Baker Hughes Co. is a Houston-based oilfield services company. It plans to lay off “several hundred” Houston employees. On February 9, 2024, a business spokesman stated that it is part of restructuring its oil field services and equipment segment. The business was restructuring the division to “remove redundancy and achieve more cost efficiency across the business.”
Baker Hughes is allocating millions of dollars to severance packages for layoffs in the first half of 2024. The layoffs are part of a plan to increase margins by 2025.
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Baker Hughes Layoffs 2020
In reaction to the downturn, Baker Hughes slashed thousands of positions. There was a 15% reduction in the workforce in 2020. According to documents disclosed online, the oilfield services company cut as of the end of the third quarter of 2020. It had also closed over 200 locations around the world by that time.
The downturn severely impacted the oilfield services industry, particularly in the United States. West Texas Intermediate (WTI) crude cost fell early in 2020.
In a report on its website, Baker Hughes said the job losses, facility closures, and other initiatives, including decreasing management layers, would lead to savings of more than $700 million annually.
A drop in oilfield spending in North America by 2024
Baker Hughes stated on January 24, 2024, that it expects drilling and well completion spending in North America to drop in 2024. It’s because commodity prices remain unstable.
To compensate for low pricing, shale producers have attempted to limit drilling. Many US oil producers are pumping barely enough oil to keep production flat and increase profits for investors.
CEO Lorenzo Simonelli said on a post-earnings conference call:
“In North America, activity continues to remain. We are currently predicting no major recovery in activity during the first half of the year.”
Baker Hughes forecasts North American spending to be in the low to mid-single digits by 2024. Halliburton, its rival, has greater exposure to North America. It stated that stable activity on the continent is expected.
Baker Hughes predicted first-quarter revenue of $6.10 billion to $6.60 billion. It is lower than
Analysts’ estimates of $6.51 billion. According to the business, the current quarter’s performance will be hurt by a seasonal fall in overseas revenue and a slow start in the United States.
The company’s shares were down 3% after hitting an over-six-month low of $29.66 earlier in the session. In 2024, the business expects worldwide oilfield spending to expand to the high single digits. It is down from its previous prediction of low double-digit growth.
Baker Hughes is laying off in 2024
Baker Hughes plans to lay off “several hundred” employees in Houston. The layoffs are part of restructuring its oil field services and equipment division.
The Houston oil field services and energy technology giant declined to specify how many people would be put off. However, it says that it was part of an ongoing global restructuring of its oil field services and equipment sector that began in January 2024.
The company employs over 58,000 individuals worldwide. It is up from around 55,000 at the same time last year.
Nancy Buese is the company’s CFO. She stated during an earnings call in January 2024 that:
“The division was being restructured to remove duplication. Also, we want to drive more cost efficiency across the business.”
She stated that severance costs associated with the restructuring were included in the company’s fourth-quarter earnings. But they were not detailed separately.
These reductions come despite a much better 2023 than 2022. In 2022, the company struggled with chip shortages that limited its digital solutions sector and losses tied to its Russian withdrawal. It reported $1.9 billion in net income in 2023. It is up from a $601 million loss in 2022.
According to a company representative, the changes being made to its oil field services and equipment division would
- simplify organization,
- improve processes and execution,
- deliver profitable growth,
- meet the vast energy technology challenges and
- Make opportunities in the future.
“Baker Hughes constantly reviews our portfolio and business operations. They ensure that we have the best chance to serve our customers and deliver on our long-term growth objectives,” added the statement.
Conclusion
The job losses in Baker Hughes will be focused on the oil field services and equipment business. This was an attempt to increase margins by 2025.
Baker Hughes refused to disclose the exact number of job layoffs. But it is said to be in the hundreds in the Houston area alone. The company employs more than 5,000 people locally and over 58,000 worldwide. The Texas Workforce Commission stated that it had no record of Baker Hughes receiving a WRAN letter, prior notice of layoffs.
Baker Hughes reported $163 million in restructuring expenses for the fourth quarter of 2023. “It is, with almost all of it coming from severance charges this year, ” said Nancy Buese during the earnings call.
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