Truckers in North Dakota, executives in Denver and office employees in Houston are all feeling the squeeze.
Peggy McDonald Mauldin, 56, was laid off from Halliburton Wednesday, by way of a phone call she got as she worked from home because of the coronavirus. She worked in supply chain operations at the company’s North Belt campus in Houston and had been with the company 20 years as of March 1.
It came as both a shock and a relief, she said.
Just the day before, she had been among the 3,500 North Belt employees who had been notified that Halliburton was instituting a one-week-on, one-week-off furlough program, to begin March 23. Employees will not be paid for the weeks they do not work, but benefits will continue, said Erin Fuchs, the company’s supervisor of external affairs.
Halliburton’s troubles were evident: It is the country’s largest provider of fracking services, and as producers cut back on drilling new wells, Halliburton will be losing a major part of its business. Its stock price has fallen 70 percent since February.
But first thing Wednesday morning, Mauldin got a call from a Halliburton number.
“It was HR and my supervisor advising me that I was being let go because of the current business climate,” she said. She was given 13 weeks full pay as severance, plus information about continuing her health insurance.
“To be honest, I’m relieved,” she said. “I’ve known this would happen eventually. I wasn’t part of the team — I was located in Houston, and everyone else was in Tulsa. I haven’t been happy nor have I felt appreciated in a long time.”
Still, she said, “it's been my life for 20 years, plus two as a temp. That will be hard to get over.”
Her husband is a truck driver and owns his own truck. She plans to pitch in. “I can stay here,” she said. “My husband drives coast to coast. I am going to start adding customers and booking freight.”
The cutbacks at Halliburton — including the furloughs, which are scheduled to last at least 60 days — are striking in a company that has been so prominent.
Once headed by Richard B. Cheney before he became vice president, it was later heavily involved in Iraq War contracting through its former subsidiary, KBR. Defense Department auditors said KBR overcharged for meals, gas and administrative costs between 2003 and 2008, both during and after its association with Halliburton, and they disallowed $553 million in payments.
In 2010, Halliburton was again in the news because it had been a contractor on the ill-fated Deepwater Horizon rig in the Gulf of Mexico.
Elsewhere, Liberty Oilfield Services, a Colorado company that provides hydraulic fracking services, announced this week that all the members of its executive management team had “voluntarily” requested cuts in their base pay of 20 percent starting April 1, the company said.
In North Dakota, the state job placement office in Williston was informed by MBI Energy Services, which trucks saltwater used for fracking, that the company is laying off more than 200 workers, according to Paula Hickel, the office director.
Hess announced this week that it is going to stop operating five of the six rigs it maintains in North Dakota. Other shale producers, among them Parsley Energy and Diamondback Energy, which operate in West Texas, have also announced they are eliminating some rigs, “which of course means that those drilling rig workers are going to be out of the job,” said Andy Lipow, president of Lipow Oil Associates, a Houston-based consulting firm.
“The time frame has been compressed for when companies are taking action,” Lipow said. “They’re not waiting around, they’ve been very quick to react to the low oil prices.”
When the big producers cut spending on capital expenses — new rigs, for instance — it creates what Lipow called “a trickle-down effect of bad economic situations.” He added, “I imagine we’ll be seeing bankruptcies and consolidation in the next few months.”
Some analysts believe the oil industry is overdue for consolidation. After The Wall Street Journal reported Thursday that Texas regulators were considering quotas to reduce production for the first time in more than 40 years, and that some within the Trump administration were proposing a diplomatic and sanctions effort to bring a halt to a price war between Saudi and Russian oil producers, an advisory by Goldman Sachs said that such moves would primarily help “small marginal producers.”
Propping up the price of oil this way, it said, to “delay or derail the consolidation and rationalization that the shale sector needs to become a more efficient and profitable industry” would negatively affect U.S. economic potential.