Updated Version 3 - Halliburton expects Middle East energy reconstruction to drive years-long demand for oilfields

Rewrite the first paragraph; add analyst comments to the third paragraph

Pranav Mathur

Reuters, October 20 - Halliburton HAL.N expects its revenue in 2027 to grow at a mid-single digit percentage. The company anticipates that efforts to restore energy production and rebuild inventories in the war-affected Middle East will support demand for oilfield equipment, even though the North American market is expected to remain subdued.

Chief Executive Jeff Miller said on Tuesday that next year’s operating margin is expected to reach around 15%, an increase of about 200 basis points. The forecast does not factor in a recovery in US hydraulic fracturing activity.

Citi analyst Scott Gruber commented, “The outlook assumes a flat North American market and no recovery in domestic fracturing activity. This suggests a rebound in the Middle East market and margin improvement driven by new overseas contract start-ups.”

After Halliburton’s third-quarter profit and revenue topped estimates, its shares rose 4.6% in premarket trading.

The eight-month-long US-Iran conflict has disrupted energy operations in the Middle East, causing project delays but potentially creating long-term demand for oilfield services.

Consulting firm Rystad Energy estimated in April that the costs to repair energy-related infrastructure could reach as high as $5.8 billion.

Halliburton said third-quarter revenue in the Middle East and Asia was essentially flat, totaling $1.41 billion. About a quarter of the company's total revenue comes from the Middle East region.

“I expect efforts to restore production, rebuild inventories, and strengthen energy security will drive continued demand for oilfield services in the years ahead,” Miller stated.

Quarterly revenue in Latin America and Europe/Africa rose by 12.6% and 22.7%, respectively, partially offsetting a 9% decline in North America due to soft US fracturing activity.

Total quarterly revenue increased 1.8% to $5.7 billion, surpassing analyst expectations of $5.6 billion.

According to data compiled by London Stock Exchange Group (LSEG), Halliburton, which kicked off the US oilfield services earnings season, reported adjusted earnings of $0.60 per share for the three months ending September 30, beating the analysts’ average estimate of $0.58.

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