Oilfield services provider Schlumberger took an $8.5 billion charge in the first quarter of the year rocked by the low oil price environment and the coronavirus pandemic.
Schlumberger said in its report on Friday that its worldwide revenue in 1Q 2020 was $7.5 billion, a 9 per cent decrease sequentially and 5 per cent decrease year-on-year.
The company’s loss before taxes for 1Q 2020 amounted to $8.1 billion compared to a profit of $509 million in the same period of 2019.
Schlumberger’s net loss totaled $7.4 billion in 1Q 2020 versus a $421 profit in 1Q 2019.
According to the oilfield services provider, the first quarter results included an $8.5 billion pretax charge primarily relating to the impairment of goodwill, intangible assets, and other long-lived assets.
This almost entirely non-cash charge was driven by the significant decline in market valuations during March.
Schlumberger CEO, Olivier Le Peuch , commented: “First-quarter revenue of $7.5 billion declined 9% sequentially and 5% year-on-year as the unprecedented global health and economic crisis sparked by the COVID-19 pandemic increasingly impacted industry activity during the quarter.
“ The effect of this was amplified late in the quarter by a new battle for market share between the world’s largest oil producers. This double black swan event created simultaneous shocks in oil supply and demand resulting in the most challenging environment for the industry in many decades”.
Due to the current challenging market conditions, Schlumberger is implementing cost control and cash discipline.
With that in mind, Schlumberger decided to reduce its structural and variable costs, and restructure organization to match activity where necessary.
This includes furloughing personnel, cutting salaries, lowering headcount, and closing facilities.
In addition, the board and executive officers have voluntarily agreed to reductions in their cash compensation and the company reduced its dividend by 75 per cent.
Schlumberger has also reduced its capital investment program by more than 30 per cent and will allocate resources to the more resilient markets.