Schlumberger May Lay-off 10,000 More Employees A New Financial Disclosure Suggests #oilservicesequipment

By 1st December 2015 Industry News No Comments

A new financial filing from Schlumberger on Tuesday suggests that mass lay-offs are back on the table for the oilfield service giant. Downsizing has been on hold at Schlumberger as the company focused on maintaining operational scale in anticipation of a recovery for the past few quarters. But the outlook for 2016 has dimmed as oil prices remain depressed.

Up To 10,000 Lay-Offs May Be Coming

On Tuesday morning, Schlumberger said in an SEC filing that it will take a $350mm restructuring charge associated with workforce reductions during the fourth quarter. The company had indicated in October that the charge and further downsizing was coming. Large lay-offs follow charges like this.

The filing did not include the number of jobs that would be cut. And Schlumberger declined our request for comment on the number of employees that could be let go. The company is not ready to disclose the extent of the headcount reduction at the moment. However, we estimate the financial disclosure means approximately 10,000 jobs may be cut in this latest round.

Here’s how we get to this estimate. So far this year, Schlumberger has disclosed 20,000 lay-offs. In January, 9,000 lay-offs were disclosed and during 1Q a further 11,000 employees were released. In those two cuts, Schlumberger took charges of $296mm and $390mm, respectively. This averages out to a charge of about $34,000 for each employee released. Applying the same ratio to this new $350mm charge suggests about 10,200 additional employees could be released.

To be sure, other variables could come into play that make the extent of this round of cuts larger or smaller. For example, the 1Q15 restructuring charge included leave of absence incentives. So our 10,000 headcount reduction estimate is just that, an estimate. But wherever the number ultimately falls, one thing is absolutely clear – mass lay-offs are returning to Schlumberger and pink slips will likely be handed out between now and early next year.

Schlumberger Had Put Lay-Offs On Hold, But The 2016 Outlook Has Dimmed

Schlumberger had put mass lay-offs on hold during 2Q and 3Q this year. On a conference call during July, CEO Paal Kibsgaard said: “For now, we have decided to preserve our current structure for Q3, and this is in order to be ready for increased activity as we go forward.” But since then, oil prices have dissappointed, customer budgets continued to shrink, and the outlook for 2016 has deteriorated. And in October, the company indicated that its resizing would be back on the table during 4Q.

Speaking at an investor conference on Tuesday December 1, 2015, Patrick Schorn President Schlumberger Operations said: “The latest leg down in activity has led us to again evaluate our staffing levels against expected activity. Following which, we will further right size the organization based on the activity outlook for 2016 and streamline our support structure.” This slide from Schorn’s presentation Tuesday shows the resizing for support and field staff at Schlumberger.

If our estimate of the headcount reduction size proves correct, this latest round of mass lay-offs could take Schlumberger’s total headcount reduction since late-2014 up to 30,000 employees. From a peak near 130,000 workers, Schlumberger’s headcount would be down about 23% for the downcycle if another 10,000 employees are released.

If you have been dislocated during the O&G industry’s downsizing, can help. With the largest global selection of oil and gas jobs, Oilpro is the best place to find your next opportunity. Click here to search all 8,000 jobs, and remember there is never a charge for candidates looking for a position on