NEW YORK (TheStreet) -- The U.S. shale bust is only in the first phase -- one that will last for several more quarters at least. But we do have indications it is moving along because now all of the major oil services companies have announced some very substantial layoffs.
Schlumberger (SLB) was first to cut jobs, a whopping 9,000 announced. In the last several days, both Halliburton (HAL) and Weatherford (WFT) have also announced that they are slashing jobs. Halliburton will cut 6,500 people and Weatherford another 5,000.
As oil continues to trade below $50 a barrel, there is less and less drilling business for these oil services company to take on. Fully one-third of the oil now being drilled costs more to get out of the ground than the price that oil is getting on the open market.
Services companies, the ones that make their money from drilling activity, are the first most likely to suffer from very low realization prices for crude oil. That's because oil companies will look to curtail all but their most efficient and cost-effective wells as oil prices remain low.
The Baker Hughes (BHI) rig count tracks the number of working oil rigs in the United States. That count has dropped by more than 450 rigs in the last eight weeks. For every rig, jobs for the companies that service them are drying up, too.