Business

Halliburton cuts 8% of North American jobs as fracking slackens

Bloomberg

Halliburton Co. is shifting strategy in its largest region to deal with subdued customer spending by trimming 8 percent of its North American workforce and shelving unused frack gear.

The world’s biggest provider of fracking equipment, including heavy duty rock-blasting pumps and sand-storage silos, declined to tell analysts and investors Monday how much pressure-pumping gear it’s parked in the U.S. and Canada. The Houston-based contractor made the workforce cut in the region during the second quarter, while keeping its headcount elsewhere roughly the same, spokeswoman Emily Mir said.

“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 fracking, 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, 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. The shares rose as much as 8.3 percent for the biggest intraday gain since November 2016, and were up 6.9 percent to $23.26 at 12:14 p.m. in New York.

“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.