International oilfield services firm Weatherford will cut another 2000 jobs from its workforce, taking the total number of planned job cuts to 10,000.
Weatherford’s move follows Schlumberger announcing last week a further 11,000 job cuts, taking its total job losses to 10% of its total workforce compared to its 3Q peak in June 2014.
Weatherford said that, as of 31 March, it had completed 81% of its initial 8000 headcount reduction plan, a move which would save it US$422 million annually.
Oilfield services firms are suffering amid reduced spending, due to the $50-60 bbl oil price. Oil prices were trading at $110 highs up to June last year, since when they dropped to around $50 and have struggled to get much above $60/bbl amid an over supply in the market, largely blamed on North American shale oil and reduced demand from Asia.
North America is where are large amount of the job losses have been focused, as land drilling operations have ground to a halt. Last week, Schlumberger Chairman and CEO Paal Kibsgaard said: “The largest drop in E&P investment is occurring in North America, where 2015 spend is expected to be down by more than 30%. Internationally, we expect 2015 E&P spending to fall around 15%, which will create challenges in terms of both activity and pricing levels, but these challenges will be considerably less than the headwinds we are facing in North America.”
Weatherford’s 1Q results reported a net loss before charges of $33 million on revenues of $2.79 billion for the first quarter of 2015. Schlumberger’s 1Q revenues were $10.2 billion – a 19% drop on the previous quarter.
Weatherford said the bulk of its job cuts would be in North America. The firm had also planned to shut down seven of its manufacturing facilities during the year. Two have already closed, four more will close in 2Q and the seventh is being targeted for closure in 3Q. “Separately, we plan to shut down and consolidate 60 operating facilities across North America by the end of the year,” said Weatherford.
Bernard J. Duroc-Danner, Chairman, President and CEO of Weatherford, said: "North America will remain very challenged.” But, he said there was resilience in international markets.
“Our international performance will be resilient. Both Eastern Hemisphere and Latin America will show relative strengths through the 2015 market decline, and will outperform on margin growth.
“Internationally, our margin improvement, both sequentially and year-on-year was best-in-class. We more than offset activity and pricing headwinds with cost reduction initiatives while protecting our market share.”