Schlumberger, the world’s largest oilfield services provider, has painted a bleak outlook for the sector in the upcoming period.
The company on Thursday afternoon posted its 3Q 2015 results, reporting revenue of $8.47 billion, a drop of 33% from $12.64 billion a year ago, and 6% from the second quarter of 2015, due to a continuing decline in rig activity and persistent pricing pressure throughout its global operations.
The oilfield services sector has been hit hard by the low oil prices, which led the oil companies to cut budgets, decrease activity and pressure the suppliers to lower prices of their services.
Schlumberger Chairman and CEO Paal Kibsgaard said: “The business environment deteriorated further in the third quarter. However, the cost reduction actions we took in previous quarters and the acceleration of our transformation program enabled us to protect our financial performance in what is shaping up to be the most severe downturn in the industry for decades.”
Schlumberger, aiming to cut costs, has so far this year laid off thousands of workers. In January it said it would cut 9.000, and in April it announced further 11.000 workers would be laid off due to low oil prices.
And it may not be the end of it, as the company said it expected the activity to stay low for some time, meaning it would have to keep its costs low.
In a statement on Thursday, Kibsgaard said that for oilfield services, the market outlook for the coming quarters looks increasingly challenging with activity expected to be reduced further, “as lack of available cash flow exhausts capital spending for a number of our customers, leading them to take a conservative view on 2016 E&P spending in spite of any gradual improvement in oil prices.”
“In light of conservative customer budgets for next year, we are therefore entering another period during which we will continually adjust resources in line with activity, as the recovery now appears to be delayed. We remain focused on managing our cost base, and are further accelerating our transformation program to help offset the impact of lower service pricing,” Kibsgaard added.
The company’s net income for the quarter was $989 million, down from $1.95 billion a year ago.