US Giant Schlumberger Loses $2.2bn in Q2

The world's biggest oilfield services company Schlumberger reported a Q2 2016 net loss of $2.16bn July 21, down from a profit of $501mn in Q1 2016, despite the rising oil price; and down from a profit of $1.124bn in Q2 2015.

CEO Pal Kibsgard said: “In the second quarter market conditions worsened further in most parts of our global operations, but in spite of the continuing headwinds we now appear to have reached the bottom of the cycle. As we continued to navigate this challenging environment, we again delivered robust pretax operating income, operating margin, and free cash flow." Revenue over the quarter rose 10% sequentially, reflecting a full quarter of activity from the Cameron businesses that contributed $1.5bn. The drilling segment saw the biggest fall in margins over the period. 

The acquisition of Cameron, which completed April 1, "will result in the industry’s first complete drilling and production systems, which will be enabled by Schlumberger expertise in instrumentation, data processing, control software, and system integration," it said.

Schlumberger CEO Pal Kibsgard (image credit: Schlumberger) 

Pre-tax revenue fell 12%, with the major fall in North America thanks in part to a 25% drop in the US land rig count, while international revenue fell 9% owing to weaker activity, continued pricing pressure, and a large-scale cutback in Venezuela. "However, our wide geographical footprint and broad technology portfolio continued to offer unique advantages that helped to mitigate these effects," he said. 

With a global reach, its products have been designed to deal with most adverse geology and geography that the pursuit of oil and gas production can throw at it, and its quarterly results are littered with trademarked products that further reduce manpower and save time, bringing more oil and gas to the surface for the same cost. For example its Rhino XS reamer "has a single-piece body that allows for higher tensile and torque-load capacity, while Well Commander tools enable operators to boost circulation to remove cuttings at strategic points in the drillstring. As a result, the customer" – in this case BP, offshore Azerbaijan – "saved 48 hours of rig time on an offshore platform."

William Powell