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Halliburton, Baker Hughes See Shale Slowdown Coming This Year

Two of the world’s largest three oilfield services (OFS) companies, Halliburton and Baker Hughes, provided updates this week for their second-quarter performance and operations. Both companies said essentially the same thing. Drilling is slowing down in U.S. shale, but offshore drilling in other parts of the world is still going strong and makes up for the slowdown here at home.
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Biggest OFS Cos. See O&G Drilling on the Rise Intl, Less So in US

It’s earnings season, the time when publicly traded companies publish their latest quarterly (and in this case, annual) financial statements–for 4Q22 and all of 2022. Three of the biggest oilfield services (OFS) companies in the world–SLB (formerly Schlumberger), Halliburton, and Baker Hughes–have now issued their quarterly updates. And all three have a common theme: Expect more drilling internationally in 2023, especially in the Middle East and Latin America, but expect about the same amount of drilling (or less) in the U.S. this year.
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Halliburton Doubles Earnings in 3Q – Proud to be an OFS Driller

Halliburton, the world’s second-largest oilfield services (OFS) company and the world’s largest vendor of fracking services, issued its third quarter update yesterday. Halliburton reported adjusted net income per diluted share of $0.60/share, more than double from the same period last year. Halliburton boosted sales by more than one-third to $5.4 billion, led by North America. Unlike the world’s largest OFS company, SLB (formerly Schlumberger), Halliburton has sold off its Russian operations and no longer does work in that country. SLB continues to work in Russia.
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Oilfield Service Cos. Say Drilling is Now in Multi-Year Up-Cycle

The world’s (and North America’s) largest oilfield services companies, including Schlumberger, Halliburton, and Baker Hughes, are all saying the same thing: Drillers are getting ready to drill more this year. Some sub-sectors of the drilling market, like completions, are already “sold out” according to Halliburton. Good luck to drillers who want to add more completions crews right now. Prices are going up for fracking fleets and other services offered by OFS companies.
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Fracker Halliburton Charts New Course – Away from the U.S.

Yesterday Halliburton was the first of the big three oilfield services companies (Baker Hughes and Schlumberger being the other two) to release second-quarter numbers. While on paper the company lost $1.7 billion due to an impairment charge, Halliburton actually made $456 million in free cash flow–after axing workers and cutting dividend payments. But the big news (for us) from yesterday’s 2Q update was a comment by Halliburton CEO Jeff Miller that the company will look to markets outside the U.S. to grow in the future.
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Halliburton Lays Off 1,000 Workers at Houston, TX HQ

In mid-March as the twin blows of the coronavirus pandemic and the Saudis and Russians decided to tank oil prices, Halliburton, the second-largest oilfield services company on the planet, announced it would furlough 3,500 workers for 60 days (see Oil Price War: Halliburton Furloughs 3,500 in Houston). Now comes word the company is laying off an additional 1,000 workers at company headquarters in Houston, Texas.
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Oil Price War: Halliburton Furloughs 3,500 in Houston

And so it begins. We’ve seen it before during oil and gas “down cycles.” Some of the first companies to lay off workers are the oilfield services (OFS) companies. Companies like Halliburton. It’s a yo-yo. Lay off a bunch of people (hundreds or thousands), and in a few years when things turn around, hire back a bunch. Some pejoratively call it boom and bust. We’re entering another serious down cycle with impending layoffs. Yesterday Halliburton announced a new twist. Instead of laying off thousands, the company will “furlough” some 3,500 workers. Here’s how it works…
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Moody’s Says Smaller Oilfield Services Cos. in Trouble from Debt

Moody’s Investor Service is sounding the alarm with respect to oilfield services (OFS) companies and debt. In a publication for Moody’s clients issued earlier this week, analysts said OFS companies don’t have the means to pay back towering debt in the short term, and “limited options” when it comes to raising equity to improve liquidity. What it means is this: Companies like Schlumberger, Halliburton, and Baker Hughes a GE Company are heading for rough waters. However, the biggies, like the three we’ve mentioned, will probably be OK. But their smaller competitors, according to Moody’s, may not be OK.
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Average Workers at Top Marcellus Drillers Make $100K+ Salary

The average worker who works for producers (i.e. drillers) in the Pennsylvania Marcellus makes among the highest average salaries of any industry in the state. Looking at six of the state’s top Marcellus drillers, the average worker made $113,610 last year! That’s an average taken from workers at CNX Resources, Range Resources, Chesapeake Energy, Southwestern Energy, EQT and Cabot Oil & Gas. We hasten to add not “all workers” but “average” or “median” workers–meaning there are people who make below that number and people who make well above that number. It also means the majority of Marcellus workers in those companies made at least $100,000 per year. Those working for oilfield services (OFS) companies like Halliburton, Baker Hughes and others didn’t fare quite as well, making an average of $52,000-$80,000 per year. Still, hey, it ain’t bad money! Here’s a look at the average wage for top Marcellus drillers and the OFS companies that serve them…
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Halliburton Hires New CFO After Old CFO Left to Run Weatherford

In March, Mark McCollum, who had been Chief Financial Officer (CFO) of Halliburton, the world’s second largest oilfield services company, left to become the CEO of Weatherford, the world’s fourth largest oilfield services company (see Halliburton CFO Leaves to Become Weatherford CEO). Not long after McCollum took the helm of Weatherford, the world’s largest oilfield services company, Schlumberger, gave Weatherford a helping hand (see Schlumberger Throws Weatherford a Lifeline, Challenges Halliburton). The chain reaction (and drama) continues to unfold. Halliburton announced yesterday they’ve lured away the CFO from smaller competitor Parker Drilling Company. And now Parker is looking for a new CFO…
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Halliburton CEO Dave Lesar Out, President Jeff Miller Promoted

Dave Lesar – Retiring CEO of Halliburton

There’s a shakeup at the top of the world’s second largest oilfield services company, Halliburton. Dave Lesar has been Halliburton’s chairman and CEO since 2000 when he replaced Dick Cheney (when Cheney was nominated to become Vice President of the United States). Lesar is retiring effective next week and being replaced by the company’s current president, Jeff Miller. The financial media is calling this “an expected move” because Lesar will reach mandatory retirement age next year. Some analysts, however, are not as kind–saying that Lesar’s botched attempt to buy Baker Hughes last year (with a resulting $3.5 billion breakup fee paid by Halliburton), and the company’s poor balance sheet over the past few years, are reasons enough to make the transition now. Halliburton, one of the largest fracking companies in the world, has major operations in the Marcellus/Utica region–hence our interest in changes at the top…
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Schlumberger Throws Weatherford a Lifeline, Challenges Halliburton

Schlumberger is the world’s largest oilfield services (OFS) company. Weatherford International is the world’s fourth largest OFS company. They both have operations in the Marcellus/Utica region. We’ve posted a number of stories about Weatherford’s financial troubles–and seemingly inevitable march toward bankruptcy (see our stories here). However, Weatherford may have just gotten a reprieve from its much larger competitor. On Friday, Schlumberger and Weatherford announced they have formed a joint venture called OneStim, “to deliver completions products and services for the development of unconventional resource plays in the United States and Canada land markets. The joint venture will offer one of the broadest multistage completions portfolios in the market combined with one of the largest hydraulic fracturing fleets in the industry.” Hmmm. Interesting. Here’s why. The world’s second largest OFS company is Halliburton. However, Halliburton is the world’s largest fracking company. The media is universally claiming the Schlumberg/Weatherford jv is squarely aimed at overtaking Halliburton to become the world’s largest fracking service. Can they do it? Another interesting observation: Earlier this month Mark McCollum, who had been Chief Financial Officer (CFO) of Halliburton left to become the CEO of Weatherford (see Halliburton CFO Leaves to Become Weatherford CEO). We don’t think it’s a coincidence that Weatherford is now making a play to best its larger rival Halliburton, leveraging McCollum’s knowledge of how Halliburton became king of fracking. Two thoughts on the Sclumberger/Weatherford hook-up: (1) it keeps Weatherford out of bankruptcy by infusing $535 million of cash, (2) We think it may be the prelude to a full-out sale of Weatherford to Schlumberger down the road…
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Halliburton Rehires 2K, Says “Animal Spirits are Back” in US Land

In a “hasty” and “rare” operations call last Friday, Halliburton, the world’s second largest oilfield services (OFS) company, offered up some interesting comments. The call was apparently an attempt to blunt the coming news that the company will likely miss analyst’s expectations for profit/loss and dividends, due to rising costs and weak demand in international markets. Top brass at Halliburton wisely know that “he who gets there with the bad news first, wins.” However, the call was wide-ranging and included some good news: After trimming 35,000 jobs over the past couple of years, Halli is adding back 2,000 jobs. That’s better than a sharp stick in the eye. CEO Dave Lesar also had this rather bizarre statement on the call, in his ebullience over the drilling comeback in North America: “This diverse and exciting market has created a surge of activity and supports my thesis that the animal spirits are back in U.S. land.” OoooKay. We’ll go with it. Animal spirits. Here’s the news coming from last week’s hasty Halliburton homily…
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Halliburton CFO Leaves to Become Weatherford CEO

Mark McCollum, who had been Chief Financial Officer (CFO) of Halliburton, the world’s second largest oilfield services company, has left to become the CEO of Weatherford, the world’s fourth largest oilfield services company. Sounds like a good move for McCollum’s career. But is it? Since last November we’ve highlighted the financial problems at the company (see our Weatherford stories here). In February, Weatherford set about trying to raise $2.5 billion, to stay out of bankruptcy court (see Weatherford Tries to Dig Out of Debt – $2.5B Securities Offering). It makes perfect sense to hire an accountant to run the company and try to extract it from its financial woes. It’s a high stakes game for McCollum. If he’s successful in turning around the Weatherford ship, McCollum can write his ticket. If he doesn’t turn it around–well, perhaps he still has some Halliburton stock options stuffed away in a safety deposit box…
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Halliburton 4Q & 2016 Update – Net Loss of $153M in 2016

Last week Schlumberger, the world’s largest oilfield services (OFS) company, reported their numbers for fourth quarter and full year 2016. As we highlighted, the company experienced a net loss last year (see Schlumberger 4Q16 & Full Year 2016 Results – Swings to Net Loss). Yesterday Halliburton, the world’s second largest OFS company, reported their numbers for last year. Like Schlumberger, Halliburton also had a net loss–of $153 million. And like Schlumberger, Halliburton said in 2017 prices for drillers are going up. Halliburton is a global company. Various regions were profitable or unprofitable. North America was unprofitable in 2016. Let’s dig into the details…
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Halliburton 3Q16 Earnings Surprise: Turns a Profit!

happy-daysHalliburton kicked off the third quarter earnings season yesterday with some stunning news: the company actually turned a profit during 3Q16! It wasn’t much of a profit–just $7 million. But that comes after losing $3.2 billion during 2Q16. Engineering a turnaround like that is nothing short of miraculous. North America represents 40% of Halliburton’s revenue–the company made $1.7 billion in 3Q16, a 9% increase over 2Q16. The rest of the world (international) represents 60% of Halliburton’s revenue, which was $2.2 billion in 3Q16 (up 6% over 2Q16). The company predicted 4Q16 revenues will be flat. But hey, after billion dollar loses, who cares? CEO Dave Lesar once again reiterated his view that “things are getting better” for the oil and gas industry. A $3.2 billion turnaround in one quarter is a whole lotta proof to back up his assertion. However, company officials also said Halliburton remains in a pricing “barroom brawl” with competitors, and the oil market in particular remains “very challenging.” Here’s the Halli update…
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