Go ahead and call it "oilfield services week." Between now and Friday, several of the top names in the sector will report earnings. Up first is Halliburton (NYS: HAL) , which will provide its numbers tomorrow, and thus provide some indication of the state of the industry and where it might be headed. At the moment, the market isn't all that bullish on the sector, and analysts are projecting lower EPS for Halliburton, albeit on higher revenue.

Bearish expectations
No one's anticipating a slam-bang quarter. The batch of analysts polled by Thomson Reuters collectively figure the company will report $0.68 in EPS (around $631 million) and $7.15 billion in revenue. The EPS figure in the same period last year was $0.94, and 3Q 2011 revenue was $6.55 billion.

The profit squeeze comes from conditions on the domestic industry. The number of active drilling rigs in the U.S. is falling; according to one key industry metric they've dropped by nearly 9% from the beginning of the year. Fewer active rigs mean less equipment and services are required to keep them running.


One key driver of this is the disparity in demand and prices between oil and natural gas; the former remain strong, while gas prices have stayed low and stagnant. As a result, there has been a shift in resources to the liquid commodity. Such a shift means more downtime for gas rigs, and it's the Halliburtons of the world that lose business supplying and servicing them.

The bad news is, this year has been unseasonably warm. So, much less gas is needed for heating compared with more normal, chillier periods. It doesn't help that natural gas resources are plentiful and abundant, and technology has made them ever easier to exploit.

Fracking is, famously or notoriously (depending on your point of view) the energy sector development of the moment. But this is problematic for Halliburton for two reasons: (a) the popularity of fracking and the elevated competition for the equipment to service it have pushed down prices, and (b) again because of demand, prices for a key input -- guar gum -- used in the process have ramped up higher and don't seem to be coming down. At the moment, Halliburton is laboring to work through an oversupply of the stuff and hopes for the financial impact to subside by the time 2013 rolls around. Meanwhile, the combination of all of the above leeches profitability.

In good company
Halliburton isn't the only company feeling the squeeze. According to a recently released analysis from market researcher IHS, while the combined domestic revenue for the American oilfield services heavyweights -- Halliburton plus industry top dog Schlumberger (NYS: SLB) , Baker Hughes (NYS: BHI) , and Weatherford (NYS: WFT) -- advanced 24% (to $24 billion) in the first six months of the year on an annual basis, operating income rose a mere 8% to a little under $5 billion.

The situation is the reverse in foreign markets. There, that same revenue metric grew 18% year-over-year to $28 billion; however, operating income boomed 42% to hit $4.6 billion. Lately, Halliburton has been particularly good at covering ground lost at home with its international business. For the second quarter, in all of its non-U.S. regions, the company produced double-digit percentage increases in both revenues and operating income on a quarter-on-quarter basis.

Those international figures should be scrutinized by investors when the company releases results. Although not as much of a global player as, say, Schlumberger, Halliburton nevertheless derived around 43% of its revenue from outside the U.S .in its most recent quarter. If it continues to keep pace with advances in those markets, its results (and share price) should benefit.

Technological push
An eye should also be kept on what Halliburton is up to in the tech and materials sphere. In particular, it'll be worthwhile to see what develops with the company's just-opened Advanced Perforating Flow Lab, part of its Jet Research Center campus in Texas. 

The lab has a fancy name, but its purpose is more straightforward, bringing the company's research and analysis capabilities up to speed with state-of-the-art tech. It allows for the virtual testing potential drill sites in unconventional and often challenging environments as deepwater fields. The lab won't have a material impact on revenue in the immediate future, but it should help give the company an edge in client acquisition and retention in future periods.

Meanwhile, Halliburton is trying to address the guar gum pricing issue by developing an in-house alternative, PermStim, which the company says provides "a cleaner, more robust" -- not to mention cheaper -- alternative to guar-based fracking systems. The product has been used in more than 40 wells so far, according to the firm, so perhaps if it finds broader acceptance it could have a sustained positive impact on materials costs.

Who'll be a buyer?
Halliburton outpaced the consensus EPS estimate by a few cents last quarter, so don't be surprised if there's another modest beat when the company reports its third quarter. If so, however, its shares aren't likely to pop -- investors seem to be doing a wait-and-see on the guar gum supply issue and the development of natural gas prices.

Perhaps this will provide an opportunity to get the shares at a good price; they're barely above the midpoint of their one-year trading range, and they trade at better multiples than some of the broader stock indices. For example, Halliburton trades at a trailing P/E of 10.8, as opposed to the 14.6 of the Dow Industrial index.

Investors who like the oil services sector shouldn't just follow Halliburton's upcoming news. Later this week, Schlumberger and Baker Hughes will also be reporting results.

There are many different ways to play the energy sector, and our analysts have uncovered an under-the-radar company that's dominating its industry. This company is a leading provider of equipment and components used in drilling and production operations, and poised to profit in a big way from it. To get the name and detailed analysis of this company that will prosper for years to come, check out our special free report: "The Only Energy Stock You'll Ever Need." Don't miss out on this limited-time offer and your opportunity to discover this under-the-radar company before the market does. Click here to access your report -- it's totally free.

The article Halliburton Earnings Preview originally appeared on Fool.com.

Fool contributor Eric Volkman has no positions in the stocks mentioned above. The Motley Fool owns shares of Halliburton Company. Motley Fool newsletter services recommend Halliburton Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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