Schlumberger posts loss on US$8.5bil charge as customers accelerate cuts

DENVER (Reuters) - Schlumberger NV, the top oilfield services firm, said on Friday first-quarter earnings swung to a loss on US$8.5 billion in asset writedowns, as customers accelerated spending cuts amid the continuing decline in oil prices.

Crude prices plunged 60% in March after Saudi Arabia and Russia vowed to pump full bore and the spread of the novel coronavirus crushed global fuel demand.

On Friday, international Brent crude futures were trading around US$28 a barrel, well below the cost of production for many big producers.

The decline has caused oil giants Exxon Mobil, ConocoPhillips and others to cut spending at least 30% and halt some drilling.

Schlumberger expects overall global spending to fall roughly 20% in 2020, with a 40% drop in North America.

While OPEC and allies agreed to reduce output next month by 9.7 million barrels per day (bpd) to buttress crude prices, the flood of oil on markets and business lockdowns from the coronavirus continues to hit oil prices.

The second quarter "is likely to be the most uncertain and disruptive quarter the industry has ever seen," Chief Executive Olivier Le Peuch told investors on Friday.

Schlumberger's international business, which provides about 70% of sales, remained a bright spot with revenue up 2% year over year, compared with a 17% drop in North American revenue.

But the resilience in international markets "is a moving target" as national oil companies and others continue to reduce spending, wrote analysts at energy investment firm Tudor, Pickering, Holt & Co.

Schlumberger cut its capital investments by 30% this year to US$1.8 billion, and pared its quarterly dividend to 12.5 cents from 50 cents per share to preserve cash.

Schlumberger executives have taken a 20% pay cut, while the company has reduced staff and furloughed workers.

Shares rose 5.7% in premarket trading.

Most of the US$8.5 billion charge to earnings was from writing down the value of assets because of the business decline.

Some US$587 million came from its North America pressure pumping unit - a business it expanded roughly two years ago with a US$430 million acquisition of Weatherford's assets.

The charge led the company to report a first-quarter net loss of US$7.38 billion, or US$5.32 per share, compared with a profit of US$421 million, or 30 cents per share, a year earlier.

In North America, revenue was US$2.3 billion, a 7% decline from the last quarter.

Schlumberger has been restructuring its North American business, and in January said it would idle roughly 50% of its hydraulic fracturing fleet. In March, as activity dropped off, the company reduced its active fleet 27%.

Excluding charges and credits, the company earned 25 cents per share, slightly beating analysts' average estimate of 24 cents, according to Refinitiv IBES data.

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