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Whispers Turning in Chorus, Halliburton/BH Deal in Trouble

Just one week ago MDN alerted you to what were (then) whispers that the Halliburton buyout of Baker Hughes not be the done deal they portrayed it as (see Is the Halliburton Buyout of Baker Hughes in Trouble?). The whispers that there’s trouble in regulatory paradise around this deal are quickly becoming a chorus. Here are a couple of more articles, from reliable and respected news services, questioning whether or not the merger will happen…
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Is the Halliburton Buyout of Baker Hughes in Trouble?

Is the Halliburton/Baker Hughes wedding in trouble? Last time we checked in (in September) both companies were holding garage sales to dump business units to comply with regulators’ concerns over anti-competitiveness (see Halliburton/Baker Hughes Hold a Pre-Merger Garage Sale). Halliburton is attempting to buy Baker Hughes in a deal worth $34.6 billion (see Shotgun Wedding: Halliburton Forces Baker Hughes to Sell). The shotgun wedding was supposed to happen by the end of this year, then got pushed into early next year. Halliburton has experienced a series of “headaches” with their proposed buyout of Baker Hughes. Now the headaches are, according to one source, turning into a migraine. Yesterday the country of Brazil lodged complaints and concerns over the proposed merger. Brazil’s opposition alone would not be enough to sink the deal–but Brazil’s opposition combined with opposition coming from other sources just may be enough…
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Halliburton 3Q15: $54M Loss, Cut 18,000 Jobs Over Past Year

red inkIt continues to be tough times at Halliburton. Although the company is in the process of buying smaller competitor Baker Hughes, Halliburton themselves are having a hard time keeping their proverbial nose above water. In the third quarter of 2015 the company lost $54 million and laid off another 2,000 employees. Earlier this year Halliburton laid off 10% of its workforce–some 9,000 people (see 3rd Shoe Drops: Halliburton Lays Off Additional 2,600). In September, an internal company document surfaced saying the company has plans to lay off a total of 20,000 people. They’re almost there. According to an email from a Halliburton spokesperson, the company has now laid off 18,000 people since last year–a number much higher than previously confirmed by the company. In a phone conference yesterday, Halliburton officials said first quarter of next year will likely be the lowest point they hit with respect to a decrease in business/revenue, and after that things will improve. From their lips to God’s ears–we hope they’re right. Below is the earnings update along with select comments by Halliburton’s muckety mucks as reported by Bloomberg…
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Halliburton/Baker Hughes Hold a Pre-Merger Garage Sale

garage saleHalliburton and Baker Hughes are having a pre-merger garage sale. In order for Halliburton to buy Baker Hughes, a deal worth $34.6 billion (see Shotgun Wedding: Halliburton Forces Baker Hughes to Sell), regulators are requiring both companies to shed more of their divisions and subsidiaries. Halliburton’s expandable liner hangers business is on the table. So too is Baker Hughes’ “core completions business,” which includes: packers, flow control tools, subsurface safety systems, intelligent well systems, permanent monitoring, sand control tools and sand control screens. And there’s more on the table, marked down for a quick sale. Because of the additional businesses that must be sold, the wedding/merger date for the two companies may get pushed back to early 2016. Halliburton and BH hope some of their competitors will stop by and pick something up at the pre-merger garage sale…
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Halliburton Laying Off Up to 20,000, More than 25% of Workforce

rumor millVery interesting development with Halliburton. As we previously reported, Halliburton is forcing Baker Hughes to the alter in a shotgun wedding/takeover (see Halliburton & Baker Hughes Vote to Approve Shotgun Wedding). Before the two can get hitched, regulators are forcing Halliburton to first sell certain assets (see Halliburton Shotgun Divorce – Forced to Sell Certain Divisions). The prime candidate to buy those assets was Weatherford. However, Weatherford just canceled a plan to raise $1 billion, presumably to be used to buy Halliburton’s cast-offs (see Oilfield Services Weatherford Flip Flops on Stock/Note Offering). Now we know why Weatherford wanted $1B–but the deal to buy Halliburton’s assets is now in doubt. Enter the latest news from Halliburton–that they’re about to lay off a massive 20,000 people–something like 25% of their workforce…
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Halliburton Pays $18M in Back Wages, Some Going to PA Workers

overtime payHalliburton, the second largest oilfield services company in the world and a major presence in northeast drilling, performed a self audit of their 80,000+ employees and found that just over 1,000 (1.4%) of their employees were eligible for overtime but didn’t receive it. Some of those workers are in Pennsylvania Marcellus–39 of them in fact, who are owed a collective $800,000 in back wages. Halliburton turned themselves in to the U.S. Dept. of Labor, admitting the mistake and offering to make it right. The company reached an agreement with the DOL to pay $18,293,557 to 1,016 employees nationwide for uncompensated overtime, one of the biggest such cases “in recent years” according to the DOL…
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Tiny Balls & Instant Credit – Oilfield Services Cos. Get Creative

For some time we’ve told you that drillers in the Marcellus/Utica, as well as other shale plays, have been hammering oilfield services companies on price. Oilfield services companies are companies like Sclumberger (largest such company in the world) and Halliburton (second largest in the world) and Baker Hughes (fifth largest in the world, being gobbled up by Halliburton later this year). Oilfield services companies provide much of the equipment, personnel, chemicals and other supplies to do the actual drilling and fracking of shale wells. They’re the contract workers, hired to do a job. Last December MDN was hearing that oilfield services companies were being forced to discount prices by as much as 20% (see Marcellus Oilfield Services Cos Being Forced to Discount). By February, when it was obvious the price downturn would last for an extended period of time, MDN picked up on Magnum Hunter’s comments that they were getting prices discounted by as much as 40% (see Magnum Hunter Slashes Drilling Budget by 75% for 2015). In addition to slashing prices, oilfield services companies, in an attempt to stay in business, are innovating in two other ways: (1) they’ve become bankers, allowing drillers to buy their services on credit, and (2) refracking existing wells with “tiny rubber-coated balls”…
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Update on Halliburton/Baker Hughes Wedding Plans

love birdsWhatever happened to the Halliburton merger/buyout (i.e. shotgun wedding) with Baker Hughes? As we told you in July, the two “love birds” have set a December 1st wedding date (see Halliburton & Baker Hughes Announce a December Wedding Date). In the meantime there’s a lot to do: caterers have to be contracted, a DJ, wedding photographer–you know the drill. Oh! And let’s not forget the Dept. of Justice. They have to be consulted too. It appears that (so far) everything is on track with both the DOJ here at home, and with the European Commission overseas. Both groups have to grant their permission for the two companies to wed. There may be one slight wrinkle (last minute nerves?): Notice in the latest Halliburton update below that the two love birds may decide to push off the wedding date until early 2016–but only if absolutely necessary (they’re just so in love)…
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Tough Times: Halliburton’s Net Income Drops 93% in 1 Year

chart going downIt’s tough times in the oil patch. Halliburton, the world’s second largest oilfield services company, posted second quarter financial results yesterday. While the marketers and bean counters do their best to put a happy face on the results, there’s no papering over the fact that Halliburton and other oilfield services companies have been hammered hard by the downturn in oil and natural gas prices and the rapid decline in drilling, as evidenced by lower rig counts. Halliburton’s revenue for 2Q14 (a year ago) was $8.051 billion. Revenue for 2Q15 was $5.919 billion–a drop of 26% year over year. When you add in expenses of all types, the picture becomes even clearer–and bloodier. In 2Q14 Halliburton’s net income was $775 million. In 2Q15 it was $53 million–which is a 93% drop year over year. It’s clear that oilfield services companies like Halliburton are being asked to discount their prices by producers and consequently they bear the brunt of the downturn…
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Halliburton & Baker Hughes Announce a December Wedding Date

shotgun weddingWhatever happened to the shotgun wedding between Halliburton and Baker Hughes–two of the largest oilfield services companies in the United States? After all, the boards for both companies approved the “blissful union” back in March (see Halliburton & Baker Hughes Vote to Approve Shotgun Wedding). What happened is, it’s complicated. Such large buyouts between competitors–when it removes competition from the marketplace–involve approvals from the federal government as well as from governments in other countries where the two companies operate. In the U.S. it is the Dept. of Justice that must approve the merger and the DOJ is a) taking it’s sweet time, and b) forcing Halliburton to sell off some of its assets before they will approve the merger (see Halliburton Shotgun Divorce – Forced to Sell Certain Divisions). In a brief update last week, Halliburton and Baker Hughes announced they’re still mired in getting approvals but hope to officially tie the knot on December 1st…
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DUG East Panelists Discuss the Critical Role of Sand in Drilling

Some interesting tidbits from a roundtable discussion at last week’s Hart Energy DUG East conference. The panelists included reps from Chesapeake Energy, Range Resources, Halliburton and Schlumberger. Really, the biggest of the bigs when it comes to producers and oilfield services companies in the Marcellus Shale. A lot of the discussion seemed to revolve around the lowly grain of sand. It may surprise you (as it did us) to learn just how much sand is now being used per well in the Marcellus/Utica…
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3rd Shoe Drops: Halliburton Lays Off Additional 2,600

shoe droppingThe third shoe has now dropped. On Monday we told you that Schlumberger has cut an additional 11,000 jobs–20,000 total now gone–from the payroll (see Schlumberger Cuts Another 11K Jobs, 15% of Workforce Gone in 4 Mos). Yesterday Baker Hughes cut an additional 3,500 jobs–10,500 now gone (see Baker Hughes Follows Schlumberger, Ups Layoffs to 17% of Workforce). Today? Halliburton has admitted instead of cutting 6,400 jobs as previously announced, they’ve actually cut 9,000 jobs…
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Halliburton Shotgun Divorce – Forced to Sell Certain Divisions

Some interesting news from Halliburton concerning their takeover of Baker Hughes (see Halliburton & Baker Hughes Vote to Approve Shotgun Wedding). It seems the table has been turned on Halliburton. In order to avoid anti-trust violations, Halliburton will, grudgingly, sell off several profitable divisions: Fixed Cutter and Roller Cone Drill Bits, Directional Drilling and Logging-While-Drilling (LWD)/Measurement-While-Drilling (MWD). Yesterday Halliburton said they will likely have the merger with Baker Hughes done before selling off those divisions. They stressed it will be business as usual for customers while the divorce, er, sale proceeds…
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CONSOL Begins Fracking at Pittsburgh Airport, Using New Tech

Yesterday CONSOL Energy began fracking operations on Pad #2 at the Pittsburgh International Airport. That’s a pretty big deal in and of itself–the fact that fracking has begun under airport property. You may recall that CONSOL paid the airport a $50 million signing bonus and when everything is done, they will drill 47 wells on 6 pads (see CONSOL Energy Reveals Drilling Plan for Pittsburgh Airport). After royalties come in, the airport says it will make upward of a staggering $1 billion in revenue from the deal. This is a high profile project for CONSOL, so they’re pushing the technology to ensure environmental impacts are as absolutely minimal as they can be–including air emissions. The big news coming from yesterday, aside from the fact they’ve begun to frack, is HOW they’re doing the fracking. CONSOL is using oilfield services company Halliburton (cue sinister sounding music and flash a picture of Dick Cheney with horns). Halliburton is using brand new equipment to perform the fracking that is “fully compliant with the Environmental Protection Agency’s 2015 Tier 4F emissions standard for non-road, high-horsepower engines.” That is, it’s really really efficient and low-emissions equipment that will reduce air pollution from the operation by an estimated 36%…
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Halliburton & Baker Hughes Vote to Approve Shotgun Wedding

Looks like the Hatfields and the McCoys are heading down the isle after all. In November MDN told you that the U.S.’s second largest oilfield services company, Halliburton, had pointed the gun of replacing the entire board to the head of Baker Hughes, the third largest oilfield services company, to force Baker Hughes into selling itself to Halliburton (see Shotgun Wedding: Halliburton Forces Baker Hughes to Sell). It took a while, but the management team and investors of Baker Hughes finally warmed up to the idea and last Friday the stockholders for both companies voted to proceed with the merger. About 75% of the shares/shareholders in Baker Hughes voted on the plan, and of those 75%, some 98% voted to get hitched to Halliburton…
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Halliburton Laying Off Up to 6,400, Says Baker Hughes Not a Factor

Halliburton, the county’s second largest oilfield services company, announced earlier this week they’re laying off some 6.5% to 8% of their 80,000 employees, which translates to 5,000 to 6,500 jobs. The company Halliburton is buying, Baker Hughes, announced in January they are laying off 11% of their workforce (see Baker Hughes Announces 7,000 Layoffs Due to Low Oil Price). Also in January, the country’s (and world’s) largest oilfield services company, Schlumberger, laid of 9,000 workers (see Schlumberger Firing 9,000 to Reduce Head Count, “Low Oil Prices”). To which we say, it’s getting ugly out there…
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