London, UK | – Two of the world’s largest oil field service providers Baker Hughes Inc and Halliburton Corporation plan to cut thousands of jobs as drilling activity slows further due to a steep fall in crude oil prices. Global oil prices have tumbled almost 60 percent since June, hitting five-year lows as growing production and tepid global demand has caused a supply glut and prompted oil producers to scale back spending.
“We expect our headcount adjustments to be in line with our primary competitors,” Halliburton’s Chief Operating Officer Jeffrey Miller said on a post-earnings call on Tuesday, without giving a specific number. The company, which employees more than 80,000 people, said it cut 1,000 jobs in its operations in the eastern hemisphere in the fourth quarter.
Baker Hughes, which is being acquired by Halliburton in a near-$35 billion deal, said earlier in the day it would lay off 7,000 employees. Shares of Halliburton and Baker Hughes were down about 2 percent in morning trading, reversing earlier gains after the companies posted better-than-expected fourth-quarter results due to resilient demand.
The job cuts, which come days after industry leader Schlumberger NV said it would cut 9,000 jobs, underscore the abrupt slowdown in drilling activity seen in the past two months. The U.S. land rig count has fallen by 250 rigs, or about 15 percent, over the last 60 days, Halliburton Chief Executive Dave Lesar said on the call. Halliburton and Baker Hughes derive about half of their revenue from North America, a region they expect to fare worse than the rest of the world in the oil slump.
Baker Hughes said most of the workforce reduction would take place in the first quarter, when it expects to book a one-time severance charge of $160 million to $185 million. The company, which had 61,100 employees as of Sept. 30, said it was also considering closing facilities.
Halliburton, said it took a $129 million restructuring charge in the fourth quarter ended Dec. 31 to “temper the impact of anticipated activity declines”. Lesar said Halliburton was committed to closing its deal with Baker Hughes, adding that the transaction was “more compelling” now than when it was announced in November. In response to Schlumberger’s assertion that the company could gain market share as Halliburton and Baker Hughes integrate their operations, Lesar said the company would not “get distracted”. “We’ve been through asbestos. We’ve been through Macondo, we’ve been through the Iraq war. We’re the execution company.”
Reuters.
