Posted on 01/20/2015 9:46:05 AM PST by thackney
Following Schlumberger's 9,000 lay-offs announced last week and Baker Hughes' 7,000 earlier this morning, Halliburton said today that it will execute workforce reductions similar to its peers during the first quarter.
Halliburton COO Jeff Miller said: "We have already taken the initial steps on headcount internationally. As North America (NAM) activity falls, we will make adjustments in the US as well. We expect our headcount reductions to be in-line with our primary competitors. We will minimize discretionary spending. There is likely to be more restructuring in first quarter as we put initiatives in place to temper the impact of the market decline."
This comment suggests that the company could cut a further 6,000 jobs by March (based on the average of the Schlumberger and Baker Hughes cutbacks applied to Halliburton's ~80,000 person workforce).
Late-last year, Halliburton announced 1,000 lay-offs in its Europe, Asia, Africa, the Middle East, and Australia businesses, which is the the geo-market where Halliburton is seeing the biggest initial slowdown. The coming cuts discussed today will be closer to home, and Halliburton said it is in the process of right-sizing its US workforce now.
The entire industry is cutting back on jobs and hiring in 2015 as it adjusts to oil prices. The number of jobs listed on Oilpro's industry leading jobs board has declined from a peak of 24,000 listings in early-November to about 14,000 open positions today. Hiring is slowing, but there are still plenty of open positions to be filled for now.
The First Phase Of A Downturn Is Always The Most Difficult
The first quarter of a downturn is always the toughest on oil service companies, their employees, and their investors.
On the revenue side, there is no visibility to plan around. The rig count is plummeting while E&P capex is fluid - the 25-30% cuts announced during planning season are being revised lower. And price discount discussions with customers are accelerating across all product service lines. Wells are being drilled but not completed as fast as before - customers are managing spending within cash flow rather than focusing on accelerating first production.
On the cost side, there is a delay in vendor discounts because suppliers need to see the fall in oil service company revenues before effective renegotiations can occur. There is also a timing issue on the costs of consumables flowing through inventory. And cost savings from head count reductions come on a lag because lay-offs follow volume reductions.
Like with Schlumberger and Baker Hughes, this means that headcount reductions made this quarter are likely just the first round and will deepen throughout the year.
A Confident CEO - "We Know What Buttons To Push, What Levers To Pull."
"It's not a fun environment, but it is one we can easily handle," CEO Dave Lesar said today. "We have to be realistic, the North American market is going to see volatility and pain for a few quarters. But I like our chances." Halliburton has taken market share from its competitors, outperformed its NAM rivals, and consolidated weaker peers in prior downturns. This one is likely to play out no different.
The behavior of operators around individual wells is expected to continue. This plays into Halliburton's strengths. The increased sand volumes, higher stage counts per well, and frac design trends that played out in 2014 are likely to remain in tact on a per well, per stage basis. Overall demand will fall, but the concept of rising well volumes will remain in tact. The science of what is happening down-hole will continue to be optimized. Halliburton can do this better than anyone in North America.
Halliburton management said today: "We will look beyond the downturn to the next cycle and the coming recovery. We will continue to invest in key technologies like frac of the future." The company outlined a case for a production response in the US oil basins later this year and expects the rig count to decline sharply for three quarters as it did in the 2001/2002 and 2008/2009 cycles.
CEO Dave Lesar said: "We are taking specific actions to adjust our cost structure to market conditions. We will do what we have to do. We know what buttons to push and what levers to pull." During the downturn, Halliburton will focus on protecting market share. As its customers struggle with cash flow, they will be more focused than ever on efficiency. This bodes well for Halliburton. "This management team has been through this before, and we will emerge a stronger company," Lesar concluded.
Halliburton Responds To Schlumberger's Call Out
Directly addressing a statement from Schlumberger CEO Paal Kibsgaard made last week about the distraction the Halliburton/Baker Hughes integration is likely to cause its rivals, HAL CEO Dave Lesar said: "I'm not naive about how hard it is to put two companies together. It's damn hard. But I'm confident we will achieve our integration goals with Mark McCollum in the lead. We believe the transaction is even more compelling today than it was when we announced it."
Schlumberger has been quite vocal about the deal between its two biggest rivals. Schlumberger has been calling the combination an opportunity to take market share away from Halliburton and Baker Hughes. Directly responding, HAL CEO Lesar said: "I've heard the word 'distraction.' We've been through asbestos, we've been through Macondo, we've been through the Iraq war. You know us, we are the execution company. We aren't going to be distracted. It's a tough market, but we've been though this before. Clearly, we are not going to get distracted, I'm not going to permit that to happen."
Oil services Giant Schlumberger to Lay Off 9,000, as Crude Prices Fall
http://www.freerepublic.com/focus/news/3247465/posts
01/16/2015
Baker Hughes to lay off 7,000 in coming months
http://www.freerepublic.com/focus/f-news/3248679/posts
January 20, 2015
Halliburton ping
Oil has always been about boom and bust. This boom looked like it would never end. We will see.
Google the word "Pithole" if you want to see what I mean.
Watch Clark Gable and Spencer Tracy in Boom Town to see what I mean.
Also in Boom Town you get to see Hedy Lamarr at her best.
What next?
I’ve lived it a couple decades, I have an understanding.
Sorry, didn’t look at who I was posting to!
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