In its earnings conference calls for the fourth quarter of fiscal year 2015, Schlumberger Limited said that the oilfield services industry will suffer a ‘very challenging’ 2016, as oil and gas exploration and production (E&P) companies will continue to cut capital investment plans.
Low crude oil prices reduced the value of Schlumberger assets in the previous quarter. After taking into account restructuring and impairment charges of $2.14bn, the company posted net loss of $1.02bn.
In the same period last year, the oilfield services company recorded a net income of $302mn.
In the face of the deteriorating crude oil market conditions, Schlumberger cut 10,000 jobs in the last quarter as crude oil prices dropped to $40 per barrel. The company has already eliminated around 15,000 jobs in the first three quarters of 2015.
In total, the energy giant has slashed more than 25% of its workforce.
In Q4 2015, Schlumberger reported adjusted earnings per share (EPS) of 65 cents, to exceed the consensus projection of 63 cents per share. The energy company had EPS of $1.5 per share in the same quarter in 2014.
The energy company’s CEO and chairman, Paal Kibsgaard believes crude oil market will recover next year. He stated that although there are slight chances of ‘positive movement’ in crude oil prices this year, the question arises by how much the prices will recover.
Schlumberger plans to keep its workforce intact this year. Kibsgaard said that it was hard for the company to cut this amount of jobs, however now he is ‘optimistic’ that the energy corporation is done with all the job cuts.
Though Schlumberger is not very much optimistic about a rebound in crude oil market, Kibsgaard said he wants the industry to recover soon. Apart from layoffs, the company took some serious measures last year to reduce its costs.
The chairman believes that deteriorating market conditions will only make it more competitive, cost efficient, and productive.
