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Halliburton reports US$2.1b charge on job cuts, assets
[HOUSTON] Halliburton Co booked a US$2.1 billion expense in the first quarter for cutting jobs and writing off assets, giving some results early and delaying the full earnings release as it strives to wrap up a takeover of rival Baker Hughes Inc.
The world's largest provider of fracking services eliminated 6,000 more jobs in the quarter to reduce costs, according to a statement Friday.
The release of its full earnings report is being postponed to May 3 from April 25 because of the deadline to complete the deal with Baker Hughes by the end of this month, Houston-based Halliburton said.
"It makes sense to delay this until after April 30, but the timing is just a little odd, doing it the Friday before the report," Luke Lemoine, an analyst at Capital One Southcoast in New Orleans, said on Friday in a phone interview. "It does probably show that they're trying to work on this deal really hard for the April 30 deadline, and they just don't need any distractions right now."
Halliburton, which announced the takeover in November 2014 in a deal now worth about US$25 billion to better compete against industry leader Schlumberger Ltd, is facing a Justice Department lawsuit to stop the merger on concern it will harm competition.
The deal, which would unite the No. 2 and No. 3 oil-services providers, threatens to eliminate head-to-head competition in 23 products and services used in oil exploration and create a duopoly with market leader Schlumberger, the Justice Department said.
Seeking Scale Halliburton is seeking the cash-and-stock deal to achieve scale and build a better technology portfolio in a market where the ability to innovate is increasingly critical for success. Companies like Halliburton and Baker Hughes help energy explorers do everything from fracking oil fields to lining wells with cement to reviving output from aging reservoirs.
Oilfield service providers were the first to feel the pain when crude prices began falling in the middle of 2014. Of the more than 250,000 jobs cut globally in the energy industry during the downturn, service providers continue to be the most heavily impacted after customers slashed more than US$100 billion in spending last year, with promises of more cuts to come.
Halliburton reported an operating loss of US$39 million in North America, its largest region, on revenue of US$1.8 billion, according to the statement.
Schlumberger, the world's largest oil services provider, reported a loss of US$10 million, before taxes, in North America when it reported first quarter earnings on Thursday.
Halliburton called the market for oil service companies in North America 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," President Jeff Miller said on Friday in the statement.
The industry is going through an unprecedented downturn with a "full-scale cash crisis," Schlumberger Chief Executive Officer Paal Kibsgaard said Thursday.
Shares of Halliburton rose 1.3 per cent to US$40.84 on Friday. The statement was released after markets closed.