Schlumberger Profit Falls as Revenue Slumps
Schlumberger, Ltd (NYSE: SLB – $79.84) the world’s No.1 oilfield services provider, reported a 48.6% slump in quarterly profit, as spending cuts by oil producers continued to take a toll. According to a statement released by the company, the decline in global drilling activity and the rate of disruption reached unprecedented levels in the quarter and is expected to continue deteriorating over the coming quarter. For the period, all of Schlumberger’s business segments and geographies were lower than the prior year period. The outlook, according to management, is still much the same as it has been for the past twelve months and remains bleak. Excluding special items, SLB reported a profit equal to $0.40 per share, a penny above estimates. Total revenue, however, fell 36% to $6.52 billion, less than most estimates of $.75 billion. Revenue slumped 55% in North America and fell 28% outside the region. In an effort to better align productivity with demand, the company said it laid off another 2,000 employees during the first quarter. Since November 2014, when the oil bust started to take hold of the energy industry, Schlumberger has cut 36,000 jobs, or 28% of its workforce.
Prospects are limited for a quick upturn in business conditions, even by 2017. But conservative investors willing to be patient and looking for a solid long-term stake in the energy space might consider holding their postions here.