Schlumberger, the world’s largest oil field services company, saw its profits tumble 49 percent in the third quarter amid an oil bust that’s rapidly shaping up to be the worst in decades, CEO Paal Kibsgaard said.
The company which has chopped 20,000 jobs, or 15 percent of its workforce, since the slump started hinted at further cost-cutting measures, but did not say whether any additional jobs are on the chopping block.
“In light of conservative customer budgets for next year, we are therefore entering another period during which we will continually adjust resources in line with activity, as the recovery now appears to be delayed,” Kibsgaard said in a statement.
The company, which has main offices in Houston, Paris and The Hague, posted earnings of $989 million, or 78 cents per share, during the three-month period ending Sept. 30. That’s down from $1.95 billion, or $1.49 cents per share, during the same time last year. Revenue fell from $12.6 billion to $8.5 billion.
Schlumberger and other oil field services companies had expected oil patch activity to rebound by now, but the company’s third quarter earnings painted a bleak picture for the industry, serving as a bellwether of tougher times ahead for firms that supply tools, crews and expertise in the oil field in the U.S. and beyond.
“For oilfield services, the market outlook for the coming quarters looks increasingly challenging,” Kibsgaard said in a statement.
The company expects drilling and completion activity to slow even more as its financially pinched customers adopt conservative spending plans for next year, even if oil prices rebound. Kibsgaard said Schlumbeger doesn’t expect it will be able to offset the seasonal winter slowdown with its usual year-end sales of software, products and licenses.
Schlumberger’s North American revenues, which had been taking a beating for a while, slumped even more in the third quarter, tumbling 4 percent in three months following a fresh collapse in crude prices and a renewed retreat in the U.S. rig count.
But the lingering downturn has started to spur a retreat from oil fields overseas, too, dealing a hefty blow to Schlumberger’s international sales, which slipped 7 percent in the third quarter as global oil companies slashed their budgets, slowed drill bits and demanded deeper discounts. In 2015 alone, Schlumberger has seen a 34 percent decline in North American sales and an 18 percent fall in international revenues.
Still, despite the worsening business environment, Schlumberger said it has been able to protect its balance sheet by cutting costs and accelerating a company-wide transformation program
Kibsgaard said Schlumberger will continue to “strike a balance between market share and operating margins,” searching for opportunities to grow its portfolio through targeted deals, such as its $12.8 billion takeover bid for Houston-based oil tool maker Cameron International.