Analyst Note| Preston Caldwell |
Halliburton reported second-quarter revenue up 7% sequentially, with North America revenue leading the way up 12% and international revenue up 4%. Adjusted operating margins increased to 11.8% from 10.7% in the prior quarter, driven mostly by operating leverage from the higher volumes. Management also reported that pricing has started to improve slightly in North America. By product segment, margins increased 200 basis points in the completion and production segment but dipped 30 basis points in the drilling and evaluation segment due to weaker product mix (lower software sales). Our fair value estimate and narrow moat rating are unchanged following the results.