Schlumberger Cuts Jobs, Slashes Dividend 75% in Historic Oil Rout -- 2nd Update
17 Abril 2020 - 7:09PM
Dow Jones News
By Collin Eaton
Schlumberger Ltd., the world's largest oil-field-services
company, cut its shareholder dividend 75% and is restructuring
businesses, cutting jobs and closing facilities to cope with a
historic energy rout.
Chief Executive Olivier Le Peuch said on Friday that
Schlumberger is bracing for an acute downturn, with North American
oil-field activity set to decline 40% to 60% in the second quarter,
the steepest drop in several decades.
Globally, the capital spending by oil companies that sustains
services firms is set to fall 20% this year, with North American
drilling and fracking activity falling 40%, Mr. Le Peuch said.
Despite the recent agreements by major oil producers, including
OPEC and Russia, to curtail production, "Q2 is likely to be the
most uncertain and disruptive quarter that the industry has ever
seen," he said in a conference call.
Schlumberger disclosed its plans while reporting a $7.4 billion
net loss in the first quarter. The company is taking an $8.5
billion pretax charge for asset impairments, almost all noncash. It
said it planned to furlough more workers and reduce head count in
response to the challenging environment. In the first quarter, it
cut 1,500 jobs in North America.
Schlumberger's board approved a quarterly cash dividend of 12.5
cents a share, compared with a previous dividend of 50 cents. Mr.
Le Peuch said it was a difficult decision but one that would
protect its cash and liquidity in the downturn.
The company's shares rose almost 9% on Friday, as U.S. stocks
climbed on hopes of a treatment for coronavirus. Schlumberger's
earnings per share, excluding charges and credits, of 25 cents,
beat analysts expectations of 24 cents a share, according to
FactSet.
Mr. Le Peuch, appointed CEO in July, was already working to
shift away from some U.S. businesses, reducing a fracking fleet it
had built when shale was booming. But selling underperforming units
will be difficult in the current market, analysts said. The company
has less cash and more debt than prior to the last downturn.
Its stock has dropped about 65% this year as oil prices crashed
under the weight of a global glut and a historic demand slump. The
company's first-quarter loss of $7.4 billion, or $5.32 a share,
compared with net income of $421 million, or 30 cents a share, in
the same period last year. Revenue dropped to $7.45 billion from
$7.9 billion. In North America, sales fell 19% as producers cut
spending.
Schlumberger, which has corporate offices in Paris, Houston,
London and The Hague, has about $4 billion in debt maturities
through 2022, according to FactSet.
By the end of the first quarter, the company had reduced its
spending plan in North America by 60%, while reducing overall
spending for the year about 35% to $1.8 billion.
The oil-field-services sector, always the first in line to feel
the effects of any downturn, is expected to shed more than 200,000
U.S. jobs this year, analysts said, due to combined pressures of
coronavirus and the oil-price war that ended last weekend.
"The job losses are going to be profound, some of them
structural," said Bill Herbert, an analyst at Simmons Energy, a
unit of Piper Sandler. "It's a vastly overcapitalized
industry."
All told, the oil-field-services industry will likely cut 21% of
its global workforce this year, according to consulting firm Rystad
Energy. The number of drilling rigs operating on U.S. land has
plunged to 512, the lowest since October 2016 and down from 773 in
mid-March, according to Baker Hughes Co.
For smaller oil-field-services companies with revenue of $1
billion or below, job reductions have ranged from 40%-50% and most
layoffs have already occurred over the past month, said Richard
Spears, vice president at energy-consulting firm Spears &
Associates.
Earlier this week, rival Weatherford International PLC said it
would cut 25% of its global workforce and delist from the New York
Stock Exchange. Baker Hughes planned to take about $1.8 billion in
charges related to a restructuring plan and expected to write down
$15 billion in assets. Last month, Halliburton Co. furloughed 3,500
employees at a Houston campus.
Schlumberger had 105,000 employees at the end of last year, down
from 120,000 at the peak of the last oil boom in 2014.
Write to Collin Eaton at collin.eaton@wsj.com
(END) Dow Jones Newswires
April 17, 2020 17:54 ET (21:54 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
Schlumberger (NYSE:SLB)
Gráfico Histórico do Ativo
De Jun 2024 até Jul 2024
Schlumberger (NYSE:SLB)
Gráfico Histórico do Ativo
De Jul 2023 até Jul 2024