Halliburton posts $5.7 billion in losses

Halliburton, the world’s second largest oil field services company, reported on Monday dramatic losses following the failed bid to take over rival Baker Hughes.

Halliburton, based in Houston, said it lost $5.7 billion or $6.69 a share in 2016, compared to losses of $671 million in 2015, or 78 cents per share.

Halliburton Chairman and chief executive Dave Lesar said he had never, in his 40 years in the business, seen a more difficult downturn. On a Monday morning call with analysts, he called it the “sharpest and deepest industry decline in history.”

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The company attributed much of those losses to a single event: The failed $28 billion merger with Houston-based oil field services firm Baker Hughes, scuttled by federal regulators in May. That alone cost Halliburton more than $4 billion last year, the company said.

A Halliburton Co. worker walks through an Anadarko Petroleum Corp. hydraulic fracturing (fracking) site north of Dacono, Colo., in 2014. Jamie Schwaberow/Bloomberg
A Halliburton Co. worker walks through an Anadarko Petroleum Corp. hydraulic fracturing (fracking) site north of Dacono, Colo., in 2014. Jamie Schwaberow/Bloomberg

But Halliburton was also hard-hit by the 2-year-old oil price crash. Oil production companies, struggling to make money with oil prices at $50 a barrel or less, put heavy pressure on the company, it said, to lower service rates. Total revenues fell by $7.7 billion, or about one-third, to $15.9 billion for the year.

Operating cash flows dipped from $3 billion created in 2015 to $1.7 billion used by operations in 2016. Cash on hand fell from $10 billion to $4 billion.

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At the same time, Lesar said the company came through the crash with more market share than its primary competitor, Houston- and Europe-based Schlumberger.

The international market is still down, Lesar said. But after three quarters of operating losses in North America, the company said it had returned “to operating profitability” in the fourth quarter.

As fourth quarter equipment demand increased and availability tightened, Halliburton began talks on increasing prices, which had bottomed out during the crash, executives said on the Monday morning call. These conversation “were sometimes hard,” executives said. If customers agreed to increase prices, Halliburton continued to work with them. If not, the company took its equipment elsewhere.

And for the first time in months, Halliburton said it would be adding moth-balled equipment back into the oil field in 2017.

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