Oil services giant Schlumberger to cut 21,000 jobs
US oil services giant Schlumberger announced on Friday its plans for a further reduction in expenses, including cutting 21,000 employees in all its operations. The company announced in a statement a one-time fee of $ 3.7 billion to restructure, with more than $ 1 billion of those receipts destined for compensation expenses.
Both Schlumberger and its competitors Halliburton and Baker Hughes were forced to radically cut their costs in order to survive the drastic decline in demand for oil services, as the crisis by the CCP (Chinese Communist Party) virus hit demand for the products. of oil and gas in the second quarter.
However, the oil and gas industry is showing signs of stabilization, Baker Hughes reported Friday that the number of active oil platforms in the United States increased from one to 181. Still, the number of gas platforms decreased by 3 for a slight general descent. The total number of active platforms is 251, far from the 695 counted in July 2019, according to the company’s platform count.
On Monday, a Halliburton statement (pdf) reported a net loss for the second quarter of 2020 of $ 1.7 billion, while Baker Hughes reported that the company’s adjusted operating income for this quarter was down 71 percent compared to last year.
Schlumberger was forced to cut 21,000 jobs – a fifth of his workforce – amid declining drilling, hydraulic fracturing, exploration and development of oil fields as demand for oil and gas falls to world level. Other costs include a charge of $ 977 million for impairment of fixed assets and use rights, and $ 603 million in inventory reductions. $ 703 million in losses related to projects in Latin America, including a pipeline damaged by a landslide in Ecuador.
“This has been probably the most challenging quarter in recent decades,” Schlumberger CEO Olivier Le Peuch said in a statement. Le Peuch said Schlumberger’s decline in revenue was due to a drop in activity in North America and downward revisions to the budgets of international clients.
“North America’s revenue fell 48 percent sequentially, with land revenue falling 60 percent, while customers dramatically cut their spending,” said Le Peuch. The company’s international revenue also fell 19 percent, with the hardest hit activities being in Latin America and Africa. However, the company’s entry into Russia, Europe, Asia, and the Middle East held up the most, dropping just 10 percent sequentially.
Oil and gas outlook
Schlumberger expects oilfield conditions in North America to improve in the third quarter as hydraulic fracture completions increase. However, activities will resume from a very low base. The company warns that any renewed disruption due to the resurgence of levels of infection with the CCP virus could pose a risk to the company, as well as significant drops in demand for oil and gas products.
Those views echo those of Lorenzo Simonelli, President and CEO of Baker Hughes. Simonelli said Wednesday that it is difficult to predict future market conditions at this time. He said Baker Hughes will focus on preparing for possible future market volatility by reducing cost bases and focusing on higher margin activities.
“Although most closings were relaxed globally and economic activity probably declined during the second quarter, visibility into the economic outlook remains extremely limited,” Simonelli said in a statement. “More specifically, the risk of a second wave of virus cases, the reinstatement of selective closings, and the risk of persistent high unemployment creates an uncertain economic environment that is likely to persist for the rest of 2020.”
Halliburton President and CEO Jeff Miller was optimistic about his company’s ability to withstand the storm and succeed. He said the company would focus on efficiency and cost reduction in the coming months.
“The strategic actions we are taking will further boost our earning power and the ability to generate free cash flow as we push ourselves and earn the eventual recovery,” Miller said in a statement this week.