Schlumberger Cuts 21,000 Jobs Amid Historic Oil Downturn
According to The Wall Street Journal, Schlumberger Ltd., the world’s “largest oil-field services company, is cutting about 21,000 jobs as oil producers made steep spending reductions in response to a historic drop in prices amid the coronavirus pandemic.”
In the second quarter, Schlumberger “recorded $3.7 billion in impairment charges,” including about “$1 billion in severance charges related to the job cuts, which represent roughly one-fifth of its workforce,” The Journal reported. “Schlumberger’s sweeping job cuts are the latest example of how companies are having to sharply tighten their belts and reduce their workforces in the face of a historic drop in demand for their products due to the pandemic.”
“This has probably been the most challenging quarter in past decades,” Chief Executive Olivier Le Peuch said.
“Many companies have chosen to furlough rather than completely sever ties with workers in hopes of bringing them back when conditions improve,” The Journal wrote. “But as the effects of the pandemic drag on, more companies may resort to letting workers go.”
Energy companies have “been particularly hard-hit,” the report continued. “U.S. oil prices dropped into negative territory for the first time in April as demand for gasoline and jet fuel fell dramatically this spring.” This oil price crash “prompted U.S. oil companies to sharply cut capital spending on drilling and fracking new wells, the lifeblood of oil-field service companies” such as Schlumberger and rivals Halliburton Co, and Baker Hughes Co.
Le Peuch announced that Schlumberger will shut down “scores of facilities in a move to position itself ‘for a market of smaller scale and lower growth outlook, but with higher returns.’”
“We expect the global decline to recede into a soft landing in the coming months absent further negative impact from Covid-19 on the economic recovery,” Le Peuch said in a conference call Friday.
Schlumberger, which has corporate offices in Paris, Houston, London and The Hague, has as many as 55,000 employees working remotely. The company “reported a net loss of $3.4 billion, or $2.47 a share, compared with a net income of $492 million, or 35 cents a share, in the same period last year,” reported The Journal. “Revenue declined 35% year-over-year to $5.4 billion, with North American sales down 58% to about $1.2 billion.”
In addition, last month, British oil giant BP PLC “said it plans to cut nearly 10,000 jobs, or 14% of its workforce. U.S. oil major Chevron Corp. said it expects to reduce its global workforce by 10% to 15% from about 45,000,” the report added.