The world’s largest oilfield services provider, Schlumberger (NYSE:SLB), reported on Friday a second straight quarterly loss on the back of a dramatic revenue slump in U.S. shale and asset impairment charges in what “has probably been the most challenging quarter in past decades,” as CEO Olivier Le Peuch said.
The company also announced it would get rid of 21,000 jobs as oil producers rein in spending.
Schlumberger reported on Friday a net loss of US$3.434 billion for the second quarter, after a US$7.376-billion loss for Q1, which was the result of a US$8.5-billion impairment charge.
As a result of the market conditions, Schlumberger recorded US$3.7 billion of pretax restructuring and asset impairment charges in the second quarter, including US$1 billion of severance costs associated with the massive workforce reduction.
Schlumberger’s total revenues slumped by 28 percent quarter on quarter and by 35 percent year on year, to US$5.356 billion. The drop in North American revenue alone was much steeper—down by 48 percent compared to Q1 and down 58 percent compared to Q2 2019.
While Schlumberger gets more revenues from outside the American market, the company was affected by the collapse in drilling activity in the United States and the cut in spending plans outside North America of major oil and gas companies after the price crash.
“This has probably been the most challenging quarter in past decades. Schlumberger second-quarter revenue declined 28% sequentially, caused by the unprecedented fall in North America activity, and international activity drop due to downward revisions to customer budgets accentuated by COVID-19 disruptions,” chief executive Le Peuch said.
“North America revenue declined 48% sequentially with land revenue falling 60% as customers dramatically cut back spending,” the executive added.
According to Schlumberger, there are conditions for a modest increase in frac completion activity in North America in the third quarter, but if the economic recovery is slower and a second wave forces new major disruptions, they would be downside risks to its forecasts.
Earlier this week, Halliburton also booked a second quarterly loss in a row and has signaled that it will look beyond fracking completion in shale for profitability.