By July 22, 2016 Read More →

Schlumberger releases 16,000 employees in 2016 amid weak Q2 results

US land rig count fell by 25% in second quarter

SchlumbergerSchlumberger released it’s second quarter results, and while it’s revenue is up 10 per cent from last quarter, at $7.2 billion, it’s all attributed revenue gained from the merger with Cameron International Corporation, which finalized April 1.

North American revenue decreased 12 per cent, while international revenue decreased 9 per cent.

“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,” said Schlumberger CEO Paal Kibsgaard in a press release.

“As we continued to navigate this challenging environment, we again delivered robust pretax operating income, operating margin, and free cash flow.”

During the quarter, Schlumberger repurchased 0.4 million shares of its common stock at an average price of $72.77 per share for a total purchase price of $31 million.

“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,” said Kibsgaard.

North American revenue fell as a result of the Canadian spring break-up and the US land rig count declining 25 per cent in the second quarter.

While fracturing stage counts and active pressure pumping fleets increased more than 15 per cent sequentially, an unfavorable job and technology mix, combined with pricing pressure, more than offset the increase in volume.

Latin America saw the biggest revenue drop at 26 per cent, largely due to an ongoing financial crisis in Venezuela where the government owned PDVSA oil company is having trouble paying its service providers. Activity in the rest of the area continued to decline, particularly in the Mexico, Central America and Brazil Geomarkets, as land and offshore rig counts fell due to customer budgetary constraints.

In Europe/CIS/Africa areas, revenue dropped by 7 per cent, mainly due to rig counts declining and projects ending. Norway & Denmark GeoMarket revenue declined due to seasonal maintenance shutdowns. Russia and Central Asia revenue increased as activity recovered after the winter slowdown and the Russian ruble strengthened.

“At the same time, the effects of the cuts that we have seen in E&P spending are now clearly visible in falling oil production, and with demand remaining strong, we are 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,” said Kibsgaard.

Posted in: Energy Financial

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