Halliburton chopped another 4,000 jobs worldwide during the third quarter as oil companies continue to idle rigs and throttle activity, and will consider further reductions if business doesn’t improve, the Houston-based oil field services company said Monday.
The reductions brings the total number of job losses across the company to 18,000, or 21 percent of Halliburton’s global workforce.
“These are always tough decisions affecting great people, but they are simply decisions we have to make,” President Jeff Miller said.
Included in that reduction, Halliburton slashed an entire level of management connected to a service line, but provided no additional details about where those employees worked.
The layoffs forced Halliburton to post a $257 million charge, which included severance costs as well as asset write-offs as falling crude prices darkened the company’s outlook about the coming months. And company leaders hinted that the cuts may not be over.
“As this market plays out, we will evaluate our operations and make further adjustments as required,” said Christian Garcia, Halliburton’s senior vice president and chief accounting officer.
The fresh fall in oil prices in the third quarter spurred oil and gas producers — Halliburton’s customers — to pull back even further from the oil patch and demand even deeper discounts, pinching Halliburton’s earnings in the three month period ending Sept. 30.
The world’s second-largest oil field services company behind Schlumberger posted a $54 million loss, or 6 cents per share, down from a $1.2 billion profit, or $1.41 per share, during the same time last year.
Revenue fell from $8.7 billion to $5.6 billion, pulled down primarily by slumping oil patch activity and pricing pressure in North America, where the Houston-based oil field services company has seen operating income fall to near breakeven levels. Halliburton’s pressure pumping business has taken the greatest hit, Miller said. More than half the pressure pumping equipment
International revenues also slumped, but Halliburton was able to offset some of the pain in part by “relentless focus on cost management,” CEO Dave Lesar said.
“As expected it was another very challenging quarter for the services industry, ” he said. “Considering the difficult headwinds that are working against us, I’m actually very pleased with our overall financial results for the third quarter.”
As tough as the third quarter was on Halliburton, the company is expecting an even worse environment in the last three months of the year, although Lesar conceded that its tough to predict what to expect.
“In my 22 years in this business, I’ve never seen a market where we had less near-term visibility,” he said.
Already, the fourth quarter rig count in the United States is down 10 percent compared to the prior quarter, and Lesar expects oil companies to idle even more rigs in the coming weeks as they run out of cash for the year and extend the seasonal holiday break for a longer stretch of time, starting as early as Thanksgiving, Lesar said.
Oil companies will reload their budgets in the first quarter, but it remains to be seen how quickly they will once again ramp up activity.
“The first quarter could end up being a mirror image of the fourth quarter,” Lesar said. “So just as the fourth quarter is facing a steep drop-off post-Thanskgiving, we expect to see a slow ramp up beginning in January and improving from there, suggesting the first quarter could be the bottom of this cycle.”
The company continues working with regulators to finalize its $35 billion takeover of rival services firm, Baker Hughes, and has maintained a closing date of mid-December, although company officials said that date can be pushed back into next year. Lesar said the company expects to wrangle $2 billion in synergies, in addition to the savings Halliburton already reaped through layoffs and other cost-cutting measures, by fusing the two huge services companies together.
The company continues to make progress on its plans to sell off certain business lines to achieve regulatory approval for its merger, and has entered the negotiation phase for the first round of spin-offs, Lesar said.