Schlumberger Cuts 21,000 Jobs Amid Historic Oil Downturn - The Wall Street Journal

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Schlumberger says it is accelerating a plan to restructure its North American business.
Photo: richard carson/Reuters

Updated July 24, 2020 1:18 pm ET

Schlumberger Ltd., SLB 0.93% the world’s largest oil-field services company, is cutting about 21,000 jobs as oil producers slash spending in response to a historic drop in prices amid the coronavirus pandemic.

Schlumberger said Friday that it recorded $3.7 billion in impairment charges in the second quarter, including about $1 billion related to the job cuts, which represent roughly one-fifth of its workforce.

“This has probably been the most challenging quarter in past decades,” Chief Executive Olivier Le Peuch said, noting revenue fell sharply because of an unprecedented fall in oil-field activity in North America.

Schlumberger’s sweeping workforce reduction is the latest example of how companies are having to sharply tighten their belts and cut staff as demand for their products and services plummets due to the pandemic.

From United Airlines Holdings Inc. UAL -1.05% and Boeing Co. BA -1.52% to General Electric Co. and Uber Technologies Inc., UBER -3.08% dozens of major companies have announced they are laying off workers as they buckle down in anticipation of a prolonged slowdown.

Many companies have chosen to furlough rather than completely sever ties with workers in hopes of bringing them back when conditions improve. But as the effects of the pandemic drag on, more employers may resort to letting workers go.

Energy companies have been particularly hard-hit. U.S. oil prices dropped into negative territory for the first time in April as demand for gasoline and jet fuel fell dramatically this spring after people stopped traveling and governments imposed stay-at-home restrictions.

The oil price crash prompted U.S. oil companies to sharply cut capital spending on drilling and fracking new wells, the lifeblood of oil-field service companies such as Schlumberger and rivals Halliburton Co. and Baker Hughes Co.

Earlier this week, Halliburton and Baker Hughes both reported losses and declining revenue for the second quarter, with Halliburton estimating spending by North American oil-field services customers will decline 50% this year compared with 2019.

Schlumberger’s Mr. Le Peuch said the company has accelerated a plan to restructure its North American business, shutting down scores of facilities in a move to position itself “for a market of smaller scale and lower growth outlook, but with higher returns.”