Schlumberger CEO sees oil sector cash crisis continuing
Schlumberger Ltd. cut more jobs in the first quarter as the world’s largest provider of oilfield services sees the industry in an unprecedented downturn.
The global head count dropped to 93,000 at the end of the first quarter with the reduction, Joao Felix, a spokesman for the company, said by email. The company let go about 8,000 people in the quarter, and reclassified about 5,500 contractors as permanent workers, chairman and CEO Paal Kibsgaard said Friday in a conference call with analysts and investors. One-third of Schlumberger’s workforce, or roughly 42,000, has now been cleaved off since the worst crude-market crash in a generation began in mid-2014.
“The decline in global activity and the rate of activity disruption reached unprecedented levels as the industry displayed clear signs of operating in a full-scale cash crisis,” Kibsgaard said in a statement announcing first-quarter earnings Thursday.
“This environment is expected to continue deteriorating over the coming quarter given the magnitude and erratic nature of the disruptions in activity.”
Oilfield service providers were the first to feel the pain when crude prices began falling in the middle of 2014.
Of the more than 250,000 jobs cut globally in the energy industry during the downturn, service providers continue to be the most heavily affected after customers slashed more than US$100 billion in spending last year, with promises of more cuts to come.
Second-quarter revenue, excluding what’s expected from its new acquisition of Cameron, is forecast to fall at a similar rate to the company’s 16 per cent sequential drop in the first three months of this year, said Kibsgaard on the conference call.
Schlumberger’s profit fell in the first quarter as the company, which helps explorers find pockets of oil underground and drill for it, adjusts to shrinking margins in North America as customers scale back work.
Customers are slashing spending by as much as 50 per cent in the U.S. and Canada.
Net income declined to US$501 million, or US40 cents a share, from US$975 million (US76 cents) a year earlier, the Houston-and Paris-based company said.