Halliburton and SLB reported earnings. Margins are compressing. But the sector is healthy enough to go on offense.
The headlines around these earnings reports write themselves: rig counts falling, revenue declining, margins compressing.
But that’s only half the story.
Yes, the OFS sector is in a defensive posture.
The global crude surplus is working against them, and management teams are pulling out the stops to protect profitability.
But here’s what’s easy to miss: margins today are still four to six percentage points above where they were before the pandemic.
This sector learned something from the last decade’s pain.
And that structural health is giving certain players room to make offensive bets, even while the market contracts around them.
• Halliburton is pushing into power generation through its VoltaGrid partnership
• SLB continues its relentless expansion in digital
Are these bets strategic foresight or well-intentioned distractions?
That’s the question the next several quarters will answer.
In my newest post at Foundations of Energy, I walk through revenue, margin, and capex data across 18 publicly traded OFS companies, and explore what Halliburton and SLB are actually saying about their frontier plays.
Read the full analysis here.
