On Friday Halliburton announced that it will be adding an additional 2,000 jobs in the U.S in the first quarter in addition to ramping up activity faster than what they initially expected in attempts to match the surging oilfield activity in West Texas in particular.
Halliburton Chairman and CEO Dave Lesar announced that the company plans on spending more money now in order to protect market share and ensure stronger profits in the near future, which he stated in a rare operations update call.
“We are coming off of a historic trough, so what we have to add back is almost unprecedented,” Lesar said, warning that its first-quarter earnings won’t be as strong as previously projected.
After cutting 35,000 positions over a two-year oil bust, Halliburton had 50,000 employees at the end of last year. Those jobs are now beginning to resurface and equipment that was once idle is being reactivated. Soon after, profits will follow, Lesar said.
Last week the rig count rose to 789, up from a low of 404 back in May. Due to the fact that each rig can now drill more wells and each will can produce more oil, Halliburton President Jeff Miller compared current activity to that of 2014, before prices dropped. “Nine hundred (rigs) is the new 2,000,” he said.
Oilfield activity is accelerating faster than Halliburton expected, so the company is losing some market share, but only temporarily. It plans to spend more to maintain as much of that market share as possible, said Bill Herbert, a senior energy analyst at Piper Jaffray & Co.
In response to higher oil prices, the state of Texas has approved almost 1,000 oil and gas drilling permits in February alone.
Halliburton is the North American leader in hydraulic fracturing, which is used to extract the maximum amount of oil and gas from shale rocks.
Halliburton has not raised its service pricing to match the growing costs of supply-chain increases, like the rising cost of sand for fracking, for example.
It is taking a $50 million hit just on inflated sand prices alone because it doesn’t have enough sand supplies under contract, Lesar said.
The industry continues to struggle internationally and offshore, it likely wont begin to bounce back until the end of this year or beyond, he added.
In addition to that, Halliburton lost Chief Financial Officer Mark McCollum, who left to become CEO at Weatherford International, a smaller rival.
Despite Halliburton’s financial situation improving late last year, it still posted a loss of $149 million in the fourth quarter and a $5.7 billion loss during all of 2016.
Article written by HEI contributor Lydia Ezeakor.