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Top oilfield service firms warn of slower 2025 activity

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Tariffs raising costs, adding pressure on service margins

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SLB, Halliburton ( HAL ), Baker Hughes ( BKR ) cite weaker North America

outlook

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Oil producers cutting back drilling activity

By Arunima Kumar

May 9 (Reuters) - Top U.S. oilfield service firms have

signaled a challenging period ahead as a recent slide in oil

prices pushes producers to temper their drilling activity and

rethink their budgets.

SLB, Halliburton ( HAL ), and Baker Hughes ( BKR )

all flagged cautious customer spending in their first-quarter

reports, citing a lack of visibility, especially in North

America.

Higher output from the OPEC+ grouping and a global tariff

war that has raised demand concerns drove crude prices to

near $55 a barrel this month, from around $78 just before U.S.

President Donald Trump assumed office in January.

"With oil prices falling out of the well-defined range that

had persisted for much of the past 2+ years, producer budgets

are encountering meaningful strain for the first time in several

years," said Raymond James analysts.

Many producers have warned that drilling becomes

unprofitable below $65 per barrel. Brent crude was

trading around $63 on Friday.

Diamondback Energy ( FANG ) trimmed its 2025 capital budget

by $400 million and said it would drill and complete fewer

wells, while Coterra Energy ( CTRA ) said it would cut its

Permian rig count by 30% in the second half of the year.

The cuts by the independent producers could potentially

affect the service firms that supply them with rigs, crews, and

equipment.

Halliburton ( HAL ) CEO Jeff Miller said customers were reviewing

2025 plans, which could lead to more idle time for fleets and,

in some cases, sending equipment overseas or into retirement.

Analysts at Jefferies said while delays in North American

activity have now stretched into the second quarter,

international projects are facing slowdowns.

SLB flagged slow starts in Mexico and Saudi Arabia, and now

expects global upstream investment to decline in 2025.

Baker Hughes ( BKR ) forecast a low double-digit drop in North

American spending and mid-to-high single-digit cuts

internationally.

Tariffs are also adding fresh uncertainty, including driving

up equipment costs.

Halliburton ( HAL ) forecast a 2-cents-to-3-cents per share impact

in the second quarter from the trade tensions, while Baker

Hughes ( BKR ) warned of a $100 million to $200 million hit to 2025

EBITDA if tariffs stay in place.

Meanwhile, all three companies are concentrating on pockets

of resilience such as LNG infrastructure, power grid upgrades,

and data center-driven power demand to weather a slower, more

uneven recovery.

Baker Hughes ( BKR ) expects to book at least $1.5 billion of orders

in data-center equipment over the next three years.

"We're really not seeing customers pull back from LNG, gas

infrastructure or the data-center projects," said CEO Lorenzo

Simonelli.