With WTI Crude still struggling for a sustained period to cross the $50 per barrel mark over the past quarters, oilfield services firms are experiencing a slowdown in recovery.
This lean period forced oilfield service companies to significantly trim down costs by suspending some of their major operations and cutting jobs while searching for innovative ways to churn out more oil and gas.
While this strategic step can improve the level of income to some degree, the overall feeling around the sector remains largely negative.
Setbacks
Here's a quick overview of the oil and gas field services industry's price performance: The S&P 500 Index has grown 51.5 percent over the past five years against the 33.0 percent downturn in the oil and gas energy sector.
The oil and gas field services industry of Zacks sunk a staggering 46.8 percent during this time. In addition, the industry currently ranks at bottom 5 percent of Zacks Industry Rankings.
While behemoth like Halliburton struggles with setbacks, smaller firms are not faring any better. Halliburton Co. plans to cut its workforce by around 800 at its El Reno plant in Oklahoma in an attempt to bounce back from the regulated expenditure by oil and gas companies due to weak prices.
The company is also considering shutting down its office in the same city's suburbs.
Layoffs
The step also came within two months of the decision by Halliburton to lay off 650 workers in four countries, including New Mexico, Montana, North Dakota and Colorado.
This oilfield service provider headquartered in Houston recognized that it must substantially reduce costs in order to increase its operational performance given the current market conditions.
Halliburton acknowledged that it's more about returns now than demand for producers in North America where oil production has hit record peaks.
Conservative stance
Commodity price volatility, on the other hand, persuaded explorers and producers to adopt a relatively conservative approach to capital spending programs.
This shift in customer strategy is likely to induce low demand for oilfield services and equipment, putting a great deal of pressure on pricing.
It is anticipated that this organizational restructuring will help Halliburton achieve its objective of minimizing expenses and optimizing operational excellence by supporting its staff.
In contrast, National Oilwell Varco, Inc., located in Texas, announced that it will withdraw 85 staff as it plans to close down its equipment manufacturing operations for offshore and onshore drilling rigs at its Galena Park facility due to the continuing decline in the shale business.
