Schlumberger has reduced its workforce by 16,000 so far this year, which the oil services giant attributed to weak activity that it expects to persist throughout the year.
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Image from Schlumberger. |
With the most recent round of layoffs, Schlumberger has incurred a US$646 million restructuring charge in Q2 2016.
“As a result of the weakness in activity that will persist through 2016 as expected, we have made another significant adjustment to our cost and resource base, including the release of more than 16,000 employees during the first half of 2016 and a further streamlining of our overhead, infrastructure, and asset base,” Paal Kibsgaard, Schlumberger chairman and CEO said. “This has led to $646 million in restructuring charges in the second quarter for the reduction in our workforce, as well as a non-cash $1.9 billion impairment charge for fixed assets, inventory, and multiclient seismic data. We also recognized $335 million in merger and integration charges relating to the Cameron acquisition.”
According to Susan Ganz, Schlumberger corporate public relations manager – Western Hemisphere, the company's employee total stands at approximately 100,000.
The company’s revenue for Q2 posted at $7.2 billion, representing a 10% jump from Q1’s $6.5 billion; however a drop of 20% when compared to Q2 2015’s $9 billion.
“In the second quarter market conditions worsened further in most parts of our global operations, but in spite of the continuing headwinds we now appear to have reached the bottom of the cycle,” Paal Kibsgaard, Schlumberger chairman and CEO said.
Kibsgaard said that the effects of the cuts Schlumberger has seen in exploration and production spending are now clearly visible in falling oil production, and with demand remaining strong, the company is heading more rapidly towards an increasing negative gap between global supply and demand for oil.
“This will require significant capability and capacity to reverse, and without pricing recovery the service industry will be challenged to deliver,” he said.
“As we have navigated this downturn, we have made a series of moves that position us well for the inevitable market recovery. Our balance sheet remains strong in spite of the investments we have made in our business and the cash that we have returned to our shareholders. We have expanded our technology portfolio, not only by the major acquisition of Cameron International, but also by a series of smaller acquisitions that are enabling the development of new integrated drilling and production technologies that will further lower cost per barrel. And we have leveraged the opportunities of transformation to create significant competitive advantage and steadily improve our intrinsic performance,” Kibsgaard said.
In April, Schlumberger completed the $14.8 billion merger with rival Cameron International, less than a year after the deal was proposed.
Later that month, the company revealed one of its steepest revenue declines since the downturn began in 2014.
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