Operator slashes jobs as rig count nears low
Evidence of the economic devastation in the U.S. oil patch continued to grow Friday as a large drilling rig operator posted a multimillion-dollar loss and the number of operating rigs hit a historic low.
Tulsa-based Helmerich & Payne said Friday that it decommissioned 37 rigs and laid off nearly 3,000 workers in its second quarter as the oil crash added to its toll. The company closed its fiscal quarter, January to March, with a $420.5 million loss — nearly a half-billion dollar swing from the $60.9 million the company made a year earlier. Revenue declined 12 percent to $633.6 million from $720.9 million during the same period a year earlier.
Executives attributed the loss to reducing the value of $563 million in assets, including the 37 decommissioned rigs. During a Friday morning investors call, Chief Financial Officer Mark Smith said removing those rigs from service also meant laying off 2,800 people and that more job cuts could be coming.
“We’ve seen 115 rig release notifications since early March,” Smith said. “We expected to end the third quarter below 70 rigs.”
Helmerich & Payne started the year with 299 drilling rigs in the U.S. and 8,500 employees around the world.
The drilling rig reductions and layoffs are a result of the monthslong oil crisis that has seen demand destroyed by the corona
virus and a glut of oil worsened by a short-lived production war. Oil, which in January, was priced around $60, settled Friday at just under $20.
“The crude oil overhang has created a dilemma for exploration and production companies,” Helmerich & Payne John Lindsay said. “Some are shutting in production. Others are deferring completions and drilling.”
Most producers have slashed spending during oil’s record price collapse, laying off thousands and halting operations in the oil patch as they’ve posted billions of dollars in losses.
The results for operations in oil producing areas across the country can be tallied each week with the Baker Hughes Rig Count. The number of operating rigs in the U.S. declined for the eighth consecutive week, Baker Hughes said Friday, plunging to levels not seen since the bottom of the previous oil bust.
The number of operating rigs fell by 57 to 408, according to the Houston oil field services company, a level slightly above the lowest point of the 2014-16 oil bust. The rig count during that collapse bottomed out at 404 in May 2016.
Energy companies have pulled rigs from U.S. oil fields at rapid clip since the middle of March, when oil prices began plummeting. The rig count has plunged by nearly 400 since then; it’s fallen by more than 50 percent from a year ago, when nearly 1,000 drilling rigs were in operation.
The number of operating rigs in Texas fell by 30 this week to 201, down from 484 a year ago. Companies pulled 27 rigs out of the Permian Basin in West Texas and New Mexico. The Permian rig count has declined to 219 from 459 a year ago.