3 major oil-service firms report large layoffs - Houston Chronicle, June 30
By NELSON ANTOSH
Three of the nation's major oil-service companies reported big layoffs
Wednesday, demonstrating the lingering effect of low oil and gas prices.
While oil prices have jumped lately -- breaking $19 a barrel Wednesday --
during the second quarter, Baker Hughes cut more than 1,100 jobs and Smith
International cut 450, and may cut more.
Similarly, Cooper Cameron may trim an additional 5 percent of its 9,000
workers if the business doesn't improve, said Chief Financial Officer Tom
Hix. The equipment maker has already eliminated 1,700 jobs since May
1998.
The company is "still feeling for the bottom" of the business cycle, Hix said.
The companies revealed their reductions during presentations at an energy
outlook conference in Houston sponsored by Banc of America Securities,
where bad news about job cuts mingled with upbeat long-term outlooks.
One of those upbeat speakers was Richard Cheney, the chief executive
officer of Dallas-based Halliburton Co., which has trimmed about 9,500
workers, 8,400 of them from energy services, since the peak in 1998.
Halliburton still employs nearly 100,000 employees worldwide in businesses
including engineering and construction companies Brown & Root and
Kellogg.
Expressing the sentiment of several other speakers, Cheney said there was
"considerable cause for optimism."
Business will be better in 2000, he forecast, improved by factors including a
recovery in the Asian economy, restraint by OPEC in crude production, and
higher prices for oil and gas.
There is a sense that the first significant improvement will be in the North
American natural gas market, said Cheney.
On Wall Street, the price of energy service stocks jumped Wednesday as the
price of crude pushed past $19 per barrel, with most of the big names in this
business posting 4 and 5 percent gains.
Not only is oil at the highest levels since late 1997, but prices are also high
enough to encourage drilling. Earlier this week Coastal Corp. announced a
significant increase in its exploration budget to seek gas at a time of higher
prices.
Executives, however, cautioned the conference that recovery could be 12 to
24 months away. This is expected to be the case for Transocean Offshore,
which has a fleet of floating drilling rigs.
While long-term prospects are strong, said Transocean President W. Dennis
Heagney, in the short term there will be a lag between the improved oil
market and his business volume.
Smith's International Chief Financial Officer Margaret Dorman said that
company will size its work force to fit its revenues. But, "I would hope the
vast majority are over with," she said of layoffs.
Smith's current 6,300 employees compare with a peak of 9,100 in March
1998, said Chairman and Chief Executive Doug Rock.
Baker Hughes Chief Executive Max Lukens said that the Houston-based
company, which offers a wide range of services, went from 36,500
employees in May 1998 to 28,300 now.
This is a loss of 8,200 employees, or a 23 percent cutback in the work force.
For Smith International, Dorman said, the total employee reduction since early
1998 was approximately 31 percent.
In the case of Cooper Cameron, the percentage of job reductions has not
been as great as some other companies because it is further away from the
drill bit, said Hix.
But orders from customers still have not improved, said Cooper Cameron
spokesman R. Scott Amann. If there should be further layoffs, he said, they
mostly will be in the compression portion of the company which is centered in
Ohio and Pennsylvania. The engines and compressors made there are used
primarily for natural gas transmission. |
