Halliburton has cut more than 6000 positions during Q1 2016, bringing its workforce down by one-third since late-2014, in addition to a decreased revenue of 40% during the period.
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Image from Halliburton. |
In Q1, Halliburton reported US$4.2 billion in revenue, representing a 40% fall year-on-year from $7.1 billion, and a 17% decline compared to Q4 2015’s $5.1 billion. The company attributed the decrease to disruptive market conditions that persisted in Q1, as US rig counts reached a record low and the worldwide rig count being at the lowest level since 1999.
“Responding to the reality of the market, we force-fit our employee headcount to available activity levels,” the company said in its Q1 report.
The oil services giant said the cuts to its estimated 55,000 employees, provide sustainable structural savings without compromising our ability to add personnel to serve the market when it recovers, which included consolidating management roles across countries and centralizing support functions. With the most recent cuts, headcount at Halliburton is about 49,000 that operate in 80 countries.
In February, Halliburton had originally anticipated to cut 5000 positions.
“There is no doubt this is one of the most challenging markets the industry has ever experienced, as we face a more than 30% decline in global drilling and completion spend for the second straight year,” Dave Lesar, Halliburton chairman and CEO said. “Further, we expect to see an additional 50% decline in North America spend in 2016, following last year’s 40% decline.”
For the company’s North America operations, revenue for Q1 came in at $1.8 billion, a sequential 17% decrease, in addition to an operating loss of $39 million.
“These declines were driven by reduced activity throughout the United States land sector, particularly pressure pumping services, along with a decrease in completion tools sales in the Gulf of Mexico,” Halliburton said.
International revenue for the period was $2.4 billion, representing an 15% fall from Q4 2015’s $2.9 billion; and dropping 31% year-on-year from $3.5 billion. Operating income was $310 million, which decreased 38% year-on-year from $502 million.
At the period’s end, Halliburton said it also closed, or is currently in the process of closing more than 100 different service points worldwide that rang from elimination of underutilized stock points to the consolidation of individual service centers.
“In addition, our view of the fundamental changes to the market has led us to take action and reduce the infrastructure that had been maintained in anticipation of the pending Baker Hughes acquisition. We are not making any decisions that would permanently impair our logistical infrastructure, or ability to flex back up, but we see no scenario in the current market where we need this additional infrastructure,” Lesar said.
Halliburton and Baker Hughes agreed to extend the time period under the merger agreement to obtain regulatory approvals to no later than 30 April 2016, after which the parties may continue to seek relevant regulatory approvals or either of the parties may terminate the merger agreement, the company said.
The latest hurdle of the $34.6 billion mega merger was earlier this month when the US Department of Justice (DOJ) sued to block Halliburton’s takeover of Baker Hughes, claiming that the merger threatens to eliminate competition, raise prices and reduce innovation in the oilfield services industry.
Both Halliburton and Baker Hughes are vigorously contesting the allegations.
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