Oilfield services behemoth Halliburton (HAL -0.03%) pledged to cut its 2020 spending by 50% and reduce other expenses by $1 billion after it announced a billion dollar net loss in Q1 2020. 

Low oil prices have hurt demand for Halliburton's services as oil producers cut back on spending. In early March, OPEC+ members Russia and Saudi Arabia flooded the market with cheap crude, cutting oil prices nearly in half. Meanwhile, travel restrictions due to the COVID-19 pandemic caused demand to plummet. On Monday, U.S. oil prices had crashed below $11/barrel, a 34-year low. 

Workers near an onshore oil well at sunset.

Image source: Getty Images.

Drastic action

"We have been through downturns before," said Halliburton CEO Jeff Miller in a statement released Monday morning. "We know what to do and will execute based on that experience. We are taking swift actions to reduce overhead and other costs by approximately $1 billion, lower capital expenditures to $800 million, and improve working capital. We will take further actions as necessary to adjust to evolving market conditions."

Halliburton's shares opened about 10% lower Monday morning, on news of the huge net loss. However, they moved higher throughout the morning as Wall Street digested the company's massive cost-cutting plan, and by noon were up about 6% over Friday's close. 

Impairment charges

The company's massive net loss was primarily the result of non-cash asset impairments. In total, Halliburton booked $1.1 billion in total pre-tax charges, and another $310 million in after-tax charges. That more than offset the company's $345 million in operating income, which was down 6% from Q1 2019. 

Halliburton's woes should be a warning sign to energy investors that the turmoil in the oil industry is far from over.