PortandTerminal.com, July 24, 2020
Schlumberger, the world’s largest oil-field services company, is cutting about 21,000 jobs as oil producers slash spending in response to a historic drop in prices amid the coronavirus pandemic.
HOUSTON – Houston-based oil services firm Schlumberger is cutting 21,000 jobs as it implements a reorganization in response to one of its worst quarters in decades.
The job cuts, which represent about one-fifth of the company’s total workforce, follow steep revenue losses both at its North American operations and internationally.
“This has probably been the most challenging quarter in past decades,”Chief Executive Olivier Le Peuch
Revenue at the Houston-based oil services firm during the second quarter fell 35% to $5.4 billion compared with the same period a year ago. Its North America operations fared the worst, with revenue down nearly 60% to $1.2 billion compared with a year ago. At international operations, revenue fell 24% to $4.1 billion.
Company CEO Olivier Le Peuch said he expects 3rd quarter revenue to remain roughly flat, with a potentially modest increase in the part of its North America business focused on “completing” oil wells (preparing them for oil extraction) that have been drilled by injecting water, sand and chemicals, a process known as fracking.
“This has probably been the most challenging quarter in past decades,” said Olivier Le Peuch. “This speaks volumes about an industry confronted with historic oil demand and supply imbalances caused by demand destruction from the global Covid-19 containment effort.”
“Oil demand is slowly starting to normalize and is expected to improve as government measures support consumption,” Le Peuch said. “However, subsequent waves of potential COVID-19 resurgence pose a negative risk to this outlook.”
Oil services firms like Schlumberger perform many of what Forbes calls the “industry’s necessary but thankless tasks”: maintenance of oil wells, preparing (“completing”) freshly drilled wells for oil production, and drilling for oil. Many of these activities are concentrated in the side of the oil industry focused on new oil production — the same segment of the industry that oil producers have cut back on first. Halliburton said this week it expected spending by customers of oil services firms in North American to fall by half this year compared with 2019.
Earlier this month the Petroleum Equipment and Services Association (PESA), an oil services trade group, found that employment in the oil-field services and equipment sector fell by more than 8,600 jobs in June alone, bringing total job losses due to pandemic-related demand destruction to nearly 94,000.
Copyright © 2020 PortandTerminal.com