Yahoo Finance Here's How Schlumberger Will Cut $1.5B in Costs Every Year
Schlumberger Limited SLB is planning to bear about $1.4-billion charges related to the ongoing restructuring and associated job cuts, said its CEO Olivier Le Peuch.
Notably, the one-time charge will be in the range of $1.2 billion to $1.4 billion. Per the restructuring initiative, the company will divide its 17 product lines into four units. The company will also restructure its global organization across five major oil basins.
Peuch believes that more layoffs and the restructuring program will help the company survive the coronavirus-induced downturn in the oilfield service business. With the pandemic hurting global energy demand and keeping oil in the bearish territory, explorers have little incentive to award contracts to oilfield service players for upstream operations.
On the brighter side, the restructuring will help Schlumberger save roughly $1.5 billion in costs every year, added Peuch. The company is reportedly looking to augment the use of automation and digital technologies in its field activities, highlighting its focus on lowering costs and boosting the bottom line.
Investors should also know that although Schlumberger had earlier warned of a bleak June quarter for oilfield service business, the decline in activities has been sharper than anticipated, per Peuch. The underperformance can be attributed to not only activity disruptions in the land market of North America but also weakness in the international market owing to the outbreak.
Schlumberger Limited Price
Schlumberger Limited price | Schlumberger Limited Quote
Currently, Schlumberger carries a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy sector are Murphy USA Inc MUSA, QEP Resources, Inc. QEP and CNX Resources Corporation CNX. All the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Murphy USA is likely to see earnings growth of 7% in the next five years.
QEP Resources has witnessed upward earnings estimate revisions for 2020 in the past 30 days.
CNX Resources has witnessed upward estimate revisions for 2020 bottom line in the past 60 days.
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