As crude oil prices continue slipping, pink slips are mounting in the oil patch.
The latest: oilfield services provider Baker Hughes (BHI), which said Tuesday it plans to lay off about 7,000 employees — or about 11% of its workforce — in the wake of a nearly 60% drop in the price of crude oil.
“While market demand ended up being more resilient in the fourth quarter than many had predicted, the recent declines seen in rig counts will clearly affect results in 2015,” said CEO Martin Craighead. “We are taking proactive steps to manage the business through these challenges.”
During a conference call with analysts, Craighead was more frank about the layoffs, which will be company wide and occur mostly in the first quarter.
“This is really the crappy part of the job, and this is what I hate about this industry frankly,” Craighead said. “This is the industry, and it’s throwing us another one of these downturns, and we’re going to be good stewards of our business and do the right thing. But these are never decisions that are done mechanically.”
Baker Hughes closed Tuesday up 1.2% to $57.26. The company, which is being acquired by Halliburton for $34.8 billion later this year, posted record revenue of $6.6 billion for the fourth quarter, up 6% from the fourth quarter of 2013, and made $24.6 billion for the full fiscal year, up 10% over 2013.
Separately, Halliburton reported fourth-quarter revenue rose 14.8% to nearly $8.8 billion from $7.6 billion from the fourth quarter of 2013. Net income climbed 13.8% to $905 million from $795 million in the year ago quarter. For the full year, revenue rose 12% to $32.9 billion, and adjusted net income rose 28% to $4.02 a share.
Baker Hughes joins several other energy companies to slash jobs in the oil patch.
Last week, Schlumberger announced plans to cut 9,000 employees, about 8% of its global workforce. Suncor Energy earlier announced plans to cut 1,000 workers from its Canadian tar sands projects. In December, Halliburton announced it would cut 1,000 workers, about 1% of its workforce. Apache Oil has terminated 250 employees, or about 5% of its employees.
The sector remains under pressure as crude oil prices continue to slide. Benchmark West Texas Intermediate fell 4.7% to $46.39 and Brent crude dropped 1.4% to $48.15.