This time last year was probably the lowest point for oil-services provider Halliburton (NYSE:HAL). Not only had drilling activity hit some of the lowest levels in decades, but the company also had to fork over $3.5 billion to Baker Hughes for the breakup fee for not completing their proposed merger. 

Since then, though, things have slowly improved for the company. Shale drilling in the U.S. has caught its second wind after the oil-price crash, and Halliburton has been able to capitalize. Its momentum culminated this quarter in a per-share profit -- something we haven't seen in several quarters. Here's a review of the company's most recent results, as well as what we can expect from here. 

Roughnecks working drill pipe

Image source: Getty Images.

By the numbers

Metric Q2 2017 Q1 2017 Q2 2016
Revenue $4,957 million $4,279 million $3,835 million
Operating income $146 million $203 million ($3,880 million)
EPS $0.03 ($0.04) ($3.73)
Free cash flow $38 million ($232 million) ($3,817 million)

Data source: Halliburton earnings releases.

Over the past few quarters, the North American market has helped to prop up struggling results from the rest of the world. This quarter, though, a modest uptick in international revenue, coupled with continued astronomical growth in North America, drove Halliburton's bottom-line result back into the black. 

What is also notable about these results is that the company had to write down $201 million related to a promissory note in Venezuela. Schlumberger (NYSE:SLB) noted a similar writedown when it reported earnings last week. Therefore, investors should view this as a Venezuela problem rather than a Halliburton issue, as the Venezuelan oil industry has been in a tailspin for some time. 

When it comes to Halliburton, North America is a significant component of the business. This past quarter, 55% of revenue came from the North American market as shale continues to grow like a weed even though oil prices have faltered of late. Considering how fast producers can turn the capital expenditure tap on and off with shale wells, it will be worth watching to see if oil's retreat to a price between $45 and $50 a barrel has a severe impact on drilling activity this quarter.

Halliburton operating income by business segment for Q2 2016, Q1 2017, and Q2 2017. Shows gains for its Completion & Production business while its Drilling & Evaluation business was flat. One-time charges also declined significantly.

Data source: Halliburton earnings results. Chart by author.

The biggest criticism for Halliburton's most recent results is the lack of free cash flow. Some of that has to do with one-time cash payments and working-capital builds that have eaten up $480 million in operational cash flow so far this year. The company is also ramping up its capital spending to keep pace with growth in the North American market. The concern certainly doesn't change the overall investment thesis, but it's something worth watching in the coming quarters. 

Halliburton also used $1.6 billion in cash to pay down some long-term borrowings. At the end of the quarter, the company had $2.14 billion in cash and $10.8 billion in long-term debt.

What management had to say

Overall, Halliburton CEO Jeff Miller's commentary was quite positive. While he isn't betting heavily on improved results in the international market, the strength of the North American shale business should more than offset tepid overall growth in the long run:

The Completion and Production division revenue increased 20% in the quarter and operating margins improved by 700 basis points to approximately 13%, driven by the strength in our production enhancement, cementing and completion tools product service lines. Our Drilling and Evaluation division is driven, in large part, by our international footprint. While we experienced a modest increase this quarter the overall market continues to move sideways with continued pricing pressure. Overall, I am confident about Halliburton's ability to grow North America margins, and continue to maintain the run rate for our international business. 

Miller's outlook is slightly different than that of Schlumberger CEO Paal Kibsgaard, who thinks that the industry is on the precipice of an uptick in international activity as many projects are approaching final investment decision. 

What a Fool believes

Halliburton has so far recovered relatively well from that flubbed Baker Hughes acquisition. We can trace much of that success to the rapid decline in breakeven prices for shale in North America. As Miller pointed out, though, service prices are on the rise as more idle equipment gets put to work. If oil prices remain low and service costs start to increase, there is a real chance that this second wave of shale could come to an abrupt stop.

For the longer term, however, Halliburton is in a decent position regardless of where the North American market goes from here. It remains one of the best-in-class oil-services providers, with plenty of liquidity to work through the fits and starts of this oil and gas recovery. 

Tyler Crowe has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.