JULY 24, 2020 — 21,000+IMPACTED BY RESTRUCTURING ACTIVITIES
More than 21,000 workers are facing layoffs as Schlumberger restructures to survive the global oil and gas industry depression and response to the COVID-19 pandemic.
Schlumberger CEO Olivier Le Peuch commented, “Before addressing our results, I would like to pay tribute to our employees and contractors for their remarkable resilience in the face of the historic COVID-19 pandemic that confronts us all.”
“Our employees and contractors have shown outstanding adaptability to the new working environment with up to 55,000 of our people working remotely to maintain business continuity.”
“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. 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.”
“This new organizational structure of four divisions aligned with our customers' key workflows and five key basins of activity is significantly leaner and more responsive, adapted to the new industry normal and strategically aligned with our performance vision.”
“As a reminder, our restructuring program will permanently remove $1.5 billion of fixed costs, with more than half relating to our international businesses. For the sake of clarity, let me highlight that these are true cash savings. They do not take into account the reduction in depreciation and amortization expense as a result of impairment charges.We have achieved approximately 40% of this $1.5 billion target in the second quarter and we aim to complete the large majority of the remainder before the end of the year. This will provide a strong tailwind to our margins in the second half of the year and into 2021.”
MARCH 24, 2020 — MAJOR REDUCTION IN FORCE AND COMPENSATION
Company CEO Olivier Le Peuch has announced that a North America restructuring plan will be implemented in response to adverse oil and gas market conditions.
The company anticipates a major reduction in force, reduced employee compensation, and a drastic reduction in capital expenditures in the coming months.
In January 2020 Schlumberger announced a loss of $10.1 billion in 2019, a layoff off 1,400 workers in the fourth quarter, closure of facilities, a recall of hydraulic fracturing fleets from the field and plans to sell assets.
Original post…
Now that third-quarter 2019 results have been posted and the investor call completed, the question is simple. Will Schlumberger, no stranger to restructuring and mass layoffs, adjust to declining 2019-2020 market conditions? Will Schlumberger follow the other oil patch service providers in trimming personnel in anticipation of year-end financial reporting?
From the company …
“The North America business saw strong offshore sales with minimal growth on land due to slowing activity and further pricing weakness.”
“This quarter’s results reflected a macro environment of slowing production growth rate in North America land as operators maintained capital discipline, reducing drilling and frac activity.”
“Market uncertainty, however, is weighing on future oil demand outlook in a climate where trade concerns are seen as challenging global economic growth.”
“Last month, we presented four key elements of our new strategy: leading and driving digital transformation; developing fit-for-basin solutions; capturing value from the performance impact for our customers; and fostering capital stewardship. The latter involves more stringent capex allocation and a strategic review of our portfolio—particularly in North America—through the lens of fit-for-basin attributes, customer performance, and return on investment.”
“Based on our Q3 year-to-date results and our outlook for Q4, we still expect full-year high single-digit International revenue growth excluding Cameron. Sequentially, however, Q4 will include the seasonal activity decline in the Northern hemisphere. And we anticipate only muted year-end sales.”
“In addition, we expect seasonal weaknesses in North America as the fourth quarter develops. We are anticipating a year-end slowdown in North America, similar to last year due to operator budget constraints. However, this year the activity reduction has started earlier than last and we anticipate the second should decline in Q4 to be more pronounced than last year.”
Considering the number of times digital transformation has been mentioned, it might behoove administrative personnel to embrace cloud solutions and employ the appropriate cloud jargon when speaking with members of management. Knowing how to produce compelling PowerPoint presentations is a must.
Change is coming. There will always be a tomorrow, no matter how much you may try to ignore it. There are no guarantees in life or promises for a bright future. Just because something bad hasn't happened yet, doesn't mean it won't. It can happen to anyone, anytime, anywhere. No one is guaranteed to wake up tomorrow and still have a job by evening. Are you now wondering, Am I Next?
