Baker Hughes Cuts 17% of Staff, Closes Facilities Amid Oil's Fall -- Update

By Chelsey Dulaney 

Baker Hughes Inc.on Tuesday said it ramped up head count reductions to 17% of its total workforce during the first quarter, while the oil-field services company also closed or consolidated 140 facilities during the first quarter amid falling oil prices.

The company also reported first-quarter results that came in sharply below Wall Street expectations.

Shares fell 0.8% in premarket trading Tuesday.

Baker Hughes, which had previously estimated job cuts at 7,000, said it has now slashed 10,500 positions.

The moves, expected to reduce costs by $700 million a year, come as tumbling oil prices are prompting many of its customers to curtail or cancel projects. Chief Executive Martin Craighead said he expects the tough market conditions to continue.

For the quarter ended March 31, Baker Hughes reported a loss of $589 million, or $1.35 a share, compared with a prior-year profit of $328 million, or 74 cents a share. Excluding restructuring and severance charges, among other items, the company's adjusted per-share loss was seven cents.

Revenue fell 20% to $4.6 billion.

Analysts polled by Thomson Reuters were expecting adjusted earnings of 46 cents a share on revenue of $5.35 billion.

"Our first quarter results are a reflection of the extreme market forces faced by our industry since late December," Mr. Craighead said.

Earlier this month, Baker Hughes said it suspended the quarterly publication of the U.S. onshore well count as it seeks to cut costs and continue publishing its closely watched weekly rig count reports.

Meanwhile, Baker Hughes is moving forward with its deal to be bought by larger rival Halliburton Co. The deal, struck in November and valued at almost $35 billion at the time, underscored the new realities for energy companies in a world suddenly awash with oil. As a result, oil-field services companies, which are hired to drill and pump wells, are facing less demand for their services and pressure to cut prices.

Industry experts have predicted that firms like Baker Hughes and Halliburton will have to shrink further as clients demand price cuts.

Halliburton said Monday that it has cut 9,000 jobs, or 10% of its workforce, in the past two quarters and plans to lay off more employees in the coming months.

Meanwhile, Schlumberger Ltd., the largest oil-field service company in the world, last week said it would lay off an additional 11,000 employees, bringing its total job cuts to 20,000, or 15% of its workforce.

Write to Chelsey Dulaney at [e-mail]

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