Halliburton Company said revenue in North America, its largest market, collapsed by 57 per cent in the second quarter, underlying the challenges that the fracking behemoth faces.
The Houston-based company on Monday posted a wider-than-expected loss and said it is charting a “fundamentally different course,” after firing thousands of workers and slashing its dividend in recent months. Halliburton also announced $2.1 billion in impairments for the period, mainly due the lower value of its fracking gear and real estate. The shares dropped 2.5 per cent in early trading.
The second quarter “marked the near total shutdown of the U.S. oilfield,” Praveen Narra, an analyst at Raymond James, wrote in a note to investors last week. “Companies saw a month-long ‘frac holiday’ with little to no activity, while drilling rigs declined at their fastest ever pace.”
Chief executive officer Jeff Miller has let go workers and slashed Halliburton’s dividend after tumbling oil prices brought on by a global pandemic wrecked fracking far more than expected. Rival Schlumberger Ltd. predicted in April that as much as 60 per cent of pressure pumping demand would fall off by July 1. As much as 85 per cent of frack crews have lost work this year, according to Primary Vision Inc.
More than 100,000 American oil workers have lost their jobs since the pandemic-induced slump began, with service companies bearing the brunt. After more than 200 oilfield service providers went under in the past five years, 2020 is shaping up to be the worst, with the highest volume of debt owed during bankruptcy, according to a July tally by law firm Haynes & Boone LLP.
For the first three months of the year, before the worst of the crisis, the world’s three biggest oilfield service companies each had already announced more than $1 billion in charges that reflected the deterioration of their businesses.
Halliburton, which generates most of its revenue in North America, was the first oilfield contractor to report second-quarter results. Baker Hughes, the No. 2 supplier, will report July 22, followed by Schlumberger, their largest rival, at the end of the week.
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