Schlumberger announces 7% Workforce Cutback due to decline in crude oil

Schlumberger announces 7% Workforce Cutback due to decline in crude oil

In the wake of dwindling crude oil prices, the world's biggest oilfield-services company, Schlumberger Ltd., has decided to cut 9,000 jobs and reduce costs at a vessels unit. After anticipating lower spending by customers in 2015, the company resorted to reduce the workforce by 7.1% in addition to the reduction and reassessment of its WesternGeco fleet.

Cowen & Co has predicted that energy companies are likely to cut spending in the US by as much as 35% this year. Oil prices have gone down by more than half of what they were six months ago. Wells Fargo & Co has said that the number of onshore US rigs could see a decline by as much as 750 this year. The figure means a 43% reduction from the 1,744 in operation at the start of the year, according to Baker Hughes Inc.

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

The devaluation of Venezuela's currency is one of the major factors to have played a role in bringing the one-time charges for the quarter, said Schlumberger, which had increased its workforce by double in the past 10 years. A lower value for production assets Schlumberger owns in Texas was cited to be another reason by it for one-time charges.

Schlumberger Chief Executive Officer Paal Kibsgaard said the company is trying to control whatever it can in this uncertain environment. The company has already implemented various plans to restructure and resize the organization.

As oil prices have failed to stabilize, some producers are waiting for the right time to reveal plans for 2015.

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