US oilfield services giant Weatherford has joined its big three competitors in announcing a headcount reduction amounting to thousands as the industry faces cut backs into 2015.
Weatherford says it is targeting a 5000 cut in staff, more than 85% of which will be in the Western Hemisphere, by the end of this quarter.
The move follows Schlumberger's announcement last month that it had cut staff by 9000 - "In response to lower commodity pricing and anticipated lower exploration and production spending in 2015."
Halliburton also said it had cut 1000 jobs in Q4 and Baker Hughes, which is being acquired by Halliburton, has said it will lay off 7000 staff.
The hurt is being felt as explorers and producers make cut backs, not least in the US, in the wake of the oil price collapse to around $50/barrel since last summer. According to Baker Hughes' January 30 North America rig count, the US rig count dropped 90 week-on-week to 1543, or a drop of 242 year-on-year), and Canada saw a drop of 38 week-on-week to 394, or 214 year-on-year.
Weatherford said: "Due to the quickly changing market conditions, we are aligning and reducing our cost as well as organizational structures to match the new environment. As a result, we will have a leaner structure and a tighter organization."
It said the headcount reduction is expected to reap annualized savings of over US$350 million. The firm has launched a procurement savings initiative in Q4 2014, designed to achieve $300 million of annualized savings over the next two years. Further "adjustments" are expected, it said, including cuts in capital spending, by $550 million to $900 million in 2015.
Bernard J. Duroc-Danner, the firm's Chairman, President and CEO, said: "For every dollar of revenue we lose due to reduced activity and pricing, we will make up for it in cost, capital expenditure and working capital reductions. Our team will be focused on swift market responsiveness."
Yesterday, Maersk Drilling said it was cutting 90 jobs in its head office, 40-50 of which would be through redundancies. “The fall in the oil price over the last six months has further intensified the capital discipline among our customers, leading to lower demand for offshore rigs and pressure on day rates. In order to remain competitive in this market, we need to look at ways to reduce costs and enhance efficiency. One of the ways to reduce our costs is to reduce the number of positions in our head office,” says Claus V. Hemmingsen, CEO in Maersk Drilling and member of the Executive Board in the Maersk Group.
“It is regrettable that we have to scale down the head office, however, under the current market conditions it will be irresponsible not to act. The reduction in positions in the head office will not impact the safety and operational performance of our rigs.”
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