№6 June 2009
Oilfield services firm Weatherford International will close or consolidate an additional 25 facilities in North America as part of an expanded cost-cutting program that already has closed 20 facilities and eliminated 3,000 jobs in the region, the company's chief financial officer said Tuesday.
The move is designed to reduce the firm's fixed costs by another $40 million after a first wave of cuts trimmed company costs by $475 million a year, CFO Andrew Becnel said in response to e-mail questions.
The word comes after Weatherford reported an 89 percent drop in second-quarter earnings, chiefly on weaker business in the U.S. and Canada.
Becnel said the additional cuts won't affect any facilities in the Houston area, but he provided no other details about the locations of the targeted sites or employee numbers at the facilities.
Earlier, more than 200 jobs were cut at sites in Pearland, Alvin, Rosenberg and Huntsville, and a wireline facility in Alvin was closed, he said.
Other oilfield services companies including Schlumberger, Halliburton and Baker Hughes, have cut jobs and slashed costs this year as sharply lower oil and natural gas prices led producers to cut spending on seismic surveys, well completions, drilling and other oilfield services.
Weatherford surprised Wall Street on Monday with a steeper-than-expected drop in business in North America, which stole some of the company's recent momentum in international markets.
Company officials signaled they were serious about aggressively to cutting costs in the region. So far, the vast majority of Weatherford's job cuts and facilities closures have been in North America, Becnel said.
Cuts already this year have reduced the number of Weatherford's North American employees from 11,000 to 8,000, and service locations from 505 to 485.
But Jefferies Research analyst Stephen D. Gengaro said Tuesday he expects improved performance from Weatherford as North American business rebounds and international growth accelerates.
Weatherford shares gained 15 cents to close at $19.10 in trading Tuesday.