Weatherford International’s CEO said the company is acting “brutally realistic” as it makes more U.S. job cuts, but that the worst should now be in the past and the company can slowly regain market shares worldwide.
Weatherford will make another 1,000 job cuts, mostly in its U.S. support staff, as its onshore shale business continues to suffer with low oil prices, said CEO Bernard Duroc-Danner in the company’s second-quarter earnings conference call. That will give Weatherford 11,000 job cuts globally for the year and about 18,000 reductions in the past 18 months, leaving the company with 45,000 workers worldwide, he said.
“We tried to be as brutally realistic as what we need to do as we can,” he said, especially with U.S. shale. “Land people took it on the chin first — people like us.”
The oil field services firm operates out of Houston, but is formally domiciled in Ireland and has its tax residency in Switzerland.
Duroc-Danner acknowledged that the company had failed to manage its U.S. business well and that there was little cost efficiency. Weatherford was struggling financially even before oil prices began to dip last year.
“It isn’t desirable,” he said. “The U.S. had a heavy cost structure and many layers.”
Weatherford spokeswoman Sandra Pham said the company will not say how many of the job cuts are in the Houston area.
Weatherford took a $159 million impairment charge on its U.S. pressure pumping assets after taxes because they were largely sitting unused.It also closed three manufacturing and service facilities in the second quarter, and has shuttered 60 percent of its operating facilities in North America so far, and plans to close 30 more facilities by the end of the year.
But he emphasized that Weatherford has not made cuts into its muscle and that it will be leaner and more efficient going forward.
“This market is an opportunity as much as a punishment,” Duroc-Danner said.
While he expects the market to remain “sideways” for now, he said the worst has passed now that the second quarter is over and that Weatherford is positioning itself to rebound after making its final cuts. He said the company is focused internally and not obsessing over how to gain market share from the planned Halliburton-Baker Hughes merger.
While Weatherford’s second quarter revenues in North America were down 51 percent from the same quarter last year, its international revenues only dipped by 16 percent.
“International continues to do well,” Duroc-Danner said. “North America deteriorated further.”
Tudor, Pickering, Holt & Co. analysts Byron Pope and Jeff Tillery said in a note that Weatherford’s results seem good enough for its stock to “start to regain some of its dramatic lost ground.”
While Weatherford’s earnings were weak as expected, they were slightly better than many believed because of greater performance in Latin America and eastern Europe, including Russia, said analyst Bill Herbert of Simmons & Company International in a note.
The company’s second-quarter profits came in at a net loss of $489 million, or a loss of 63 cents a share, compared to a loss of $145 million, or 19 cents a share, in the April-June period last year. Revenues fell from $3.7 billion to $2.4 billion.