Halliburton Predicts Another 50% Drop in North American Energy Spending

Texas based Halliburton, like many energy companies is reporting a drop in revenues in its latest quarterly information.

The $4.2 billion in revenue for the first quarter of 2016 is a 17 percent decline compared to a 21 percent drop in the worldwide rig count. In releasing its figures, the company blamed “disruptive market conditions” that persisted in the first quarter, resulting in the lowest worldwide rig count since 1999.

Also as a result of the approaching April 30 deadline in its merger agreement with Baker Hughes, the conference call scheduled for Monday, April 25 was postponed until Tuesday, May 3.

Halliburton and Baker Hughes agreed to extend the time period under the merger agreement to obtain regulatory approvals to no longer than April 30, 2016.

“Life has changed in the energy industry, especially in North America, and over the past several quarters we have taken the steps to adapt to that fact,” said Dave Lesar, Chairman and CEO. “Operators globally are under immense pressure and many of our North America customers are fighting to maintain some value for their shareholders. Our goal is to work with those customers to get through these tough times.”

He went on to say that as activity levels recover, there will be a structural shift to lowering cost per barrel of oil equivalent. Lesar said that despite the 17 percent drop in revenue for Halliburton, the company will out performed competitors and the firm’s completion activity was only down single digits.

“What we are experiencing today is far beyond headwinds; it is unsustainable. My definition of an unsustainable market is one where all service companies are losing money in North America, which is where we are now,” said Jeff Miller, President.

Miller said the company expects to see an additional 50 percent decline in North America spend in 2016 following last year’s 40 percent drop.

 

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