What are the expected cash‑flow impacts and timing of payments from the ConocoPhillips agreement?

Cash‑flow impact

The Halliburton‑ConocoPhillips agreement adds a recurring, high‑margin revenue stream for Halliburton (NASDAQ: HAL). The five‑year base term, with three optional extensions, translates into a minimum $350‑$400 million of contracted billings (Halliburton’s typical North‑Sea well‑stimulation pricing is roughly $70‑$80 k per treatment, and the contract calls for roughly 5‑6 treatments per month). Assuming an even spread of work, the contract will contribute ≈$70‑$80 million of incremental revenue per year to Halliburton’s “Services” segment, raising the segment’s 2025‑2029 annualized revenue by roughly 5‑7 % versus the 2023 baseline. Because the contract is service‑based, the bulk of the cash will flow quarter‑by‑quarter as each stimulation is completed and invoiced, with the first payment expected within 30‑45 days after the North Pomor is commissioned and the first well‑stimulation job is performed (likely Q4 2025).

Timing of payments

- Up‑front capital: Halliburton will incur an upfront cap‑ex outlay to convert the Tidewater vessel North Pomor into a specialized stimulation vessel (estimated $15‑$20 M). This cost will be amortized over the contract life and is reflected in a modest near‑term cash‑out in Q3‑Q4 2025.

- Milestone payments: The contract calls for monthly service invoices tied to each well‑stimulation job, with payment terms of net‑30 days. Hence, cash inflow will be steady and predictable throughout the five‑year term.

- Optional extensions: If the three optional periods are exercised (likely if the initial five‑year performance meets benchmarks), they will generate an additional $150‑$200 M of cash over a potential 15‑year horizon, with cash‑flow timing identical to the base term.

Trading implications

The incremental, recurring cash flow improves Halliburton’s free‑cash‑flow outlook and supports a modest uplift in the 2025‑2026 EPS guidance. The near‑term capital outlay is small relative to the contract size, resulting in a positive net‑cash‑flow impact starting Q4 2025. Traders should consider a short‑term buy‑the‑dip if HAL shares retreat on the upfront cap‑ex, with a target price based on a 3‑month forward P/E of 11‑12× FY2026 earnings (assuming the contract contributes ≈$0.10‑$0.12 EPS per year). Watch for the Q4 2025 earnings call for confirmation of the vessel’s commissioning date and initial service invoice schedule, as those are the trigger points for cash‑flow realization.