Schlumberger job cuts reach 34,000

SCHLUMBERGER will lay off around 10,000 more workers in an aggressive cost-cutting drive to weather an expected prolonged slump in oil prices as it posted a slightly better-than-expected December quarter result.
Schlumberger job cuts reach 34,000 Schlumberger job cuts reach 34,000 Schlumberger job cuts reach 34,000 Schlumberger job cuts reach 34,000 Schlumberger job cuts reach 34,000


Haydn Black

The company has already shed 26% of its workforce, some 34,000 jobs, since November 2014 and the latest round of retrenchments seems to indicate that the US company sees little prospect of a rally in the oil price.

Service companies have already more than halved their charges, and expect to see more work drying up with oil companies expected to slash capital expenditure by a further 20% this year.

Full year 2015 revenue of $US35.5 billion decreased 27% year-on-year in line with upstream spending cuts that resulted in significantly lower exploration investment levels, with the company’s operations in the onshore US space particularly hard hit.

North American revenue declined 39%, with the onshore business falling 45% while offshore was down 17%, CEO Paal Kibsgaard said.

“The decrease in land activity was the sharpest seen since 1986, as capex spending by North American customers declined by more than 40%,” he said.

“With the year-end US land rig count 68% lower than the 2014 peak, at less than 700 rigs, the massive over-capacity in the land services market offers no signs of pricing recovery in the short to medium term.”

The company’s Middle East and Asia business unit saw full-year revenue decrease by 17% due to a significant activity drop in the Asia-Pacific region, particularly in Australia.

This decrease was partially offset by robust activity in the Gulf Cooperation Council countries in the Middle East, particularly Saudi Arabia, Kuwait and Oman, although the effect of that was hurt by pricing concessions.

December quarter revenue fell 39% to $7.74 billion, missing the average analyst estimate of $7.78 billion. The company’s pretax operating income was $1.28 billion, down $300 million from the previous quarter.

Schlumberger also booked impairments of more than $1.4 billion, with most of that in equipment and inventory in North America.

The net loss attributable to Schlumberger was $1.02 billion in the fourth quarter, compared with a profit of $302 million a year earlier.

Kibsgaard said growing demand, supply cuts due to reduced investment and "the size of the annual supply replacement challenge" would help balance oil supply and demand.

A $US10 billion share buyback program is about to wrap up as well, having commenced in 2013.

The firm is also expecting to finalise its $US14.8 billion deal for equipment maker Cameron International in the coming months.