The shrinking of the oil industry picked up speed this week after Halliburton Co. announced it’s cutting another 5,000 workers, or 8 percent of its remaining global workforce, to survive a lengthening crude market downturn.
The world’s second-largest oilfield services provider said last month it cut nearly 4,000 jobs in the final three months of 2015 and indicated more could come this quarter. With the latest layoffs, the Houston-based provider of drilling and hydraulic fracturing services will have let go nearly 29,000 workers, or more than a quarter of its headcount since staffing reached its peak in late 2014. Emily Mir, a spokeswoman, confirmed the additional cuts Thursday in an e-mailed statement.
The oilfield service providers were the first to feel the pain when crude prices began falling in the middle of 2014. The sector continues to be most heavily impacted after customers slashed more than $100 billion in spending last year, with promises of more cuts to come. Earlier this week Saudi Arabia oil minister Ali al-Naimi called on high-cost producers to "lower costs, borrow cash or liquidate" in comments at the IHS CERAWeek energy conference in Houston.
"We regret having to make this decision but unfortunately we are faced with the difficult reality that reductions are necessary to work through this challenging market environment," Mir said.
The oil industry has cut more than 250,000 jobs globally, with the largest chunk coming from service providers, to keep up with tumbling oil prices, which are down about 70 percent over the past year and a half due to an oversupply of crude.
On Wednesday, a day after Saudi’s Naimi ruled out a production cut by the nation, two Bakken shale producers announced they were halting work to complete wells.
Continental Resources Inc., the shale oil pioneer controlled by billionaire wildcatter Harold Hamm, halted all fracking in the Bakken shale formation in the U.S. Williston Basin after posting its first annual loss since the company’s public debut in 2007. Whiting Petroleum Corp. estimates it will leave 73 unfinished wells in the region by year-end, and another 95 in the Niobrara shale area in the Denver-Julesburg Basin.
The 15 companies in the Philadelphia Oil Service Index have collectively lost more than half their value since the downturn began in June 2014, compared to a 1 percent drop in the Standard & Poor’s 500 Index in the same period.
West Texas Intermediate, the U.S. benchmark, rose 2.8 percent to $33.05 at 2:33 p.m. on the New York Mercantile Exchange.