• Friday, December 01, 2023
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Schlumberger Cuts 9,000 jobs as oil slump portends uncertainty

Oil majors lose $44bn after abruptly exiting Russia

Schlumberger Ltd, the world’s biggest oilfield-services company, tackled the “uncertain environment” of plummeting crude prices head-on by cutting 9,000 jobs and lowering costs at a vessels unit.

The 7.1 percent workforce cutback, along with the reduction and reassessment of its WesternGeco fleet, were among steps leading to a $1.77 billion fourth-quarter charge in anticipation of lower spending by customers in 2015, the Houston- and Paris-based company said in an earnings report Thursday.

Energy companies, coping with oil worth less than half its price six months ago, are expected to cut spending in the U.S. by as much as 35 percent this year, according to Cowen & Co.

The number of onshore U.S. rigs could fall by as much as 750 this year, Wells Fargo & Co. said in a note Wednesday. That would be a 43 percent decline from the 1,744 in operation at the start of the year, according to Baker Hughes Inc.

The coming year “is looking like it’s gonna be pretty rough,” Rob Desai, an analyst at Edward Jones in St. Louis, who rates the shares a buy and owns none, said. “With the potential for this to last some time, it’s in the best interest of the company to attack it aggressively.”

Schlumberger, which had doubled its workforce in the past 10 years, said the one-time charges for the quarter also resulted from the devaluation of Venezuela’s currency and a lower value for production assets it owns in Texas. Net income dropped to $302 million, or 23 cents a share, from $1.66 billion, or $1.26, a year earlier.

Read also: Schlumberger cuts 10,000 jobs amid oil price rout

“In this uncertain environment, we continue to focus on what we can control,” Schlumberger Chief Executive Officer Paal Kibsgaard said in the earnings report. “We have already taken a number of actions to restructure and resize our organization.”

Shares in oilfield-services companies, which help customers find and produce oil and natural gas, were the first to fall as crude prices declined.

Service companies in the Standard & Poor’s Index dropped 20 percent in the quarter, more than the 18 percent decline for producers.

Exploration and production spending globally is expected to drop 17 percent to $571 billion, Jim Crandell, an analyst at Cowen, wrote in a Jan. 7 research note.

Excluding one-time items, Schlumberger earned $1.50 a share in the fourth quarter, beating the average of 34 analysts’ estimates compiled by Bloomberg. Sales of $12.6 billion fell short of estimates.

Schlumberger, which has 34 buy and 10 hold recommendations from analysts, gained 0.4 percent to $76.99 in after-hours trading at 6:57 p.m. in New York, after closing 2.3 percent lower. The company increased its quarterly dividend 25 percent.