Schlumberger Ltd. has pulled out of the Hobbs area.
The company doors were shuttered on Friday with a skeleton crew inside the fence claiming they were unable to speak to the press.
There were only about a dozen private vehicles in the company parking lot.
After several calls and emails, Schlumberger corporate office released the following statement:
“The world is going through an unprecedented global health and economic crisis sparked by the COVID-19 pandemic. The effect of this crisis on the oil and gas industry was amplified by a battle for market share between the world’s largest oil producers. This combination has created shocks in both oil supply and demand, resulting in the most challenging environment for the industry in many decades. As a direct result of this environment, much of our operational capacity is unneeded, and some of our facilities are underutilized.
“In light of these realities, we have made the difficult decision to consolidate our well services operations for the Permian Basin in Midland, Texas. We will continue to service our customers’ needs in South East New Mexico as before. Our priorities are the safety of our employees and contractors, superior service for our customers, and making this transition as smooth as possible to maintain seamless business continuity.”
Permian Basin moves comes on the heals of the company announcing it was restructuring its business operations.
Touted as the world’s largest oilfield-services company, Schlumberger Ltd. cut its shareholder dividend 75% and is restructuring businesses, cutting jobs and closing facilities to cope with the current historic drop in oil production, according to CEO and director Olivier Le Peuch, reporting in a quarterly conference call from Houston on April 17.
Le Peuch noted that Schlumberger is bracing for an acute downturn, with North American oilfield activity set to decline 40% to 60% in the second quarter, the steepest drop in several decades.
Having already cut 1,500 North American jobs in the first quarter that ended in March, Schlumberger plans to cut capital investments by more than 30 percent in what Le Peuch said is likely to be the most uncertain and disruptive quarter ever seen by the oil and gas industry.
“We’re also reducing our research and engineering investment by more than 20% in the second quarter to reflect the necessary adjustment to our 2020 commercialization program,” Le Peuch said.
The Schlumberger CEO announced during the conference call, “We’ll continue to decisively implement structural changes during the second quarter, both in North America and internationally to align our cost base with the anticipated short-term and second-half activity outlook—with full understanding that the pace and scale of decline is still uncertain but will be more abrupt than during any recent downturn.”
Le Peuch also said the company has taken “temporary measures to conserve cash” by furloughing employees, both in North America and internationally, and reducing compensation for executives and the board of directors.
“The most severe impact was in North America land where customers were fast to react with a sharp 17% cut in headcount,” Le Peuch said.
Oil prices collapsing in March resulted in drastically reduced numbers of rigs and hydraulic fracturing.
“Along with well construction and completion activity decreasing, the technology mix switched from driving performance to saving costs,” Le Peuch said. He explained the company reduced capacity in North America by more than 27%.
“In contrast, our international revenue closed 2% ahead year-on-year or 4% when accounting for the 2019 business divestiture,” Le Peuch said.
In addition to the reduced demand for oil and the volatile level of oil prices, Le Peuch said Schlumberger faces two degrees of uncertainty.
“First, it is very difficult to model or predict the frequency or magnitude of the COVID-19 disruption on field operations,” he said. “Second, it is too early to judge the impact of the recent OPEC+ decision on the level of international activity as well as its repercussion on storage levels globally and related risks of production shut-ins.”
Curtis Wynne may be contacted at reporter3@ hobbsnews.com.
