26 January 2016 — Oil field services giant Halliburton shed another 4,000 jobs in the final three months of 2015, as the Houston-based company continued to aggressively cut costs amid the worst oil crash in decades.
With the latest job cuts, Halliburton has reduced its global workforce by 25 percent, a total of about 22,000 employees since its peak in 2014. And more cuts could be on the way if a recovery in crude prices stalls, company executives said Monday morning.
“2016 is shaping up to be one tough slog through the mud and the industry is going to have to take it a quarter at a time,” CEO Dave Lesar said.
The company lost $28 million in the three-month period ending Dec. 31 due to impairment charges from asset write-offs and severance pay for laid-off workers.
Halliburton has continued to feel pressure from a global retreat from the oil patch. The company’s fourth quarter loss of loss of 3 cents per share was down sharply from a $901 million profit, or $1.06 per share, during the same three-month time period last year, the company reported early Monday morning.
Still, Halliburton executives celebrated the company’s performance, noting that its revenue, which slipped 28 percent, didn’t fall as sharply as the 35 percent decline in the global rig count and worldwide spending on drilling and completions.
Instead of bouncing back as some had expected, crude continued to collapse in 2016, tumbling below $30 a barrel earlier this month for the first time in 12 years.
Given the uncertainty over commodity prices, oil companies have been reticent to announce spending plans for 2016, leaving oil field services companies unable to chart a path forward. Exploration and production capital spending appears poised to fall for the second year in a row, marking the first time that’s happened since the ruinous bust in the late 1980s, Lesar said.
Some surveys indicate that oil companies may trim their spending budgets by 30 to 50 percent from last year in North America. That’s in addition to the 40 percent spending cut that happened in 2015, Lesar said.
“The reality is: Due to the macro-uncertainties, many of our customers are managing their businesses in real-time, rig by rig,” he said. “Accordingly, we are going to take this market week-by-week, and in some cases, crew by crew. This is unlikely to change until our customers have confidence in a sustainable and economical oil price.”
In addition to the layoffs, Halliburton has also slashed costs by consolidating offices in more than 20 places around the world and shutting down operations in two countries. The company declined to provide more details.
Halliburton ended the year with a reduced spending budget of $2.2 billion. Executives said the company will slash its capital expenditures in 2016 to $1.6 billion.
Despite intense regulatory scrutiny, Halliburton remains committed to closing its acquisition of rival services provider Baker Hughes.
Halliburton recently provided the U.S. Department of Justice with proposals for additional divestitures in an attempt to satisfy concerns about competition, Lesar said. The justice department had previously announced that plans to spin-off about $5.2 billion in assets didn’t go far enough to assuage worries that the combined companies would wield too much control over certain markets.
Halliburton also informally notified of the European Commission of its stepped-up divestiture plans as it works to provide remedies to antitrust regulators’ concerns.
The companies remain in discussions with interested buyers, Lesar said, but declined to provide additional details.
Given the longer-than-anticipated regulatory process, the companies have extended the closing date to April 30, but can agree to extend it further if necessary, Lesar said.
“We strongly believe that the proposed merger is good for the industry and for our customers,” he said. “The combination is expected to create en even stronger company and achieve substantial efficiencies, enabling us to compete aggressively to provide efficient, innovative and low-cost services.”