Oilfield Services In 'Survival Mode' - Halliburton (NYSE:HAL)

Oil-field service companies are "slashing costs," and "no cut is too small," The Wall Street Journal reported.
Oil-field service companies are looking to reduce costs anywhere and everywhere, even by changing the colour of paint on underwater equipment.
The industry as a whole has seen tens of thousands of layoffs while behemoth firms join forces to create much needed synergies.

Oil-field service companies are looking to cut costs wherever and whenever possible, even if it involves switching the color of paint used.

TECHNIP SA TNHPF, a company that provides project management, engineering and construction for the energy industry, has switched to using white paint instead of yellow on its underwater equipment. Yellow paint is the industry standard but is more expensive. Technip's president of subsea told The Wall Street Journal that the savings isn't "big money" but there are "many examples like this." The company said in July it needs to slash six thousand jobs and any little savings it can find is significant as crude prices are now trading near the $50 per barrel mark – half of its price from summer 2014. The significant drop in oil has left even the world's biggest oil-services company, Schlumberger Limited. SLB vulnerable as the company reported a 33 percent decrease of revenue from a year ago in its third quarter results and a near halving of its profit. Meanwhile, industry giants are looking to combine businesses in order to realize synergies and cost savings. One of the most notable mergers consists of Halliburton Company HAL's proposed $35 billion acquisition of Baker Hughes Incorporated BHI. Halliburton expects to realize nearly $2 billion of operating synergies from its acquisition. 2016 Could Be Worse The Wall Street Journal cited Wood Mackenzie, an energy consultancy group, said that next year could be worse for the sector as oil producers are pulling back more than $200 billion in spending this year and next. "It's a huge falloff," said James Webb, an analyst at Wood Mackenzie. "The primary response from the service industry has been very much survival mode—cutting their own margins, bidding competitively and reducing capacity." However, with a barrel of oil selling for $50 or less, the simple fact is projects aren't moving forward, in fact, big oil companies are scaling down.

Market News and Data brought to you by Benzinga APIs