Oilfield services and well characterization company Schlumberger on Friday announced that for the first quarter of 2020, it saw revenues declining by 9% to $7.5 billion as a result of the impact of COVID-19 on the company’s activities.
The company, which has operations in Guyana in partnership with ExxonMobil and its joint venture partners HESS and CNOOC, had announced in March that it was cutting spending by 30% due to the coronavirus disruptions and the Saudi Arabia-Russia price war.
In a statement on Friday announcing first quarter 2020 results, 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.”
He noted that 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.
“Customer spending and drilling activity in North America declined as oil prices slipped early in the quarter before falling abruptly in March. This resulted in a 7% sequential decrease in North America revenue to $2.3 billion as we accelerated our land strategy to high-grade our portfolio and resized our operational footprint,” he said.
Le Peuch said that international activity, expected to be seasonally lower sequentially, suffered from COVID-19-related activity disruptions and initial customer spending cuts in response to falling oil prices. As a result, international revenue of $5.1 billion declined 10% sequentially, he said.
According to Le Peuch, the resilience of the company’s performance given the COVID-19-related disruption and the early impact of the oil price collapse delivered earnings of $0.25 per share, “only marginally short of our original expectation.”
He said the quarter was characterized by the usual combination of seasonal impact in the Northern Hemisphere and the sequential decline of product and software sales.
“However, toward the end of the quarter, activity started to decline in several basins due to the unprecedented drop in oil price and the increasing challenge posed by COVID-19. The most severe impact was in North America land, where customers were fast to react with a sharp 17% cut in rig count,” he said.
Reservoir Characterization revenue closed the quarter sequentially down 20%, partly on seasonal effects, but also as a consequence of customers curtailing their discretionary and exploration spending in the latter part of the quarter, he noted.
“Drilling revenue declined sequentially on seasonal effects and the collapse in North America late in the quarter but displayed resilience with margins flat sequentially on our operational execution and our focus on underperforming business units…” he said.