Oilfield service providers Baker Huges, Halliburton to cut thousands of jobs

Oilfield service providers Baker Hughes Inc and Halliburton Co will cut thousands of jobs as drilling activity slowed further after the recent steep fall in crude oil prices, Reuters reported.

Global oil prices were down almost 60 per cent since June, hitting five-year lows with growing production and tepid global demand leading to a supply glut and prompting oil producers to scale back spending.

Halliburton's chief operating officer Jeffrey Miller said on a post-earnings call yesterday, that the company expected its headcount adjustments to be in line with its primary competitors. He did not give a specific number.

The company, with an 80,000 strong workforce, said it cut 1,000 jobs in its operations in the eastern hemisphere in the fourth quarter.

According to Baker Hughes, which was being acquired by Halliburton in a near-$35 billion deal, said it would lay off 7,000 employees (See: Halliburton to acquire rival Baker Hughes for $34.6 bn).

Shares of Halliburton and Baker Hughes were down about 2 per cent in morning trading, reversing earlier gains after the companies posted better-than-expected fourth-quarter results on resilient demand.

The job cuts, come days after industry leader Schlumberger NV said it would cut 9,000 jobs, highlighting the abrupt slowdown in drilling activity seen in the past two months.

The layoffs announcement came the same day Baker Hughes announced record adjusted earnings per share of $1.44 for the fourth quarter for 2014.

According to a press release, with 62,000-plus employees, the layoffs would account for about 11 per cent of the global company.

''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,'' the release continued.

Baker Hughes chairman and CEO Martin Craighead said yesterday on a conference call,  this was the crappy part of the job, what he hated about the industry. He added the industry was throwing another one of these downturns, and the management was going to be good stewards of the business and do the right thing.

The release said in 2014, the company saw $1.71 billion in net income, as against $1.1 billion in 2013.