Schlumberger and Halliburton joined the ranks of oil companies on a spending-cutting spree amid the steep oil price drop.
Schlumberger said it would slash its spending by 30 percent less than it spent in 2019 and cut the number of active drilling rigs in North America, possibly to as low as it was in 2016. The company noted it will direct most of its capital expenditure plans to locations outside its home market, pointing out that 80 percent of its free cash flow was generated outside the United States.
Halliburton will also spend less this year. Reuters reported, citing its chief financial officer, that the spending reduction would be significant although he did not give an exact number. In some parts of its business, the company is eyeing cuts of up to 60-65 percent. Halliburton originally planned to spend $1.2 billion this year.
“The industry is facing an unprecedented dual impact on demand and supply side that none of us have witnessed over our professional lifetimes,” CFO Lance Loeffler told shareholders, as quoted by Reuters.
Earlier this month Halliburton said it would furlough 3,500 employees for two months. The 3,500 employees will work alternating weekly schedules – one on, one off – during the period. They will only be paid for the weeks worked, Halliburton said.
“We believe moving to this schedule will allow us to best manage costs and provide full benefits to our employees during this difficult market,” a spokeswoman for the oilfield services major said in a statement.
Halliburton, Reuters notes, is the largest provider of hydraulic fracturing services in the U.S. shale patch. Despite its size, it is already feeling the pain from the oil price rout, with its share price tanking by 70 percent over the last four weeks to just above $6 apiece.
More pain is to come: at least one U.S. shale producer, Parsley Energy, has asked oilfield service providers to cut their prices by as much as 25 percent to help E&Ps weather the new crisis.