Halliburton swung to a loss in the fourth quarter as it took a $2.2 billion charge to earnings due to the slowdown in the U.S. shale market.

As The Wall Street Journal reports, the rapid shale production growth of recent years has been “waning as shale companies, many of which have struggled to make money, focus on profits over expansion to satisfy unhappy investors.”

The downturn has hit oilfield services firms, with Halliburton disclosing Tuesday that it had recognized $2.2 billion, pre-tax, of impairments and other charges during the fourth quarter to “further adjust its cost structure to market conditions.”

“These charges consisted primarily of non-cash asset impairments, mostly associated with pressure pumping and legacy drilling equipment, as well as severance and other costs,” the company said in a news release.

Halliburton dismissed 8% of its North American staff at mid-year, and later cut staff across several western U.S. states.

As a result of the charge, Halliburton swung to a $1.7 billion loss in the fourth quarter after making a $668 million profit a year ago. On an adjusted basis, it earned 32 cents per share amid higher drilling activity outside North America, beating analysts’ estimates of 29 cents.

“The U.S. shale industry is facing its biggest test since the 2015 downturn, with both capital discipline and slowing leading edge efficiency gains weighing down activity and production,” Halliburton CEO Jeff Miller said on a call with analysts.

The U.S. rig count has fallen by roughly 24% to 796 in the past year, according to Baker Hughes. Halliburton, which finished 2019 with 22% less working frack equipment than it began the year, said Tuesday it will reduce capital spending by 20% this year.

Other companies to be hit by the shale slump include Schlumberger, which announced last week that it cut more than 1,400 workers and would idle 50% of its fracking equipment due to weak demand.

“While shale producers have been successful in growing U.S. oil production to record levels of more than 12.5 million barrels a day, [they have] been less successful in making money for shareholders,” Forbes said.

Photo by Ricardo Ceppi/Getty Images

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