Schlumberger Profit Falls 49% as Revenue Slumps

By Tess Stynes 

Schlumberger Ltd. said its first-quarter earnings fell 49% and revenue tumbled as reduced spending by energy producers continued to hurt demand.

Oil producers have slashed their capital spending plans and halted drilling as they struggle with weak commodities prices, which in turn has pressured oil-services companies to reduce their costs.

In the latest quarter, "the decline in global activity and the rate of activity disruption reached unprecedented levels as the industry displayed clear signs of operating in a full-scale cash crisis," Chairman and Chief Executive Paal Kibsgaard said in prepared remarks Thursday.

"This environment is expected to continue deteriorating over the coming quarter given the magnitude and erratic nature of the disruptions in activity," he said, adding that "our overall outlook for the oil markets remains unchanged."

Schlumberger is the first major oil-field services company to report its first-quarter results. Halliburton Co. and Baker Hughes Inc., competitors that have a pending merger deal, are set to report on Monday and Wednesday, respectively.

The sharp decline in oil prices also has been a catalyst for energy deals, including Halliburton's planned acquisition of Baker Hughes. U.S. antitrust regulators recently filed suit to block that deal, alleging the planned combination would hurt competition in the sector.

A day after the latest quarter closed, Schlumberger completed its acquisition of Cameron International Corp., which makes drilling equipment and supplies maintenance equipment to pipelines.

Revenue in Schlumberger's North America business slumped 55%. The segment swung to a pretax operating loss of $10 million, compared with a year earlier profit of $416 million.

For Schlumberger's operations outside North America, revenue dropped 28%. Pretax operating earnings declined to $1.06 billion from $1.66 billion.

Over all, Schlumberger reported a profit of $501 million, or 40 cents a share, down from $975 million, or 76 cents a share, a year earlier. Revenue decreased 36% to $6.52 billion.

Analysts polled by Thomson Reuters expected per-share profit of 39 cents and revenue of $6.51 billion.

Mr. Kibsgaard said Schlumberger would continue to "tailor costs and resources to activity, while remaining cautious in adding back capacity given the unpredictable nature of the current market."

Schlumberger in January said it had reduced its workforce by an additional 10,000 employees on expectations demand would remain weak for the first half of this year.

Write to Tess Stynes at [e-mail]

(END) Dow Jones Newswires

April 21, 2016 17:16 ET (21:16 GMT)

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