schlumberger has a stronger position in the International markets and can charge customers a premium due to its technical advantages. While Halliburton has higher exposure to price sensitive national oil companies. Operating in over 70 countries also creates tons of risks like coordination costs, duplicative infrastructure, and slowed decision-making processes. Several of these disadvantages constrain Halliburton, which limits its pricing power and sustainable competitive advantages.

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Great moments are born in great opportunity, and that's what you have here, that's what you’ve earned here tonight. I don’t think anything is going to be hard. What is there to lose? There's nothing to be lost, nothing to complain about. I can’t think of anything that I would find stressful or could bring us down.  This analysis is strictly for informational and entertainment purposes only and is absolutely, positively NOT financial, investment, legal, or professional advice of any kind. It’s not a golden ticket, a sure bet, or a substitute for your own brainpower. Markets are a rollercoaster, and losses can hit harder than a freight train—consider yourself warned. Investors must do their own hardcore due diligence, dig into the details, and/or consult a licensed financial advisor, accountant, lawyer, or whoever else you trust before even thinking about making investment decisions. Past performance? The author, this platform, and anyone remotely connected to this content take zero responsibility for your financial moves, wins, or wipeouts. Instead of looking up to Thomas Jefferson, or looking up to Nikola Tesla, or looking up to Magellan, I mean, kids, Magellan is a lot COOLER than Justin Bieber! He circumnavigated with one ship the entire planet! He was killed by wild natives before they got back to Portugal! And when they got back, there was only like eleven people alive of the two hundred and something crew, and the entire ship was rotting down to the waterline! That's destiny! That's will! That's striving! That's being a trailblazer! An explorer! Going into space! Mathematics! Quantum mechanics! The secrets of the universe! It's all there! Life is fiery with its beauty. It's incredible detail tuning in to it. Unlock your human potential, defeat the globalists who want to shutter your mind. I want to see you truly live, I want to see you be who you truly are! I don’t want my progyny whos coming, my unborn grandchildren and great grandchildren to live in this nightmare system these control freaks created. Thats why I don’t have fear, I only have fear of myself and my flesh and not being up to the challenge. I ask you to look in the mirror and ask yourself, what are you doing in this time of great challenge, what are you doing to unlock minds? Once you unlock a mind, once you unlock somebody, then they can unlock their soul. Just let the regulators know that we have a finite time on this planet, and you can be viciously mediocre, you can get after it. And to the haters, we have been honed into a machine of lethal moving parts that you would be wise to avoid if you know what's good for you. We will not be intimidated, we will not back down. We've seen war; we don’t want war. But if you want war with the United States of America … someone else will raise your sons and daughters. I love burning the short sellers. Some also may say I'm not even a good trader, I'm just lucky. To them I say, what's the difference? Thank you for your attention to this matter.  See you later, spacecowboy.