Halliburton Co. laid off another 4,000 workers at the end of last year as it lost money in the fourth quarter on its oil-field drilling and services businesses, the company said Monday.
The company, a bellwether for the energy industry, was hurt by asset write-downs and severance costs, as well as drastically lower revenue from its North American division, Halliburton executives told investors and analysts on a conference call to discuss financial results.
Halliburton, the second-largest oil-field services firm behind Schlumberger Ltd., is hunkering down for another tough year as oil prices hover around $30 a barrel and its customers continue to slash their budgets to deal with the downturn in energy markets.
Exploration and production companies that pump oil and natural gas are projected to cut their spending for the second year in a row, said Halliburton CEO Dave Lesar. That trend marks the first time since the 1980s that energy producers have dialed back their operations by such a large extent.
“Once the market has visibility of the trough, the recovery will come into view,” Lesar said, but adding that “2016 is simply going to be a tough slog through the mud.”
Worries about slowing oil demand in China and additional crude supplies coming online from Iran have weighed heavily on the price of oil so far this year.
In North America, which is Halliburton’s largest region, sales skidded 54 percent lower in the fourth quarter compared with the prior year’s period, to $2.16 billion. Customers in the U.S. and Canada continued to curtail activity and ask for lower prices from Halliburton and other suppliers, the company said.
Even so, analysts said Halliburton’s margins held up better than they had expected, particularly in North America, as the company aggressively cut its costs. Halliburton reported operating profit margins in North America of 1.9 percent in the fourth quarter. That is down from 19.4 percent in the prior year’s period but an improvement over the third quarter of 2015.
“Halliburton delivered a considerably better-than-expected operational result, with margins markedly outpacing our expectations while revenues aligned with our estimate,” said Bill Herbert, an analyst at Simmons & Co. International, in a note to clients.
The layoffs at the end of 2015 bring to 22,000 the number of jobs cut since the 2014 peak, representing a 25 percent reduction.
The oil-field services giant is in the process of acquiring Baker Hughes Inc., the third-largest energy company in this space, in a $35 billion deal. But the merger has been delayed by antitrust concerns from the U.S. Justice Department and other competition authorities around the world.
The company reported a loss of $28 million, or 3 cents a share, in the fourth quarter, compared with a year-earlier profit of $901 million, or $1.06 a share. Total revenue for Halliburton slumped 42 percent to $5.08 billion.
