(Reuters) – Oilfield services firm Halliburton (HAL.N) is accelerating its cost-cutting and will significantly reduce spending this year below its original $1.2 billion budget, its finance chief said on Tuesday.
The Houston, Texas-based company did not disclose a new spending target, but is testing scenarios including a 60-65% reduction in some areas of the oilfield services sector, Chief Financial Officer Lance Loeffler told investors on a webcast. He pointed to a reduction to $800 million done during the last downturn that began in late 2014 as a potential target.
Crude oil prices have more than halved since the start of the year as the spread of coronavirus slashes demand, and after Russia and Saudi Arabia launched an unanticipated price war. On Tuesday, U.S. crude futures CLc1 were trading at $23.72 a barrel. [O/R]
“The industry is facing an unprecedented dual impact on demand and supply side that none of us have witnessed over our professional lifetimes,” Loeffler told investors.
Halliburton had already been cutting cost by idling equipment and laying off workers. Last week, it said it would furlough 3,500 workers for two months.
“All options are being considered,” Loeffler said.
He emphasized that Halliburton would focus on returns and free cash flow, rather than slashing prices to gain or hold onto market share, as the company did in the last downturn.
He said one reason Halliburton was taking a different strategy this time was because financing from Wall Street had dried up for the oil and gas industry.
“There is no more lifeline,” he said.
Shares of Halliburton were up 24.4% on Tuesday to $6.52. They are down 72% from the beginning of the year.
Reporting by Gary McWilliams; Editing by Chizu Nomiyama and Marguerita Choy