Oilfield services specialist Weatherford is set to cut 2000 jobs, citing the need to keep costs at bay.
Presenting its first quarter results this week, the company said that during the quarter it completed 78% of its latest 6.000 headcount reduction target, meaning almost 4.700 people were let go.
However, Weatherford will not stop there. One of the world’s largest oifield services providers said: “As we continue to weather the reality of this downturn, we plan to further reduce our cost structure by another 2,000 in headcount and complete the closing of five additional manufacturing and services facilities.”
The company in the first quarter ceased operations at four of the nine planned manufacturing and service facilities for the year, and shut down 26 operating and other facilities in North America.
In addition, Weatherford expects to close another 30 operating and other facilities by year-end, with a target of completing half of these by the end of the second quarter.
The company has cut its full year forecast for capital expenditures to $250 million, 63% lower than 2015 spending level and 83% below the spend in 2014.Net loss for the quarter attributable to Weatherford was 498 million, compared to a loss of $118 million in the first quarter of 2016.
Explaining its results, Weatherford cited low rig count levels, cuts in spending by its clients, weak winter season, project cancellations and “brutality and length” of the downcycle.
Revenue for the first quarter of 2016 was $1.59 billion compared with $2.01 billion in the fourth quarter of 2015 and $2.79 billion in the first quarter of 2015. First quarter revenues declined 21% sequentially and 43% from the prior year. The sequential decline was 22% in North America and 21% for International operations. Product sales declined 30% sequentially, while service and rental revenue decreased by 16%. The product sales decline was as much seasonal as cyclical and most impacted the Eastern Hemisphere.
Bernard J. Duroc-Danner, Chairman of the Board, President and Chief Executive Officer, stated, “The brutality and length of this down cycle has challenged the entire industry, both our customer base and our peers. During the first quarter, all of our regions and product lines suffered the brunt of this harsh industry decline. North America was very challenged, with the U.S. reaching its lowest rig count level in recorded history, and several international markets experiencing severe seasonal downturns. We managed what we could control, to the fullest.
CEO further said: “As we look forward, we believe the long-term fundamentals of our industry remain intact. The steady increase in world energy demand coupled with the acceleration of production decline rates are forcing a balance between supply and demand. Oil prices are beginning to respond to this gradual tightening of the supply-demand balance. This shift is inevitable, given the extreme cuts in both capital and operating spend by our customer base around the world. The work we are doing now will prove the merits of our direction. As a recovery unfolds, our performance will reflect our transformation in all metrics. Our focus is making our Company what it can be, and what it should be.”
Offshore Energy Today Staff