Schlumberger cuts 9,000 jobs in face of slide in crude oil prices

Schlumberger, the world's biggest oilfield-services company, tackled the "uncertain environment" of plummeting crude prices head-on by cutting about 9,000 jobs and reducing costs.

Anticipating lower spending by customers this year, Schlumberger is decreasing its workforce by 7.1 per cent and seeking to lower operating costs at a unit that helps producers find oil and natural gas, the company said in an earnings report this week.

Coping with oil prices near 5½-year lows, energy producers are expected to cut spending in the US by some 35 per cent in 2015, according to Cowen & Co.

The number of rigs drilling on US land could fall by as many as 750 this year, Wells Fargo said in a note last Tuesday, reducing the total by more than 40 per cent.

The coming year “is looking like it’s gonna be pretty rough”, Rob Desai, an analyst at Edward Jones, who rates the shares a buy and owns none, said. “With the potential for this to last some time, it’s in the best interest of the company to attack it aggressively.”

Schlumberger sees an opportunity to increase its market share after two rivals, Baker Hughes and Halliburton, agreed to merge last year in a $34.6 billion deal.

Chief executive Paal Kibsgaard told investors on a Friday conference call the company would pursue "other opportunities we have on our list" if the drop in commodity prices makes bigger acquisitions more attractive.

The company boosted its quarterly dividend 25 per cent.

The company, which had doubled its workforce in the past 10 years, took a $1.77 billion one-time charge associated with the job cuts and restructuring of its seismic unit, as well as the devaluation of Venezuela’s currency and a lower value for its assets in Texas.

Net income for the fourth quarter dropped to $302 million, or 23 US cents a share, from $1.66 billion, or $1.26, a year earlier. – Bloomberg