Halliburton took a $ 2.1 billion write-down on Monday, even as it successfully cut spending, as falling crude prices caused work to be exhausted in the oil services sector.
The group, one of the largest oil service providers in the world, is the last company to explain the collapse of the price of crude oil on its balance sheet. Analysts expect hundreds of billions of dollars in writedowns across the sector before the end of the year.
The deterioration led Halliburton to a net loss of $ 1.7 billion in the three months through June, though efforts to cut costs allowed him to post an adjusted operating income of $ 236 million, beating analyst estimates and sending the shares up to 8 percent in the first operations.
“Halliburton’s second-quarter performance in a tough market shows that we can execute quickly and aggressively to deliver solid financial results and free cash flow despite a sharp drop in global activity,” said Jeff Miller, CEO of Halliburton.
“Our results demonstrate a significant and sustainable restoration of the power of our business to generate positive earnings and free cash flow.”
100,000
Jobs lost in the US oil and gas industry since the price drop in March
Service groups carry out the hard work of the oil industry, from drilling wells to installing pipelines and supplying sand and maintaining roads. They tend to be particularly affected by recessions as producers cut costs and put any new jobs on hold.
But analysts praised the group for managing to impose discipline in the recession. Stifel Financial’s Stephen Gengaro said “aggressive cost-cutting initiatives” had enabled Halliburton to exceed market expectations “despite very difficult macro setbacks.”
However, as oil prices remain historically low, performance is significantly weaker than last year. The net loss of $ 1.7 billion compares to a gain of $ 75 million in the June quarter of 2019. Total revenue of $ 3.2 billion decreased 45 percent in the same period last year.
In line with the rest of the service sector, the company has been forced to cut thousands of jobs. In March, it said it would lay off 3,500 employees at its Houston headquarters, before cutting 1,000 jobs in May.
Most of the 100,000 jobs lost in the US oil and gas industry since the start of the collapse, triggered by the pandemic and a price war between Russia and Saudi Arabia, have been in service.
United States oil prices, which entered negative territory for the first time in April, have recovered. But at $ 40 a barrel, they have remained reduced by about a third since the start of the year, and too low for most US shale groups to restart drilling and create demand for service providers.
