Posted on 01/20/2015 12:08:41 PM PST by Rodamala
HOUSTON — Baker Hughes said Tuesday it will lay off 7,000 mostly in the first quarter of 2015, amid a crude oil price slump and drilling slowdown it expects to worsen in the next quarter.
The announcement came shortly after the oil service company reported that its net income for the three months ending Dec. 30 rose to a record high of $663 million, or $1.52 a share. After adjustments to exclude deconsolidation of a joint venture, the company reported an earnings per-share of $1.44.
In the same period of 2013, Baker Hughes reported $248 million in profit.
The layoffs are an about 11 percent cut to the 62,000-plus employees Baker Hughes said it employs globally on Tuesday. The company said it expects to book a one-time charge in the next period in the range of $160 million to $185 million for severance, and said it is reviewing its facilities for possible closures.
“This is really the crappy part of the job, and this is what I hate about this industry frankly,” said Martin Craighead, Baker Hughes Chairman and CEO told analysts on a conference call discussing the results. “This is the industry, and it’s throwing us another one of these downturns, and we’re going to be good stewards of our business and do the right thing. But these are never decisions that are done mechanically.”
Baker Hughes’ fourth quarter was exceptional by almost any other measure. The company’s reported adjusted earnings per share of $1.44 soundly exceeded analysts’ expectations of about $1.07 per share. Across 2014, the company said it saw $1.71 billion in net income, compared to $1.1 billion in 2013.
Several analysts on the call praised CEO Craighead’s performance during a question and answer session. In a note to clients, energy investment investment bank Tudor, Pickering, Holt & Co. LLC called the past months “one heck of a quarter.”
The company’s most recent quarter was led by its North America division, which posted a record revenue of $3.3 billion.
But while Baker Hughes said that drilling activity rose onshore in North America during the early part of the quarter, the company said the drilling decline began to affect business around the holidays.
“The further we look beyond the quarter, the greater the lack clarity,” said Kimberly Ross, Baker Hughes’ CFO who also spoke on the call. “The average U.S. rig count in the first quarter is projected to be approximately 15 percent lower than the fourth-quarter average. Additionally, we are seeing a growing inventory of wells drilled but not completed as some customers are electing to delay completion and defer production.”
Rig counts — a measure of how many new wells are drilled and a rougher measure of the business oil service companies can expect to see — have already been dropping quickly. The latest weekly data, compiled by Baker Hughes, showed producers idling 74 rigs, the biggest one-week decline in more than six years.
Baker Hughes executives didn’t go into great detail about the company’s future. In November, rival oil service firm Halliburton said it would buy Baker Hughes for $34.6 billion in one of the biggest oil field service mergers recorded.
ping
Baker Hughes to lay off 7,000 in coming months
http://www.freerepublic.com/focus/f-news/3248679/posts
Posted on 1/20/2015, 7:37:26 AM by thackney
I can’t believe all the doom and gloom articles I’ve spotted in the last few weeks about layoffs by drillers, oil service firms, and related industries, not to mention bankruptcies and reorganizations of many businesses involved in oil production, as world oil prices continue to slump. Yes, those things will happen, and I wouldn’t want to be a roustabout or heavy equipment hauler who just recently was hauling down six figure annual pay with overtime and is now worrying about pink slips.
But these things will end, and the oil will still be in the ground. The companies who come through the current belt tightening will be stronger and leaner than when the siege began, and will have acquired rigs and skilled workers from outfits that went belly-up, while shedding some of their own marginal operations and workers.
Meanwhile, consumers are even now enjoying a $3-4,000 annual windfall, and the auto industry is already seeing increased sales, including sales of bigger, much safer cars. People are going to start planning vacations, dining out more frequently, and buying some new furniture, so jobs lost in oil and oil service will reappear elsewhere in the economy.
In short, unless you work in oil, relax. The drop in oil prices is providing the American consumer a much larger boon than any tax reduction they’re likely to see, even if we do elect conservatives to control the White House and both houses of Congress in 2016.
What most don't realize, is there are more indirect jobs created outside the oil industry due to their purchase of equipment, material and labor, than direct hires. Steel mills, cable manufacture, valves, buildings, etc all get impacted.
For example:
Caterpillar is latest victim of sliding oil price
http://www.freerepublic.com/focus/news/3247811/posts
The maker of diggers and dozers’ direct exposure to the sector is equal to about $6.5 billion, or 12% of revenue, while its indirect exposure may be as much as 15% of revenues
Huge profits. Layoffs.
Greed.
Does Computers include cell phones? Otherwise it makes no sense.
Chart Note:
Based on company filings with the federal government as reported by U.S. Census Bureau for U.S. manufacturing industries
Looking here:
http://www2.census.gov/econ/qfr/current/qfr_pub.pdf
It appears the full name of the category is:
Computer and electronic products
Which includes:
- Computer and peripheral equipment
- Communications equipment
- All other electronic products
I'm not denying that some will suffer from lower oil prices. But in a dynamic economy, more will benefit. It will cost less to manufacture and transport almost everything, and that too will work to the advantage of everyone.
Crying for relief from low oil prices is nothing more than special pleadings on behalf of a narrow special interest: oil producers and related industries and their workers. Those special interests have been rolling in the clover for the last half dozen years or more while the rest of us have struggled to make mortgage payments and keep food on the table. I think Schlumberger and T. Boone Pickens will survive a little belt tightening while the rest of us enjoy the jingle of a little more change in our pockets after paying for gasoline and heating oil.
Steel mills, cable manufacture, valves, buildings, etc. will get all of that business or more back from increased sales of cars, washing machines, and all of the any goodies American consumers will be purchasing using extra funds left over after filling their gas and heating
. . . . . .
While wishful thinking sounds good, in every past gasoline price drop, there has never been an economic boom. What do you see different this time compared to the past?
Don’t forget that part of the cause of the price drop is slowing global economy that will also be felt here.
There will certainly be sectors that gain. There may be some overall gains. But never has gasoline price drops lead to a booming economy because that price change is not the only impact.
I will bet his rating is dropping pretty quickly in Houston. Not that it was ever THAT high.
Did you read the article? Or did I miss the sarcasm tag?
It's all just catching up now.
I've done well...energy wise.
It's going to be hard...in the coming months.
Cheap energy means low demand....
Boom and bust...seems to never end.
You must be a Democrat..............
Without energy...products do not get built. Period.
Crying?
I could careless about a buck a gallon of gas either way....I need to do my business..and that is a cost of business.
The problem with your thinking..is possibly you don't understand supply and demand.
Demand fuels the market.
And demand is not there right now....WORLD wide.
I'm concerned with that....You might ought to be, also.
post 16 is right on the money.
I do a good bit of driving. But I’ve thought about how much a driver saves, this month, say, compared to six months ago, if he covers a hundred mile daily work commute.
Five hundred miles a week, divided by 20 mpg, puts him at 25 gallons. Twenty five times, generously, $2.00 in the price difference....gives you fifty bucks a week.
It’s not throwaway money but it is not going to buy a new car. It’s a night out for a good dinner, it’s a coat you’ve been wanting to buy, after half a year it will buy you a good rifle or shotgun.
But a lot of other things will change in American life if the world economy does decline and the oil bust continues.
I’m sorry. You missed that one.
Bookmark greed
Thanks for posting
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