Schlumberger CEO warns of 40%-60% Q2 drop in fracking work (NYSE:SLB) | Seeking Alpha

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Schlumberger (SLB +8.9%) CEO expects North American oilfield activity to decline 40%-60% in Q2 from Q1, the most severe drop in several decades, with North American capital budgets plunging 40%.

“Despite the recent agreements by the world’s largest oil producers… Q2 is likely to be the most uncertain and disruptive quarter that the industry has ever seen,” Le Peuch said during today’s earnings conference call.

Schlumberger disclosed its outlook while reporting a $7.4B net Q1 loss and saying it planned to furlough workers in response to the challenging environment; during Q1, it cut 1,500 jobs in North America.

Schlumberger’s international business, which provides ~70% of sales, remained a bright spot with revenue rising 2% Y/Y, compared with a 17% decline in North American revenue.

The company also cut its quarterly dividend to $0.125 from $0.50 to preserve cash – a “monumental decision from the management team, and exactly the right one,” according to Bernstein analysts.

The dividend cut will reduce quarterly cash outflow by just over $500M, says Johnson Rice analyst Daniel Burke, also favoring the move.

This content was originally published here.

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