HOUSTON (Bloomberg) — Schlumberger Ltd. reported its lowest first-quarter profit in four years and announced further 11,000 job cuts after customers slashed spending in response to tumbling crude prices.
The company is cutting another 11,000 jobs, after announcing plans to eliminate 9,000 positions earlier. Cowen & Co. estimates that energy companies will cut spending on exploration and production services by $114 billion this year after Brent crude prices fell by half from a June high. Schlumberger has the largest staff reductions from a single company of approximately 100,000 cuts that have been announced in the industry globally.
Net income fell to $975 million, or 76 cents a share, from $1.59 billion, or $1.21, a year earlier, the Houston- and Paris- based company said in a statement. That’s the lowest for the period since 2011. Excluding one-time items, per-share results beat the 89-cent average of 35 analysts’ estimates compiled by Bloomberg.
“We believe that a recovery in U.S. land drilling activity will be pushed out in time, as the inventory of uncompleted wells builds and as the re-fracturing market expands,” Chief Executive Officer Paal Kibsgaard said in the statement. “We also anticipate that a recovery in activity will fall well short of reaching previous levels, hence extending the period of pricing weakness.”
Schlumberger was one of the better prepared for the impending downturn,” James West, an analyst at Evercore ISI in New York, said in an interview before the results were released. “They took action very early to start reducing costs and accelerate the transformation program.”
The earnings statement was released after the close of regular trading in New York. Schlumberger, which has one sell, 28 buy and 14 hold recommendations from analysts, fell 11 cents to $91.89 at the close. The shares have climbed 7.6 percent this year. The company announced earlier Thursday it would pay another 50 cent quarterly dividend.
“Schlumberger’s 1Q results will likely shed light on the severity of the drilling activity decline worldwide,” Andrew Cosgrove and William Foiles of Bloomberg Intelligence wrote in an April research note.