Halliburton Cuts 5000 Jobs

Source: The Australian

Halliburton revealed that it has cut another 9 per cent of its workforce, or roughly 5,000 employees, even though the oilfield service company’s management now predicts that the global energy outlook is finally improving.

The company booked a hefty loss for the second quarter thanks to charges related to its failed tie-up with Baker Hughes Inc., its rival that also helps oil-and-gas producers drill new wells and flush out more fuel from the ground.

Halliburton’s headcount around the world now stands over 50,000 employees, down from more than 55,000 in the spring. At its peak in 2014, Halliburton employed more than 80,000 people.

Despite a loss of $US3.21 billion, or $US3.73 a share, for the period that ended June 30, Halliburton’s results beat analyst expectations. Analysts polled by Thomson Reuters had projected an adjusted loss of 19 cents a share on $US3.75 billion in revenue.

Stock in the company dropped nearly 1 per cent to $US44.58 a share in Wednesday afternoon trade.

Halliburton, which is the second largest oil-field-services company in the world behind Schlumberger Ltd., is an industry bellwether. Chief Executive Dave Lesar emphasised that the North American oil sector is poised for a turnaround in the second half of the year.

An emotional threshold was crossed in the oil patch when crude prices rebounded to $US50 a barrel during the quarter, Mr Lesar said. They have since slid back to less than $US45 a barrel, but companies are starting to think about growing again rather than just hanging on, he added.

“There’s a spring in their step I didn’t see earlier in the year,” Mr Lesar said of Halliburton’s customers. “In short, they are getting back to business.”

The hope, however, is forward facing. In the second quarter, Halliburton said revenue in its North American operations — the largest contributor to its top line — tumbled 43 per cent amid reduced activity throughout the US, particularly for pressure pumping services and drilling.

Mr Lesar said that Halliburton executives believes the US drilling rig count bottomed out during the last quarter. He pointed to improving utilisation numbers in recent weeks. So far, 26 rigs have been redeployed, reflecting operator confidence in stabilising oil and gas prices.

Halliburton expects a modest uptick in the rig count later this year and a significant ramp up in 2017, Mr Lesar said.

Some of the pain from nearly two years of low oil prices will linger. During a conference call with analysts Wednesday morning, Halliburton President Jeff Miller said the company is still working to cut its costs. He conceded that some laid-off oil workers won’t ever return to the industry, but stressed that Halliburton has tried to retain experienced people so it can be ready when the industry rebounds.

“We know how to do that, and we know how to make those people effective. So I feel like Halliburton is well positioned,” he said.

Oil-field services companies like Halliburton and Schlumberger made deep pricing concessions at the depths of the downturn, idling equipment and laying off tens of thousands of employees. Exploration and production companies will have to adjust to paying more for their services if they expect vendors to stay in business, Mr Lesar said.

“They know in their heart of hearts that service prices have to go up,” he said.

In May, Halliburton and Baker Hughes called off their merger, once valued at nearly $US35 billion, amid intense regulatory pressure on several continents. They initially struck a deal in 2014, but it stalled and in April the US Justice Department filed a lawsuit to block it.

Halliburton booked $US3.52 billion of costs related to terminating the merger, as well as $US423 million of other impairments and charges during the quarter. Excluding special items, the company posted an adjusted loss from continuing operations of 14 cents a share. Total revenue slid 35 per cent to $US3.84 billion.