Schlumberger layoffs, furloughs, exec pay cuts incoming

A report by the Houston Business Journal says oil field services giant Schlumberger Ltd. is making further changes to its operations as a new downturn grips the oil and gas industry, changes that will include layoffs, furloughs and other moves to save money.

The company will accelerate efforts to restructure its land-based operations, which will include a reduction in its headcount, Schlumberger spokesperson Joao Felix said in an email to the Houston Business Journal. The company will also institute furlough programs in some of its business lines.

At the same time, Schlumberger’s support personnel will take on modified work hours, which will result in reduced salaries as permitted by local laws, Felix said. That is expected to last for the next couple of months and will undoubtedly affect the company’s work operations in Oklahoma.

Meanwhile, the company’s senior management, including its executive team, will take 20 percent cuts to their base salary, Felix said. Like many large corporations, salary makes up the minority of Schlumberger’s executive compensation, however. A 20 percent cut to former CEO Paal Kibsgaard’s 2019 salary would have been $400,000, which would have been a 1.8 percent decrease in his overall compensation of $22.25 million for the year, according to the company’s most recent proxy statement.

Schlumberger has already cut its spending plan for 2020, reducing it by 30 percent from 2019. Oil field services and equipment companies, along with the rest of the oil and gas industry, have been put under enormous pressure on both the supply and demand side of the industry. An increase in production among OPEC countries is expected to produce a glut of available product, while social distancing measures taken in response to the COVID-19 pandemic are slicing deep into demand for transportation fuels.

Meanwhile, Houston-based Halliburton Co. is furloughing 3,500 Houston employees, who will alternate weeks working and won’t be paid for the weeks they’re off. Houston-based Noble Energy Inc. is also making cuts to employment and hours among its workforce. Apache Corp. is also laying off employees in Midland, Texas.

Several Houston-based companies have already announced spending cuts, including ConocoPhillips , Apache, Occidental Petroleum Corp.  and Marathon Oil Corp.  Total SA, a French company whose U.S. headquarters is in Houston, also announced a multibillion-dollar spending cut March 23.

Schlumberger produced $10.84 billion in 2019 North American revenue. That’s down from $11.98 billion in 2018, according to the company’s year-end financial report. The company’s total 2019 revenue of $32.92 billion was basically flat compared to 2018. Schlumberger is the world’s largest oil field services company and has its primary offices in Houston, Paris, London and The Hague.

Source: Houston Business Journal