Schlumberger Cuts Jobs, Records Charge After Oil Collapse

logo_slb_headerBy David Wethe – Jan 15, 2015 – Bloomberg News

Schlumberger Ltd. (SLB), the world’s biggest oilfield-services company, tackled the “uncertain environment” of slumping crude prices head-on by cutting 9,000 jobs and lowering costs at one of its biggest businesses.

The 7.1 percent workforce cutback, along with the reduction and reassessment of its WesternGeco fleet, were among steps leading to a $1.77 billion fourth-quarter charge in anticipation of lower spending by customers in 2015, the Houston- and Paris-based company said in an earnings report Thursday.

Energy companies, coping with a 42 percent decline in oil prices during the last three months of 2014, are expected to cut spending in the U.S. by as much as 35 percent this year, according to Cowen & Co. The number of onshore U.S. rigs could fall by as much as 750 this year, Wells Fargo & Co. said in a note Wednesday. That would be a 44 percent decline from the 1,744 in operation at the start of the year, according to Baker Hughes Inc.

The coming year “is looking like it’s gonna be pretty rough,” Rob Desai, an analyst at Edward Jones in St. Louis, who rates the shares a buy and owns none, said in a phone interview. “With the potential for this to last some time, it’s in the best interest of the company to attack it aggressively.”

Schlumberger, which had doubled its workforce in the past 10 years, said the one-time charges for the quarter also resulted from the devaluation of Venezuela’s currency and a lower value for production assets it owns in Texas. Net income dropped to $302 million, or 23 cents a share, from $1.66 billion, or $1.26, a year earlier.

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