The largest oilfield-services company in the world – Schlumberger NV – will eliminate a total of 9 000 jobs in order to deal with the “uncertain environment” of tumbling crude prices and lower spending by customers.
The lay-offs are considered the biggest ones so far announced by an oil services company and comes at a moment when the sharp decline in oil prices, which started in June 2014, is hurting the entire industry.
According to Schlumbergers statement, the company expects that its customers from the energy business will cut spending this year as oil prices hover near the lowest in almost six years. According to Barclays, spending on oil and gas exploration and production will fall by 9% this year, but that figure was estimated at Brent crude at $70 per barrel, well above the current $45-$50.
The positions that are to be laid-off represent a cutback of 7.1% of the companys workforce, which amounted to 126 000 as of September 2014. The cuts started over the last few months of 2014 and are expected to be finalized by the end of 2015. Schlumberger also plans to reduce the vessel count at its WesternGeco fleet.
One of the analysts at UBS Securities LLC – Angie Sedita – commented on the financial filing of Schlumberger to the Securities and Exchange Commission in an interview cited by the Wall Street Journal: “There was limited forward looking commentary on either North America or the International markets. Given the early stages of the downturn we believe accurate management guidance is challenging to impossible.”
Schlumberger is not the first oil company, which has announced jobs cuts and project delays, as it joins its competitors Royal Dutch Shell, BP, Premier Oil and Suncor Energy which have also been negatively affected by tumbling oil prices.
Schlumberger NV settled 6.13% higher on Friday in New York at $76.63 per share, marking a one-year change of -9.84%. The company is valued at $104.65 billion. According to CNN Money, the 31 analysts offering 12-month price forecasts for Schlumberger NV have a median target of $102.00, with a high estimate of $140.00 and a low estimate of $89.00. The median estimate represents a +25.41% increase from the last price of $81.33.
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