Schlumberger Posts 3rd Straight Quarterly Loss (Update)
(Adds analyst's comment at end.)
US oilfield services giant Schlumberger has suffered its third quarterly loss in a row, according to a company report published on October 16, as weak oil and gas prices curbed demand for its services.
Schlumberger's net loss came to $82mn in the three months ending September 30, compared with much greater losses of $3.43bn in the previous quarter and $11.38bn in the third quarter of 2019, which were caused by hefty impairment charges. Revenues slumped 38% year on year to $5.26bn, while adjusted core earnings (Ebitda) plunged 43% to $1.02bn.
The company's North America business was hit hardest, with revenues dropping 59% yr/yr to $1.16bn, while international revenues were down 27% at $4.09bn. Revenues from both segments were stable quarter on quarter, however, declining by only 2% and 1% respectively.
"International activity is steady following the budget resets completed in the third quarter and activity will be affected by the seasonal decline in the Northern Hemisphere, partly offset by muted year-end product and multi-client licence sales," CEO Olivier Le Peuch said in a statement.
Schlumberger's target for 2020 capital expenditure is $1.1bn in 2020, versus a $1.7bn spend last year.
Commenting on the fourth-quarter outlook, Le Peuch said: "In North America, the conditions are set for continued momentum, with improving [drilled-but-uncompleted] well completion activity in US land and a modest drilling resumption in the US and Canada."
"Overall internationally, we view the next two quarters as a period of transition for our industry at the trough of this cycle," the CEO continued. But he warned that "the near-term recovery remains fragile owing to potential subsequent waves of Covid-19 that could pose a significant risk to this outlook."
The company is the first of the major US oilfield services providers to report its third-quarter earnings. Rivals Halliburton and Baker Hughes are due to publish their results on October 19 and 21 respectively.
Commenting, an analyst at GlobalData said: "Along with continued depressed demand, a variable transportation sector and an increase in new Covid-19 cases, uncertainty still remains. Schlumberger has only seen an uptick in its production segment and has Q4 remaining to complete its cost cuts.... It's noteworthy that 44% of pre-2024 start-ups and 80% of the latter projects are in early stages and yet to take final investment decision. This drives home the magnitude of uncertainty in the outlook of capital spending projects."