Schlumberger, world’s largest oilfield services provider slashed 10.000 jobs in the fourth quarter of 2015.
The company said that the reason was an expected extended activity weakness in the first half of 2016. This led the company to recognize in the fourth quarter $530 million in pretax restructuring charges.
The charges were for expanding the “incentivized leave of absence program and reducing our workforce, as well as a largely non-cash $1.6 billion pretax impairment charge for fixed assets, inventory write-downs, facility closures, contract terminations, and other asset impairments.”
The number of laid off workers is in addition to the 20.000 people cut earlier in 2015.
Schlumberger Chairman and CEO Paal Kibsgaard said: “In this uncertain environment, we continue to focus on what we can control. Throughout the year we took a number of actions to streamline and resize our organization as we continued to navigate the downturn.”
Schlumberger’s fourth quarter revenue fell 39 percent . It was around $7,7 billion in 4Q 2015, versus $12.6 billion in the 4Q 2014.
The company said that negative market sentiments intensified in the fourth quarter, with oil over-production continuing and extending the bearish trend in global inventories. This led to a further drop in oil prices, which reached a 12-year low in January 2016.
The worsening market conditions added further pressure to a deepening financial crisis in the E&P industry, Schlumberger said, and prompted customers to make further cuts to already significantly lower E&P investment levels. Customer budgets were also exhausted early in the quarter, leading to unscheduled and abrupt activity cancellations.
Kibsgaard said: “We remain constructive in our view of the market outlook in the medium term, and continue to believe that the underlying balance of supply and demand will tighten, driven by growth in demand, weakening supply as E&P investment cuts take effect, and by the size of the annual supply replacement challenge.”