Oil had a pretty rough 2015.
And according to the CEO of one industry giant, 2016 could be just as bad.
Dave Lesar, CEO of oil services giant Halliburton, said that the road to recovery for the energy industry will be abysmal this year.
“As I said, 2016 is shaping up to be one tough slog through the mud and the industry is going to have to take it a quarter at a time,” Lesar said during Halliburton’s quarterly earnings call Monday.
Lesar went on to invoke the “tough slog” phrase repeatedly throughout the conversation with analysts, painting a pessimistic picture of every corner of the oil business.
In the fourth quarter the company reported an adjusted profit of 31 cents, which beat expectations, while revenue came in at $5.08 billion, just below consensus estimates.
For the full-year 2015, Halliburton’s revenue fell 28%, or $9.2 billion, to $23.6 billion. Shares of Halliburton fell 3% on Monday.
On the call Lesar said that, “Nearly every country is facing some sort of particular challenge, whether it’s macroeconomic or just pure facing down commodity price, which is an example for a Colombia for example.
“So we’re seeing historical lows in terms of rig activity in a couple of countries and I don’t see that changing.”
Oil prices have fallen to 12 year lows at the start of 2016, trading down to around $27 a barrel. The now multi-year fall in prices has crushed many oil producers and in turn the oilfield services companies that provide support, like Halliburton.
Lesar said this drop had also created a sense of unease and unpredictability in his clients, who are the actual oil producers.
“I’m talking almost every day with the CEOs of our customers and I would say that it’s a real challenge out there,” Lesar said on Monday. “Right now, our customers don’t know what they are going to spend, where they are going to spend it, and when they are going to spend it … at this point in time.”
Lesar himself said back in October that a“day of reckoning” was comingfor the industry when many cash strapped producers would either merge or go out of business.In theory that would help to rebalance the commodity’s price and draw down the supply glut that is helping to keep prices low.
So far, it seems like that day has not come yet.
And Lesar isn’t the only executive who has a downbeat view of the oil industry.
Paal Kibsgaard, CEO of oilfield services company Schlumberger, said on an earnings call Friday that, “any significant recovery in our activity levels will be a 2017 event.”
Kibsgaard added that he doesn’t know for sure, but thinks 2016 will be the “trough” for the industry.