The world’s leading oilfield services companies have stopped making additional large-scale job cuts in recent months, after the four largest groups had reduced employment by about 140,000 worldwide over the past two years.
The slowdown in job losses is the latest indication that the worst is over for the oil and gas industry, which went into a steep decline after crude prices crashed in the second half of 2014.
The number of rigs drilling for oil in the US has been rising since May, as companies have cut costs so they can compete at lower prices. The stabilisation of oil prices at about $50 per barrel during the past month has bolstered confidence, underpinned by the announcement from Opec that the cartel intended to cut its production.
However executives have been warning that the industry generally needs oil prices to be up to $10 per barrel higher than today’s levels for a sustained recovery.
Schlumberger and Halliburton, the two largest oil and gas services groups by market capitalisation, have between them taken out about 87,0000 jobs since 2014, including losses at Cameron International, which was bought by Schlumberger for $14.3bn in April.
Both reported headcounts that were approximately unchanged during the third quarter of this year.
Baker Hughes, the third-largest listed services company, cut 26,000 jobs from 2014 to the end of June, but lost only about 2,000 more in the third quarter.
Weatherford International, the fourth-largest, has eliminated 28,000 jobs since 2014, including 8,000 lost under a plan it announced earlier in the year. It did not add any further cuts when it announced its third-quarter earnings on Tuesday.
In conference calls with analysts over the past week, sector chief executives have sounded more positive about the outlook, especially in the US.
Dave Lesar of Halliburton said: “Things are getting better for us and our customers” in North America.
Paal Kibsgaard at Schlumberger told analysts: “We have indeed reached the bottom of the cycle”, and started setting out the company’s plans for the “recovery phase”.
Martin Craighead of Baker Hughes said on Tuesday that “the North American market has been continuing to grind slowly upward, and we expect that to continue”.
However, he warned that the industry needed an oil price in the “mid to upper $50s” for a sustainable recovery in the region.
He added that Baker Hughes’ customers typically needed oil at $55 per barrel for activity to pick up in the North Sea and the Gulf of Mexico, and $65 in west Africa.
Mr Lesar similarly said “significant activity increases from our customers start with sustainable commodity prices over $50 per barrel, which we haven’t seen in any meaningful way yet”.
Mr Kibsgaard warned that “the fragile financial state of the industry” would slow the recovery.
He also suggested that Schlumberger would be trying to reverse some of the reductions in its rates that have helped oil production companies cut costs during the downturn.
“It is critical for us to recover the large pricing concessions we have made over the past two years to allow us to restore investment levels,” Mr Kibsgaard said.
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