Halliburton Fires One Third Of Global Staff: "What We Are Experiencing Today Is Unsustainable"

Tyler Durden's picture

In a brutally frank and painfully honest first quarter operational update, Halliburton president Jeff Miller poured freezing cold water all over the "oil is stabilizing, and everything is going to be awesome" narrative. After explaining that the firm has laid off one-third of its global employees, and pointing to the collapse in sequential revenues across every business unit, Miller exclaimed: "What we are experiencing today is far beyond headwinds; it is
unsustainable."

Due to the deadline of its merger agreement with Baker Hughes Halliburtion has delayed its earnings conference call until May 3rd and so gave an operational update. The healdlines were horrific:

  • *HAL SEES OVER 30% DROP IN YR GLOBAL DRILLING, COMPLETION SPEND
  • *HALLIBURTON CUT ABOUT 1/3 OF STAFF GLOBALLY
  • *HALLIBURTON CUT OVER 6,000 JOBS DURING 1Q
  • *HALLIBURTON SEES ADDITIONAL 50% DECLINE IN NORTH AMERICA SPEND '16
  • *HALLIBURTON SAYS WORLDWIDE RIG COUNT LOWEST LEVEL SINCE 1999
  • *HALLIBURTON SEES PRODUCTION DECLINES IN BACK HALF OF '16

Dave Lesar, Chairman and CEO, began the dismal update...

"Life has changed in the energy industry, especially in North America, and over the past several quarters we have taken the steps to adapt to that fact.

Operators globally are under immense pressure, and many of our North America customers are fighting to maintain some value for their shareholders. Our goal is to work with those customers to get through these tough times.

Our customers have taken defensive actions to solidify their finances including significant reductions to headcount and capital spend. While these were necessary actions, it clearly will result in production declines in the back half of 2016. But even when operators feel better about the markets, they will still face issues of balance sheet repair and we believe they will be cautious in adding rigs back."

And then President Jeff Miller unloaded...

“In North America, the industry experienced another tough quarter with the average U.S. rig count down 27% sequentially. By comparison, our revenue was down 17%, outperforming our peer group, and our completions activity was only down single digits sequentially, demonstrating our clients’ continued flight to quality.

 

What we are experiencing today is far beyond headwinds; it is unsustainable. My definition of an unsustainable market is one where all service companies are losing money in North America, which is where we are now.

 

However, our margins have continued to show resilience despite the aggressive activity and pricing declines we have seen since the peak, with decremental margins of only 22% for the quarter."

But apart from that, he stuck to the narrative that is now becoming standard - that H2 will see some 'stability'...

From the peak in the fourth quarter of 2014, the U.S. rig count has declined almost 80%, setting a new record low. By comparison, our North America revenue is down 62% over the same period, again outperforming our peers, and operating income has only now slipped to a quarterly loss position. The second quarter average land rig count is already down more than 20% sequentially, and setting new record lows every week. Nevertheless, we believe we will see the landing point for the U.S. rig count during the second quarter.

 

 

 

Once we see stability in the rig count, our cost cutting measures will start to catch up. Previous downturns indicate that there is typically at least a one quarter lag after the rig count flattens before we see our margins begin to improve.

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kotfare17's picture

This is practically freezing of output worldwide, if not outright shrinking.

GoldenGoosed's picture

No he says world dumping going on worldwide is destroying us and North American oil production because democrates prefer war to capitalism anything to kill the competition!
And increase hillarys plutonium production.

kliguy38's picture

"We're gonna need a really big war"

BuddyEffed's picture

Depletion depletes jobs, depletes wages, depletes rig counts, depletes real GDP, depletes open store fronts, depletes going concerns, depletes the tax base, depletes the middle class, depletes savings.

Jethro's picture

No problem! The BLS will just print some more bullshit, and revise down later.

bwh1214's picture

I can’t find enough good things to say about ZH but I will say when they pick a narrative they really don’t let go.  In this case oil is doomed. 

Let’s be honest most of the shale oil production was going to be gone in 10 years no matter the price.  It’s a flash in the pan due to depletion rates.  That’s 10 million bbls a day that is going to go down to 4 in ten years at $100 oil now it will be more like 2, not to mention the reduction of all the other supply from the lack of current investment. 

 

The glut has been caused by 1 million over supply in a 100 million bbl a day market.  The natural depletion of shale oil along with the lack of future production from lack of current investment will be 10 million bbls a day if its an ounce. 

arby63's picture

Well, we all assume we know too much about many things we do not. Oil is one of those things. Take heart though, if we were to stop recovering Saudi oil they couldn't do it themselves---absolutely no brain power.

Taylor's picture
Taylor (not verified) arby63 Apr 23, 2016 9:09 AM

Trump Got It Right Again. This Is the Undeniable Proof...

However the mainstream media isn't saying a word about it!

What are they really trying to cover up?

http://bit.ly/23Q9Ess

83_vf_1100_c's picture

   ... or just a big war in the USSA. You can blow a lot of shit up in the ME and all you accomplish is dead brown bodies. Good for the MIC but not so much for broken windows replacement. Take out 40 large American cities and you have full employment for decades to come. The same applies to most European countries, in case our friends across the pond are feeling left out.

Mr Pink's picture

Can't they just ask Cheney to whip up a couple wars?

GeezerGeek's picture

Come November and you can (if you're registered to vote in the US or, alternatively, an illegal immigrant or dead) vote for Hillary. By next February you'll have your wars. Hope none of the blood is yours.

N0TaREALmerican's picture
N0TaREALmerican (not verified) GeezerGeek Apr 22, 2016 5:51 PM

Which means more of the same that's been going on for 30+ years?

Mr Pink's picture

Damn, looks like I pissed off a couple of Cheney fan boys or 9/11 believers....

That's gonna ruin my whole weekend

Osmium's picture

Impossible.  Who would be a fan of Dick Cheney?  Pretty sure his mom has passed by now.

kliguy38's picture

excuse me........Dick Cheney was the greatest War President we ever had.....

Mr.BlingBling's picture

I'm certainly enjoying his fourth term.

Lurk Skywatcher's picture

Dick Cheney had a mom?! I suppose even Jesus had a mother, so demonspawn must need one as well. Whats the opposite of a virgin birth?

TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) Apr 22, 2016 5:31 PM

Oil Field Servicers =/= Oil Prices.  In fact, the struggle of the servicers means that exploration and development is slowing down which should be a positive for oil prices, not a negative.  Remember different companies will profit within the energy space at different points of the cycle.

Paul John Smith's picture

I still stick to my prediction that THIS RECOVERY SUMMER will "recover us" for good ...

(won't need any more help after that)

(no point)

Obama is right - don't hate the player ...

https://www.youtube.com/watch?v=VlVmdGiAH2A

roadhazard's picture

Fuck you, Dick Cheney.

Rainman's picture

Nice .... release the doom on Friday and the algos forget by Monday

   Happy Earth Day mo'fers !!

Infield_Fly's picture
Infield_Fly (not verified) Apr 22, 2016 5:45 PM

Fix it Yellen, you fat ugly cunt!!!

NoWayJose's picture

Stock up over 25% in 2 months, almost 10% in just two weeks. Times are tough for employees, but for shareholders - NOT!

south40_dreams's picture

Janet knows who she works for

 

...wink wink nod

Jethro's picture

Last one out of Duncan, OK turn out the lights.

Hohum's picture

Marginal cost over marginal revenue is indeed unsustainable.  But there are interest payments to be made.

Jack Oliver's picture

No WAR means No JOBS in the MIC - Russia has done an exceptional job of avoiding WW111 so far !! It must be understood the US economy cannot survive without WAR !!

venturen's picture

in other News...Obama declare best economy every, and unemployment at 100 year low

venturen's picture

in other News...Obama declare best economy every, and unemployee at 100 year low

83_vf_1100_c's picture

Fuck obama! When that evil fucker finally dies they best cremate him and scatter the ashes over Osama Bin Laden's burial site or obie's grave will reek from the piss of millions of visitors. I plan on making the pilgrimage myself. I predict extended local flooding. The local beer and iced tea vendors will become millionaires.

Peter Gibbons's picture

NSA just added you to their "watch list"

truthalwayswinsout's picture

Dow 30,000....  wait I lost a page in the official script.... Dow 50,000... is just around the corner. 

ghengiskhan's picture

A bogus ramp a day keeps the collapse away

truthalwayswinsout's picture

Let them serve coffee or is that supposed to be let them eat cake?  No.. coffee is right.

AuEagleNest's picture

Describing anything Haliburton does or says as being "brutally frank and painfully honest" makes my head feel like it's going to explode.

 

Victor999's picture

Kinda like stepping into the Twilight Zone, eh?

williambanzai7's picture

Fuck Haliburton and fuck Dick Cheney

cheech_wizard's picture

Do I get to add fuck Dubai now that they've moved their corporate headquarters there?

 

Paul John Smith's picture

How's about FUCK EVERYBODY!

WE ARE ALL GUILTY!

WE ALL DESERVE TO BE SET ON FIRE!

rbianco3's picture

I agree with the second sentence, but not the first and third so didn't know how to vote.

I accept some guilt for being naive during the party days of the late 80's early 90's.

Typing Typer's picture

I was just in a local Chase Bank branch and there was almost no one working there. One teller behind the counter, one adviser in a glass paned office, and six empty cubicles and a long, almost empty teller window.

I asked the teller "What is this, some kind of holiday? It's so empty in here!".

With some embarrassment she began to explain, "No, it's the new focus of Chase Bank, branches are to be focused on doing transactions, so there will be less employees in the branches. Soon a row of new ATM's will take up some of this inside space in order to service customers on the other side of the walls an it won't look so empty in here."

So automation and economic decline strike in tandem!! Expect to hear big layoffs at Chase Bank next, you heard it here first!!

 

Victor999's picture

Sometimes I am surprised to hear how far behind the US is with automated banking - you folks still operate in Stone Age of Banking.  Still writing cheques.  Horrible capability to do international bank transfers.  Limited SWIFT support.  And you still have tellers!  Good God!...LOL

buzzsaw99's picture

stock price is still higher than it was during the gulf wars. no bid contracts for halliburton death camps, awesome bitchez.

Lorca's Novena's picture

Rumors are that Cheney and crew are merely swapping names, Haliburton will become Hilleryburton in 2018,

Seasmoke's picture

Kill baby, Kill.

brooklinite8's picture

Obama is running all over the world some thing is up. I would love to hear what CIA,FBI know today.. 

Katos's picture

Obama is busy pushing his TTP corporate fuck fest. He is busy talking to all those who have a say in the passing of this corporate boondoggle. He's letting all of them know that by virtue of information gleaned from the NSA, that he has some very disturbing information about them that might be quite embarrassing if it was to be released to their countries press corps. So a vote for the TTP, will keep all their dark little secrets, secret?