Schlumberger posts huge full-year loss

The world’s largest oilfield services firm posted a double-digit full-year 2019 loss measured in billions of dollars, red ink being to be countered by the sale of underperforming assets, stacking frac fleets, closing locations and laying off personnel.

Schlumberger reported a $10.1 billion loss in 2019 compared with a $2.2 billion profit in 2018. It had $32.9 billion in revenue for the year, up slightly from $32.8 billion in 2018.

Full-year earnings were dragged down by an $11.4 billion third-quarter loss, as the company wrote down the value of two past acquisitions and experienced nearly a year of weakened demand from its North American hydraulic fracturing business.

Schlumberger CEO Olivier Le Peuch reported Friday he expects the 2020 shale market to decline by high-single or low-double digit percentages.

In response, Schlumberger’s North American unit is selling noncore businesses, stacking nearly one-third of its frac fleet and closing one-fourth of its locations. Schlumberger also said it laid off 1,400 North American employees in the fourth quarter.

Those cuts and focusing on the three largest U.S. shale basins will save the company $300 million annually, Le Peuch said.

Schlumberger in the fourth quarter saw profit dropped 33%, falling to $333 million from $498 million in the year-ago quarter, while revenue remained steady at $8.2 billion.

The fourth quarter is generally tough for oilfield service companies, because customers reach their budget limits at the end of the year. Crude oil prices remained near $50 per barrel for most of 2019, further weakening demand for fracking services in the U.S. and Canada.

Schlumberger's North American profit declined by 10% compared with 2018, to $10.8 billion. Market weakness in North America was partially offset by 8% growth in international revenue, particularly in the Middle East, Europe and Latin America.

“We ended the year building on the strength of our international franchise, driven by the breadth of the international recovery, after four consecutive years of declining revenue," Le Peuch said.

During the third quarter, Schlumberger wrote down the value of business units formed by the 2010 acquisition of fellow oilfield services company Smith International, and the 2016 acquisition of offshore service company Cameron International.

Headquartered in Paris but with principal offices in Houston, Schlumberger is the largest oil-field service company in the world with more than 100,000 employees in 85 nations.

Source: Kallanish Energy