Schlumberger Ltd. (NYSE: SLB) disclosed in its fourth quarter results released on Jan. 15 that it decided to cut 9,000 jobs companywide.
The cuts are in “response to lower commodity pricing and anticipated lower exploration and production spending in 2015,” Schlumberger’s press release said. The cuts, which began in the fourth quarter, are expected to be complete sometime later this year, a company spokesman told the Houston Chronicle.
Worldwide, the oilfield services giant employs about 120,000 people, so the company is reducing its workforce by 7.5 percent. Schlumberger, which has principal offices in Houston, Paris, London and The Hague, recorded a $296 million charge associated with the job cuts.
In total, Schlumberger recorded about $1.77 billion in impairments and other charges in the fourth quarter. Other charges related to the restructuring of WesternGeco ($806 million), currency devaluation loss in Venezuela ($472 million) and impairment of Schlumberger’s SPM development project in the Eagle Ford Shale ($199 million
“In this uncertain environment, we continue to focus on what we can control,” Schlumberger CEO Paal Kibsgaard said in a statement. “We have already taken a number of actions to restructure and resize our organization that has led us to record a number of charges in the fourth quarter. We are convinced that performance must now be driven by an accelerated change in the way we work through our transformation program.”
For the full year, Schlumberger’s 2014 revenue increased 7 percent year over year to $48.58 billion. However, net income decreased 19 percent year over year to $5.44 billion for 2014. Diluted earnings per share were down 17 percent to $4.16 for the full year.
“Our considerable financial strength, as demonstrated by a strong cash conversion rate of earnings that generated over $6 billion in free cash flow in 2014, has led the board of directors to approve an increase in our dividend for the fifth consecutive year, resulting in the doubling of our dividend over the five-year period,” Kibsgaard said in the statement. “In combination with our continuing share repurchase program, this clearly underlines the confidence in our ability to generate superior cash flows in spite of the more challenging environment.”
Several other energy companies have announced job cuts in recent weeks due to falling oil prices.
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