The operations of Schlumberger were seriously affected in the first quarter of this year, thus resulted to poor performance.
The chairman and CEO Paal Kibsgaard said: â€œDuring the first quarter of 2016, 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.
He said budgeted E&P spend fell again and substantially affected our operating results.
The chairman said this environment is expected to continue deteriorating over the coming quarter given the magnitude and erratic nature of the disruptions in activity.
He said sequentially, the first-quarter revenue decrease of 16per cent was one of the steepest quarterly declines we have posted since this downturn started.
Kibsgaard noted that this was driven by a continuing drop in activity and persistent pricing pressure throughout our global operations as well as from project delays, job cancellations and activity disruptions.
He said North America revenue fell 25per cent sequentially as the US land rig count declined 31per cent following customer budget cuts.
The chairman disclosed that by the end of the quarter, the US land rig count had fallen to around 400, representing a drop of 80per cent from the peak of October 2014.
He said international revenue declined 13per cent due to a combination of customer budget cuts, activity disruptions, seasonal winter slowdowns, and continued pricing pressure.
The chairman said the decline in international revenue was most pronounced in the Europe/CIS/Africa Area where seasonally lower performance was exacerbated by the further weakness of the Russian ruble.
Â â€œAmong the business segments, first-quarter revenues of the Drilling and Reservoir Characterization Groups declined sequentially by 16per cent and 20per cent, respectively, on continued lower demand for exploration- and development-related products and services as customer budgets were further reduced.Â Production Group revenue declined by 11per cent generally due to lower pressure pumping services in North America.
â€œAs previously announced, the Cameron merger closed on April 1, 2016.Â Cameron is now the fourth Schlumberger product group alongside the existing Reservoir Characterization, Drilling and Production Groups.Â Cameronâ€™s first-quarter revenue was $1.6 billion.
â€œMeanwhile, E&P spending cuts continue. Recent spending surveys for 2016 now indicate sharper declines than previously forecasted.Â Global spending reductions in 2016 are approaching 25per cent, corresponding to reductions between 40per cent to 50per cent in North America and around 20per cent internationally.
â€œIn this environment, our overall outlook for the oil markets remains unchanged with the tightening of the supply-demand balance expected to continue during the rest of the year.Â Although new exports from Iran and growing global oil inventories drove oil prices lower earlier in the quarter, prices have rebounded to around the $40 level, due to underlying market trends, supply disruptions and talks about a production freeze.Â Demand growth forecasts remain steady, while OPEC production levels have been largely flat since mid-2015.Â Production in North America continues to fall as the effects of decline become more pronounced, while mature non-OPEC production is also declining in a number of regions.
â€œIn navigating this landscape, we remain focused on balancing market share against profitability while also working to best preserve the core capabilities of the company for the long term.Â We will continue to tailor costs and resources to activity, while remaining cautious in adding back capacity given the unpredictable nature of the current market.
â€œIn the midst of a deepening downturn that has already entered its seventh quarter, we are still optimistic and confident about the medium term outlook for Schlumberger.Â Our unmatched ability to generate cash in the oilfield services industry allows us to capitalize on a variety of significant business opportunities while continuing to return cash to our shareholders through dividends and stock buy-backs. This, combined with the strategic moves we have made that include the Cameron merger, leaves us very well positioned once markets start to recover.â€