Third Quarter Report: Schlumberger Gains Profit, Halts Job Cuts

schlumbSchlumberger, the biggest energy services company in the world, posted a $176 million profit, or 13 cents per share, for the third quarter and acknowledged the company’s plan to suspend massive job cuts.

After cutting nearly 50,000 jobs over the course of 18 months amid the worst oil slump in 30 years, Schlumberger has managed to sustain its worldwide staff-count of 100,000 workers since midyear. Schlumberger has headquarters based in Houston, London, Paris, and The Hague.

“After calling the bottom of the cycle in the second quarter of this year, our business stabilized in the third quarter,” Paal Kibsgaard, Schlumberger CEO, said Thursday in a prepared statement.

The $176 million profit is a far cry from the $989 million profit, or 78 cents per share, Schlumberger reported in the third quarter of 2015. Still, it is a better outcome for the company compared to the $2.16 billion loss Schlumberger reported for the second quarter of 2016.

The second quarter of this year also pulled in impressive revenues of $7.16 billion. Comparatively, the third quarter stayed in line with this number, posting revenues of $7.02 billion. It was still less than the $8.47 billion in revenue reported for this quarter last year, however.

“International pricing will take time to improve, given the long-term nature of international contracts and operators,” Marshall Adkins wrote in a note to investors Monday, “Once activity begins to meaningfully grow across individual regions, we expect margins to slowly move higher over the next two years.” Adkins is an analyst at Raymond James.

According to Kibsgaard, the global market is basically balanced when it comes to supply-and-demand fundamentals as the level of production continues to drop. In particular, Kibsgaard made reference to the decline in crude storage inventories. “We maintain that a broad-based V-shaped recovery is unlikely given the fragile financial state of the industry, although we do see activity upside in 2017 in North America land, the Middle East and Russia markets,” said Kibsgaard. He added, “We are therefore ensuring that we are optimally positioned to capture a large share of this upside that we can subsequently turn it into positive earnings contributions.”

In April, Schlumberger announced that it would decrease activity in Venezuela because of zero improvements and insufficient payments. That same month, Schlumberger closed on its purchase of Cameron International, a Houston-based equipment manufacturing and services firm. The merger added 20,000 jobs to the company across the globe, including 4,000 in the city of Houston. Besides these positions, 5,500 of Schlumberger’s contractors were also promoted to long-term status, upping the total headcount for the company even more. Unfortunately, many of the positions were vulnerable to being cut during the second quarter. It was at this time that Schlumberger broadcast the elimination of more than 8,000 jobs on the heels of its report of a $2.16 billion loss for that same quarter.

By September, Schlumberger also reported a dismissal of 2,000 workers in Venezuela. The elimination was an effort to scale down the work on most of its projects to refocus attention on the two ventures known as Petropiar and Petromonagas. The cuts sparked protests in Maracaibo, the capital of the Venezuelan state known as Zulia.

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