Halliburton Says Worst Over -- WSJ
July 21 2016 - 3:03AM
Dow Jones News
CEO of oil-services giant says $3.2 billion quarterly loss marks
a U.S. rig-count bottom
By Alison Sider and Anne Steele
Halliburton Co. revealed that it cut another 9% of its workforce
since April, or roughly 5,000 employees, even though the oil-field
service company's management now predicts the global energy outlook
is finally improving.
The company booked a hefty loss for its second quarter on
charges related to its failed tie-up with Baker Hughes Inc., a
rival that also helps oil-and-gas producers drill new wells and
flush out more fuel from existing fields.
Halliburton said its head count now stands at over 50,000
employees, down from more than 55,000 in the spring and about 40%
below its peak employment of more than 80,000 people in 2014.
Despite a loss of $3.21 billion, or $3.73 a share, for the
quarter ended June 30, Halliburton's results beat analyst
expectations. Analysts polled by Thomson Reuters had projected an
adjusted loss of 19 cents a share on $3.75 billion in revenue.
Its shares were off 1.6% at $44.28 apiece at 4 p.m. in New York
trading on Wednesday.
Chief Executive Dave Lesar said the North American oil business
is poised for a turnaround later this year.
An emotional threshold was crossed in the oil patch when U.S.
crude benchmark prices rebounded to $50 a barrel during the
quarter, Mr. Lesar said. They have since slid back to less than $45
a barrel, but companies are starting to think about growing again
rather than just hanging on, he added.
"There's a spring in their step I didn't see earlier in the
year," Mr. Lesar said of Halliburton's customers. "In short, they
are getting back to business."
The hope is forward facing. In the second quarter, Halliburton
said revenue in its North American operations -- the largest
contributor to its top line -- tumbled 43% amid reduced U.S.
activity, particularly for drilling and pressure pumping
services.
Mr. Lesar said that Halliburton executives believes the U.S. rig
count bottomed out during the last quarter. He pointed to improving
utilization numbers in recent weeks. So far, 26 rigs have been
redeployed, reflecting operator confidence in stabilizing oil and
gas prices.
Halliburton expects a modest uptick in the rig count later this
year and a significant gain in 2017, he said.
Some of the pain from nearly two years of low oil prices will
linger. During a conference call with analysts on Wednesday,
Halliburton President Jeff Miller said the company is still working
to cut costs. He conceded that some laid-off oil workers won't
return to the industry, but stressed that Halliburton has tried to
retain experienced people so it can be ready when the industry
rebounds.
"We know how to do that, and we know how to make those people
effective. So I feel like Halliburton is well positioned," he
said.
Oil-field services companies like Halliburton and Schlumberger
Ltd. made deep pricing concessions at the depths of the downturn,
idling equipment and laying off tens of thousands of employees.
Exploration and production companies will have to adjust to paying
more for their services if they expect vendors to stay in business,
Mr. Lesar said.
"They know in their heart of hearts that service prices have to
go up," he said.
In May, Halliburton and Baker Hughes called off their merger,
once valued at nearly $35 billion, amid intense regulatory pressure
on several continents. They initially struck a deal in 2014, but it
stalled and in April the U.S. Justice Department sued to block it,
ending the deal.
Halliburton booked $3.52 billion of costs related to terminating
the merger, as well as $423 million of other impairments and
charges during the quarter. Excluding special items, the company
posted an adjusted loss from continuing operations of 14 cents a
share. Total revenue slid 35% to $3.84 billion.
Write to Alison Sider at alison.sider@wsj.com and Anne Steele at
Anne.Steele@wsj.com
(END) Dow Jones Newswires
July 21, 2016 02:48 ET (06:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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