Oilfield services provider Baker Hughes Inc said it expects to lay off about 7,000 employees, days after industry leader Schlumberger Ltd said it would cut jobs as drilling activity slows due to a steep fall in oil prices.
Continue Reading Below
Global oil prices have tumbled almost 60 percent since June, hitting five-year lows as growing production and tepid global demand has caused a supply glut and prompted oil producers to scale back spending.
Schlumberger said last week it would cut 9,000 jobs, or about 7 percent of its workforce.
Baker Hughes said on Tuesday most of the workforce reduction would take place in the first quarter, when it expects to book a one-time severance charge of $160 million to $185 million.
The company, which had 61,100 employees as of Sept. 30, said it was also considering closing facilities.
Halliburton, which is buying Baker Hughes in a near-$35 billion deal, said it took a $129 million restructuring charge in the fourth quarter ended Dec. 31 to "temper the impact of anticipated activity declines."
Continue Reading Below
The jobcuts underscore the abrupt slowdown in drilling activity seen in the past few weeks.
The number of rigs drilling for oil in the United States fell by 55 last week, the second-sharpest weekly drop in 24 years, according to data released by Baker Hughes.
Still, strong year-end sales and previous contracts helped both Halliburton and Baker Hughes top profit estimates, sending their shares up about 1 percent in early trading.
"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," Baker Hughes Chief Executive Martin Craighead said in a statement.
Schlumberger warned on Friday that the oil price drop was likely to have a "significantly more dramatic" impact on North America than on the rest of the world.
The company, like Halliburton and Baker Hughes, reported a better-than-expected profit on Thursday, largely helped by an jump in revenue from North America.
Baker Hughes said on Tuesday that revenue from North America rose 20 percent to account for half of overall sales.
Halliburton's North America revenue rose 24 percent, making up for more than half of fourth-quarter revenue.
Baker Hughes's total revenue rose 13 percent to $6.64 billion, while Halliburton's revenue rose about 15 percent to $8.77 billion. (Editing by Maju Samuel and Saumyadeb Chakrabarty)