CORRECT:UPDATE:Halliburton CEO: Unsure When Decline Will Bottom Out
April 20 2009 - 3:06PM
Dow Jones News
Oil and gas drilling activity is still falling, and it's unclear
when it will rebound, Halliburton Co. (HAL) Chief Executive David
Lesar said Monday.
"There can be no certainty about when the decline in activity
will bottom out," Lesar said during a conference call with
investors on the company's first-quarter earnings.
The rapid decline in activity, a result of low oil and gas
prices and tightening credit markets, is "worse than previous
cycles in terms of the speed of the decline," he said.
Most of the decline has occurred in North America, as
international operations tend to react more slowly to economic
cycles. Latin America will continue to be a "bright spot," with
operations in Brazil and Mexico maintaining high levels of
activity, Lesar said.
The largest decline came in the Permian Basin, Rockies and the
mid-continental U.S.. However, but the falloff was "less severe" in
complex shale plays and the Gulf of Mexico, which includes
deepwater operations, Lesar said. Those areas have helped in
"moderating the effect" of the current environment, he said.
Oil and gas producers are "focusing their efforts in reducing
service cost inflation" by renegotiating contracts, Lesar said.
The company aims to maintain its $1.8 billion capital budget
program, the same amount it spent last year. "We continue to
believe in the long-term prospects of this business," he said.
The downturn, a result of falling demand for energy amid the
worst financial crisis in decades, has prompted severe
belt-tightening across the sector.
"We reduced our headcount in North America by 12% in the (first)
quarter," said Tim Probert, Halliburton's president of the drilling
and evaluation division and corporate development.
Halliburton its also negotiating with its suppliers to lower the
cost, although it doesn't expect to see a "meaningful impact" from
these cost savings until the second half of 2009, Probert said.
Halliburton shares recently fell 1.1% to $18.56.
-By Angel Gonzalez, Dow Jones Newswires; 713-547-9214;
angel.gonzalez@dowjones.com