Halliburton Co. revealed that it cut another 9% of its workforce since April, or roughly 5,000 employees, even though the oil-field service company’s management now predicts the global energy outlook is finally improving.
The company booked a hefty loss for its second quarter on charges related to its failed tie-up with Baker Hughes Inc., a rival that also helps oil-and-gas producers drill new wells and flush out more fuel from existing fields.
Halliburton said its head count now stands at over 50,000 employees, down from more than 55,000 in the spring and about 40% below its peak employment of more than 80,000 people in 2014.
Despite a loss of $3.21 billion, or $3.73 a share, for the quarter 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 $3.75 billion in revenue.
Its shares were off 1.6% at $44.28 apiece at 4 p.m. in New York trading on Wednesday.
Chief Executive Dave Lesar said the North American oil business is poised for a turnaround later this year.
An emotional threshold was crossed in the oil patch when U.S. crude benchmark prices rebounded to $50 a barrel during the quarter, Mr. Lesar said. They have since slid back to less than $45 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 is forward facing. In the second quarter, Halliburton said revenue in its North American operations—the largest contributor to its top line—tumbled 43% amid reduced U.S. activity, particularly for drilling and pressure pumping services.
Mr. Lesar said that Halliburton executives believes the U.S. rig count bottomed out during the last quarter. He pointed to improving utilization numbers in recent weeks. So far, 26 rigs have been redeployed, reflecting operator confidence in stabilizing oil and gas prices.
Halliburton expects a modest uptick in the rig count later this year and a significant gain in 2017, he said.
Some of the pain from nearly two years of low oil prices will linger. During a conference call with analysts on Wednesday, Halliburton President Jeff Miller said the company is still working to cut costs. He conceded that some laid-off oil workers won’t 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 Ltd. 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 $35 billion, amid intense regulatory pressure on several continents. They initially struck a deal in 2014, but it stalled and in April the U.S. Justice Department sued to block it, ending the deal.
Halliburton booked $3.52 billion of costs related to terminating the merger, as well as $423 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% to $3.84 billion.
By Alison Sider
Source: Wall Street Journal
LinkedIn Twitter Xing EmailWhen I left my second large company experience to become President of a small manufacturing company I did so driven by ego; I fancied the title. Soon […]
LinkedIn Twitter Xing EmailFirm details on exactly how the U.K. will regulate new medicines is still to be decided after it leaves the EU later this year (caveats on timing […]
LinkedIn Twitter Xing EmailThe Simply Good Foods Company, the owner of Atkins-branded food products, has secured a deal to acquire protein snack maker Quest Nutrition for $1 billion. Quest, which […]