Slowdown forces Halliburton to close El Reno operations and make layoffs

Only four years old, Halliburton Energy Services’ Remote Operations Command Center near El Reno will be a complete shutdown following this week’s announcement of the layoff of about 800 workers.

Many of the workers were based out of the center but actually worked in Texas, Kansas and Colorado in addition to Oklahoma.

Workers had heard rumors for months that there could be a serious decision by the Houston-based company to take drastic action amidst the economic slowdown. But they also knew the center had seen a dramatic reduction in the number of workers based there.  At one point last year, an estimated 3,000 Halliburton workers were based out of the center but worked in other states.

It’s what happens in the oil and gas industry where there is an historic cycle of ups and downs of activity. When times are good and prices are healthy, yards are busy, rigs are taken out of storage and more workers are hired. When times are bad, cutbacks are made, rigs are stored and workers are let go, even if it is only a few weeks before Christmas.

Halliburton Chairman, President and CEO Jeff Miller had told analysts in October, “We are stacking equipment.”

He reasoned it was better to be on the safe side, stacking rigs rather than losing money.

Indications are that Halliburton is moving the center back to Duncan, Oklahoma where it had previously been located prior to the opening of the El Reno center in 2015. For a short period, Halliburton maintained command centers in El Reno and Duncan but eventually closed the southern Oklahoma operation. In one respect, El Reno’s loss is now Duncan’s gain.

“With the slow down of exploration in Oklahoma, in part by low prices, I was more disappointed than surprised by Halliburton’s decision,” said Oklahoma 3rd District U.S. Rep. Frank Lucas who farms and ranches in far western Oklahoma where he has seen increased oil and gas drilling. “This will undoubtedly have a dramatic effect on Canadian County families.”

El Reno mayor Matt White wasn’t totally surprised by the announcement.

“We have been around long enough to know that the oilfield comes and goes,” he told The Oklahoman. “So while we were a little surprised by Halliburton’s announcement, we had anticipated there was going to be some downsizing and regrouping.”

The nationwide drop in rig activity had an impact on a service company such as Halliburton. In Oklahoma where the most rig count was only 51, it meant fewer rigs to service compared to the nearly 148 operating in the state last year at this time.

In October, Halliburton Company announced its third quarter net income was $295 million or $0.34 per diluted share compared to second quarter income of $75 million or $0.09 a share.

“Total company revenue was $5.6 billion and operating income was $536 million, representing decreases of 6% and 3%, respectively, compared to revenue and adjusted operating income in the second quarter of 2019,” said Miller at the time.

The company’s North America revenue dropped 11% sequentially and Miller said it was “driven by customer activity declines.”

It was a red-light warning that drastic decisions were coming in the company. It was a matter of when and where.