Halliburton (NYSE:HAL) will release its quarterly report on Monday, and shareholders have already experienced the optimism that has sent shares soaring to record highs. Even with competition from Schlumberger (NYSE:SLB) and a host of other players in the oil-field services space, Halliburton has consistently found ways to keep growing. Moreover, Halliburton has every reason to believe that even as U.S. energy activity keeps reaching unprecedented heights, opportunities abroad could bring a whole new wave of growth to the industry.

In every gold rush, you can count on the makers of picks and shovels to reap huge profits from the dreams of those aiming to strike it rich. Halliburton has found itself in exactly the same position with its oil and gas company clients, as the willingness of small exploration and production companies to make large capital expenditures in search of a big find has offered an outlet for the expertise of oil-field services players. And as unconventional extraction methods such as hydraulic fracturing have become commonplace, Halliburton's wealth of experience carries high value around the world. Yet plenty of other companies, including rival Schlumberger and oil-field materials specialist National Oilwell Varco (NYSE:NOV), also aim to extend their reach. Let's take an early look at what's been happening with Halliburton over the past quarter and what we're likely to see in its report.

Source: Arne Hückelheim, via Wikimedia Commons.

Stats on Halliburton

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$7.24 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

How long can Halliburton earnings grow?
Analysts have made substantial cuts to their views on Halliburton earnings in recent months, reducing first-quarter estimates by nearly 20% and cutting 3% to 5% from their full-year 2014 and 2015 projections. The stock, though, has continued its ascent, climbing 21% since mid-January.

Halliburton's fourth-quarter results showed the shifting winds of profitability in the energy world. Total revenue for the company rose by just 2%, with a similarly modest rise of 7% in net income once you adjust for continuing operations. Yet the great divide is between Halliburton's North American operations, where rig counts fell from the year-ago quarter and where customers are becoming more adept at making the most of limited capital budgets, and its Eastern Hemisphere segment, where sales soared 17% and operating income rose by 23%.

Indeed, the big opportunity for Halliburton, Schlumberger, and other major players in the oil-field services industry comes from the worldwide outlook for growth in exploration and production activity. For instance, energy producers aim to help China use less coal by finding natural-gas reserves, and shale-gas finds could help the emerging-market power import less liquefied natural gas and shift energy consumption away from fuels that cause more pollution. Australia and areas of the Middle East also have high potential for further capital spending. Halliburton should be able to expand internationally to take advantage of the favorable environment in many parts of the world.

One concern, though, stems from recent discoveries that nonconventional wells have shown much more rapid rates of production decline than those established using more traditional drilling methods. The relative impermeability of shale compared to other types of rock makes it harder for wells to produce once the initial surge of fracking-induced output leaves the formation. Yet that actually introduces a great business opportunity for Halliburton, Schlumberger, and other service providers, as they have used their expertise to make advances in drilling technology to create new wells that are more productive and therefore more economically viable.

Water contamination is also a hot-button topic when it comes to hydraulic fracturing. On that score, Halliburton has been proactive, partnering with Nuverra Environmental Solutions (NYSE:NESC) to allow drillers to reuse water repeatedly to minimize total consumption during the fracking process. This service will allow Halliburton to add value for its clients and potentially help avoid some of the environmental concerns people have about new production methods.

In the Halliburton earnings report, watch to see how well the company's results compare with Schlumberger. With so much activity in oil and gas production worldwide, Halliburton has huge potential if it can execute and capture the opportunity.

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