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Oil Prices Slump On Renewed Coronavirus Concerns

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Drilling Giant Posts $11 Billion Loss

Oil Rig

The world’s largest oilfield services provider, Schlumberger (NYSE:SLB), reported on Friday a net loss of US$11.38 billion for the third quarter, compared to a US$644-million profit for Q3 2018, after a hefty pretax charge of US$12.7 billion weighed on the most recently reported results.

The pretax charge, driven by market conditions, is almost entirely non-cash and primarily relates to goodwill, intangible assets, and fixed assets, said Schlumberger, which also flagged continued slowdown in North America’s drilling growth.

The slowdown resulted in an 11-percent yearly decline in North American revenue for Schlumberger. North American revenue dropped to US$2.85 billion in the third quarter of 2019 from US$3.189 billion in the same period of 2018.

Outside North America, the world’s top oilfield services firm reported an 8-percent annual increase in international revenues to US$5.629 billion.

“Sustained international activity drove overall growth despite mixed results in North America,” Schlumberger’s chief executive Olivier Le Peuch said, commenting on the results.

Schlumberger’s North America business saw strong offshore sales, but growth in land drilling was “minimal,” due to slowing activity and further pricing weakness, he added.

“This quarter’s results reflected a macro environment of slowing production growth rate in North America land as operators maintained capital discipline, reducing drilling and frac activity,” Le Peuch said.

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Schlumberger also pointed to increased market uncertainty, with trade disputes challenging global economic growth and weighing on the outlook for oil demand.

As early as the second quarter of this year, Schlumberger warned investors of the weakness on the North American oil services market, as land investment drops because of the cash flow constraints of E&P operators. Competitor Halliburton also admitted then that the North American onshore drilling market has become “challenging.”

Amid the further slowdown in shale drilling growth, Halliburton said earlier this month that it would lay off 650 workers across four U.S. states.

By Tsvetana Paraskova for Oilprice.com

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