Halliburton plans to beef up its U.S. hiring
With growing oil field work, company wants to protect its market share
Halliburton plans to add 2,000 jobs by the end of March — easily the biggest hiring spree by a U.S. energy firm in three years — to match oil-field growth, particularly in West Texas.
Halliburton is adding 2,000 U.S. jobs by the end of March and ramping up activity faster than anticipated to try to match the surging oil field growth, especially in West Texas.
This is easily the largest announced American hiring spree by an energy company in three years — before the two-year oil bust began. In a rare operations update call Friday, Halliburton Chairman and CEO Dave Lesar said the company is spending more money now to protect its market share and ensure stronger profits. The plan to “front-load as much of the costs as we can” will mean smaller profits now to better position Halliburton for the future.
“We are coming off of a historic trough, so what we have to add back is almost unprecedented,” Lesar said, warning that its firstquarter earnings won’t be as strong as previously projected.
Halliburton’s news is a preview to more jobs growth data in April, when oil field services companies like Schlumberger and others reveal their first-quarter earnings and increased activity, especially in Texas’s Permian Basin, southern New Mexico and Oklahoma, said Byron Pope, an energy analyst with Tudor, Pickering, Holt & Co. in Houston.
“Across the board, they’re back in the market for hiring new people,” Pope said, adding that employees who have been laid off are typically offered jobs first. “The competition is going to get tougher by the day. Then they’ll need to recruit less seasoned and experienced people.”
Still, Halliburton isn’t rehiring at the same pace it was cutting. At the end of the year, Halliburton
“We are coming off of a historic trough, so what we have to add back is almost unprecedented.” Dave Lesar, Halliburton chairman and CEO
had 50,000 employees after cutting 35,000 positions during the bust. The Houston area alone lost more than 80,000 oil and gas jobs.
Now, jobs are beginning to return and idled equipment reactivated. Profits will follow later, Lesar said, and Halliburton is considering building new equipment as existing resources are strained.
The growth follows the rapid rebound in the number of rigs drilling for oil and gas in U.S. shale plays. The nation’s rig count this week rose to 809, more than double the low of 404 in May. There also are 404 rigs now just in Texas, according to data collected by Houston’s Baker Hughes services company. This week saw the addition of 21 rigs actively seeking oil, eight of which are in Texas. West Texas’ Permian Basin accounts for nearly half of the nation’s oil rigs.
Because each rig can now drill more wells and each well can produce more oil, current activity is comparable to that of 2014, before prices fell, Halliburton President Jeff Miller said.
“Nine hundred is the new 2,000,” he said.
Not everyone is hiring, though. The Woodlandsbased Anadarko Petroleum Corp. said Friday it cut about 60 jobs after the company sold its assets in South Texas’ Eagle Ford Shale.
The news overall is better, though. The U.S. benchmark for crude oil pricing more than doubled from a low of just over $26 a barrel in February 2016 to a high of more than $54 per barrel at the end of last month. In part because of concerns about increased U.S. production, the price has since dipped below $48, but that hasn’t inhibited new activity. The state of Texas approved almost 1,000 oil and gas drilling permits in February.
Halliburton’s bread and butter is leading the North American market in hydraulic fracturing, called fracking, which comes after the wells are drilled. Fracking is used to extract as much oil and gas as possible from shale.
Because the increased oil field activity is “far exceeding” what Halliburton and others anticipated, the company is temporarily losing some market share and spending more to maintain as much of its market as possible, said Bill Herbert, a senior energy analyst at Piper Jaffray. Halliburton is basically adding twice the equipment back to oil fields in the first half of the year than it previously intended for all of 2017.
“It’s a massively cathartic ramp-up in activity,” Herbert said. The system is “straining at the seams,” and profits should eventually follow.
Halliburton also is hurt by supply-chain price increases, like the rising cost of sand for fracking, while the company’s own services pricing hasn’t risen to match its growing costs. The sand is injected into the wells along with water and chemicals to fracture shale.
Because Halliburton doesn’t have enough sand supplies under contract, Lesar said, Halliburton is taking a $50 million hit just on inflated sand prices. The industry trend increasingly is to inject much more sand into each well.
Internationally and offshore, the industry continues to struggle and won’t begin to bounce back until late 2017 or beyond, Lesar added, so the optimism is only focused on North American land for now.
All the dramatic swings are adding up to a “raucous” start to the year for the energy services sector, Herbert said.