Halliburton Cutting Frac Jobs, Equipment in U.S. and Canada
Halliburton is shifting strategy in its largest region to deal with subdued customer spending by shelving unused frac gear and cutting jobs in North America.
The world’s biggest provider of fracing equipment, including pumping units and sand-storage silos, declined to tell analysts and investors Monday how much pressure-pumping gear it has parked in the U.S. and Canada. Emily Mir, a spokeswoman, said the Houston-based contractor cut 8% of its workforce in the region during the second quarter.
“We recognize the changing behavior of our North American customers and are executing a new playbook to keep generating returns and free cash flow,” Chief Executive Officer Jeff Miller said on the call. “What was the right playbook several years ago, when there was a different cadence and pace of customers’ spend, today needs to change.”
Industry consultant Rystad Energy estimated in February that Halliburton and its competitors would have a year-end supply of 24.4 million horsepower for fracing, but would face demand of just 14.5 million this year. Shale producers have cut spending as investors pressure the companies to return cash to shareholders after the worse oil-price crash in a generation five years ago.
Halliburton, which had been the worst performer in the S&P 500 Index over the past 12 months before Monday, was the day’s biggest gainer in the group.
“Kudos for being proactive on the stacked equipment in this market versus fighting for share,” Angie Sedita, an analyst at Goldman Sachs Group Inc., said Monday on the call.