Schlumberger Ltd., the world's largest oilfield services company, is to cut 21,000 jobs out of the 105,000 people it employed at the end of 2019 as the global coronavirus (COVID-19) pandemic quashes oil demand.
Schlumberger said July 24 it had a net loss of $3.43 billion in second-quarter 2020 compared to income of $492 million in the same period a year ago. Revenue tumbled 35% to $5.36 billion from $8.27 billion a year ago.
"This has probably been the most challenging quarter in past decades," Chief Executive Olivier Le Peuch said.
Revenue also fell 28% sequentially from the first quarter, "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. This speaks volumes about an industry confronted with historic oil demand and supply imbalances caused by demand destruction from the global COVID-19 containment effort."
North America revenue was down 48% from the first quarter as customers cut back spending. International revenue was down 60% from the first quarter, with Latin America and Africa seeing the worst declines due to COVID-19 restrictions and the drop in deepwater activity, the CEO said.
The company is reorganizing and combining its 17 product lines into four divisions, restructuring geographically around five key basins of activity, and streamlining management.
The company is cutting 21,000 jobs as part of the restructuring. The company will pay more than $1 billion in severance benefits.
Schlumberger expects to permanently remove $1.5 billion of structural costs annually by reorganizing itself into a leaner and more responsive company.
"Looking at the macro view in the near-term, oil demand is slowly starting to normalize and is expected to improve as government measures support consumption," said the CEO. "However, subsequent waves of potential COVID-19 resurgence pose a negative risk to this outlook."
