BA Boeing Co

By Collin Eaton 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (July 25, 2020).

Schlumberger Ltd., the world's largest oil-field services company, is cutting about 21,000 jobs as oil producers slash spending in response to a historic drop in prices amid the coronavirus pandemic.

Schlumberger said Friday that it recorded $3.7 billion in impairment charges in the second quarter, including about $1 billion related to the job cuts, which represent roughly one-fifth of its workforce.

"This has probably been the most challenging quarter in past decades," Chief Executive Olivier Le Peuch said, noting revenue fell sharply because of an unprecedented fall in oil-field activity in North America.

Schlumberger's sweeping workforce reduction is the latest example of how companies are having to sharply tighten their belts and cut staff as demand for their products and services plummets due to the pandemic.

From United Airlines Holdings Inc. and Boeing Co. to General Electric Co. and Uber Technologies Inc., dozens of major companies have announced they are laying off workers as they buckle down in anticipation of a prolonged slowdown.

Many companies have chosen to furlough rather than completely sever ties with workers in hopes of bringing them back when conditions improve. But as the effects of the pandemic drag on, more employers may resort to letting workers go.

Energy companies have been particularly hard-hit. U.S. oil prices dropped into negative territory for the first time in April as demand for gasoline and jet fuel fell dramatically this spring after people stopped traveling and governments imposed stay-at-home restrictions.

The oil price crash prompted U.S. oil companies to sharply cut capital spending on drilling and fracking new wells, the lifeblood of oil-field service companies such as Schlumberger and rivals Halliburton Co. and Baker Hughes Co.

Earlier this week, Halliburton and Baker Hughes both reported losses and declining revenue for the second quarter, with Halliburton estimating spending by North American oil-field services customers will decline 50% this year compared with 2019.

Schlumberger's Mr. Le Peuch said the company has accelerated a plan to restructure its North American business, shutting down scores of facilities in a move to position itself "for a market of smaller scale and lower growth outlook, but with higher returns."

He said oil demand is slowly returning to normal and is expected to improve as governments lift restrictions in support of increased consumption, paving the way for a modest pickup in fracking activity in North America.

"We expect the global decline to recede into a soft landing in the coming months absent further negative impact from Covid-19 on the economic recovery," Mr. Le Peuch said in a conference call Friday.

As many as 55,000 of the company's employees are working remotely, he said. Schlumberger has corporate offices in Paris, Houston, London and The Hague.

For the second quarter, Schlumberger reported a net loss of $3.4 billion, or $2.47 a share, compared with a profit of $492 million, or 35 cents a share, in the same period last year. Revenue declined 35% to $5.4 billion, with North American sales dropping 58% to about $1.2 billion.

Earnings per share, excluding charges and credits, came to 5 cents. Analysts polled by FactSet were expecting a loss of a penny a share.

Schlumberger said it employed approximately 85,000 people as of the end of the second quarter. It had said in the first quarter it employed about 103,000.

Halliburton has also cut thousands of jobs, reporting Monday that it had more than 40,000 employees as of the end of the second quarter, down from about 55,000 at the end of the fourth quarter. It didn't provide specific job-cut numbers.

"This was a difficult decision, but is a necessary action as we work to successfully adapt to challenging market conditions," Halliburton spokeswoman Emily Mir said.

Last month, British oil giant BP PLC said it plans to cut nearly 10,000 jobs, or 14% of its workforce. U.S. oil major Chevron Corp. has said it expects to reduce its global workforce of about 45,000 by 10% to 15%, with most of the reduction taking place this year.

Write to Collin Eaton at collin.eaton@wsj.com

(END) Dow Jones Newswires

July 25, 2020 02:47 ET (06:47 GMT)

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