Oil Glut, Collapsed Prices, Layoffs Be Damned: Production Soars
by Wolf Richter
WolfStreet.com
January 22, 2015
Irony of a debt-fueled boom: the Great American Oil Bust
Layoff announcements have been ricocheting around the oil and gas sector, fleshed out with individual stories that percolate up to me. The entire sector is cutting operating costs and capital expenditures as fast as they can crunch the numbers. Revenues are plunging largely in sync with the collapsing prices of oil and natural gas.
Today, French oil giant Total’s CEO Patrick Pouyanne, while hobnobbing at the World Economic Forum in Davos, said that his company would “limit” its investments in US shale fields at least until prices come back up – “my instructions have been pretty clear,” he said.
On Tuesday, Oilfield services provider Baker Hughes, which is being acquired by Halliburton for almost $35 billion in a masterful piece of Wall Street engineering, chimed in with its own job cuts; its customers in the oil patch are slashing their capital expenditures and what they will pay Baker Hughes as their revenues are plunging due to the collapsing price of oil. The chain reaction goes on. Baker Hughes is going to axe 7,000 employees, mostly in the first quarter. That’s about 11.5% of its headcount!
Acquirer Halliburton, which has already cut 1,000 people outside North America in the fourth quarter, out of the 80,000 it employs worldwide, would do some cutting of its own at home. “Headcount adjustments” was the term COO Jeffrey Miller used during the earnings call, without going into details. Both companies get about half of their revenues from North America, which they expect to get hit harder than the rest of the world.
The Rest…HERE
