Schlumberger’s customers are abruptly cancelling projects, the world’s largest oilfield services company warned on Thursday as its full-year results revealed further pain from an 18-month rout in crude that has found new momentum this year.
The US-listed company’s description of “unscheduled and abrupt activity cancellations” came as it disclosed a $1bn loss for the final quarter of 2015 and plans to cut 10,000 jobs from its current 95,000 staff.
The latest wave of cuts means Schlumberger has axed 34,000 employees, or 26 per cent of its original workforce, since November 2014.
The oil services industry has been at the sharp end of the deep cuts weaker crude prices are forcing on producers which had become accustomed to oil trading above $100 a barrel. WTI, the US oil benchmark, closed under $30 on Thursday.
Schlumberger’s earnings announcement warned of a “deepening financial crisis in the [exploration and production] industry” that was prompting customers to make further cuts to already reduced investment plans.
The company’s $1bn quarterly loss from continuing operations included a $530m charge, while quarterly sales fell almost 40 per cent to $7.74bn. Adjusting for the charge, the company earned 65 cents a share, ahead of analysts’ forecasts.
Paal Kibsgaard, chief executive, warned that “negative market sentiments intensified in the fourth quarter,” with oil over-production “extending the bearish trend in global inventories”.
Schlumberger also announced a new $10bn share buyback programme, helping to send its shares up as much as 4 per cent in extended trading. The stock fell more than 18 per cent last year.
The oil services company kicks off what is forecast to be a sombre earnings season for US energy companies. Data provider S&P Capital IQ expects the S&P 500 energy sector to show a 74.4 per cent drop in earnings per share for the quarter.
