Halliburton says fossil fuels unsustainable, lays off a third worldwide, including management

You know things are bad for fossil fuels when the biggest profiteer of them all takes an axe to itself. The fewer fossil fuel boondoggles (including more pipeline projects going belly-up), the faster investment will keep moving to renewable sun, wind, and water power, for profits, and we get clean air and water and less global warming.

“Tyler Durden”, Zerohedge, 22 April 2016, Halliburton Fires One Third Of Global Staff: “What We Are Experiencing Today Is Unsustainable”,

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…

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…..

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.

And what if the rig count keeps going down?

Already, even a few of the lower-level managers who got fat off the fossil fuel boom are getting laid off. Rhiannon Meyers, FuelFix, 23 September, 2015, Halliburton plans more layoffs, now targeting management,

Oil field services giant Halliburton is planning more cuts to its workforce, including management positions in North America where the crude slump has been particularly brutal, on top of thousands of layoffs already announced this year.

In an internal memo from the company that was posted on the website of an Austin-based consultant, Halliburton laid out a plan to “flatten” its North American business by eliminating multiple layers of management — a decision that will undoubtedly affect Houston-area employees where the company is headquartered. Halliburton also said it will pursue additional cuts to its headcount as oil patch activity continues to falter.

So sad for Halliburton and the fossil fuel industry.

So good for the rest of the world.

Let the sun rise!

-jsq