Schlumberger cuts 9,000 jobs

January 19:

Net income dropped to $302 million, or 23 cents a share, from $1.66 billion, or $1.26, a year earlier. Photo: Bloomberg file

Houston: Schlumberger, 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 per cent 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 on Thursday. Energy companies, coping with oil worth less than half its price six months ago, are expected to cut spending in the US by as much as 35 per cent this year, according to Cowen. The number of onshore US rigs could fall by as much as 750 this year, Wells Fargo said in a note on Wednesday. That would be a 43 per cent decline from the 1,744 in operation at the start of the year, according to Baker Hughes. 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 in a phone interview. 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 of the compnay dropped to $302 million, or 23 cents a share, from $1.66 billion, or $1.26, a year earlier. Tough environment "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 organisation." 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 per cent in the quarter, more than the 18 per cent decline for producers. Exploration and production spending globally is expected to drop 17 per cent to $571 billion, Jim Crandell, an analyst at Cowen, wrote in a January 7 research note. Schlumberger has the smallest  exposure to North America compared with peers, generating a dollar of sales in the region for every  $3 globally. With oil prices failing to stabilise, some producers are waiting to announce plans for 2015, making first-quarter earnings estimates for Schlumberger "still a bit of a guess," said Gengaro, who rates the company a buy and doesn't own the shares. Less than half of the 150 oil and gas companies it monitors have reported spending plans for the year, Norman MacDonald, a portfolio manager for Invesco, said in an interview. MacDonald, who manages the $990 million Invesco Energy Fund, said he's never seen this many companies wait so long to announce their budgets. hare on  Source:  www.timesofoman.com/News/45817/Article-Schlumberger-cuts-9-000-jobs?