Schlumberger Ltd, the world’s No.1 oilfield services provider, said the oil downturn appeared to have bottomed out and it was considering rolling back pricing concessions. Schlumberger’s statement echoed smaller rival Halliburton Co’s comment that “deep, uneconomic pricing cuts” would have to be reversed. Oilfield services companies were forced to cut rates after oil producers slashed their capital budgets in response to a slide in crude prices to their lowest in more than a decade. “As oil prices have nearly doubled from their lows of January 2016, we are now shifting our focus to recover the temporary pricing concessions that have been made,” Chief Executive Paal Kibsgaard said in a statement on Thursday.
He said the company was also planning to renegotiate contracts with limited promise of longer-term financial viability. Halliburton said on Wednesday that the company has been reviewing every contract and program, down to individual wells, as it expects to see a modest uptick in rig count in North America during the second half of the year. U.S. crude has rebounded since slumping to its lowest in over a decade at $26.19 a barrel earlier this year. It was trading at $44.73 at 6:30 p.m. ET on Thursday. Schlumberger, which reported a better-than-expected adjusted profit for the 19th quarter in a row, said activity in 2016 would still be weak.
Drillers have added a net 32 oil rigs since early June, when crude prices topped $50 a barrel. U.S. drillers added six oil rigs in the week to July 15, the third straight week of additions, according to a report by oilfield service provider Baker Hughes Inc. Schlumberger said on Thursday it cut 16,000 jobs in the first half of the year, bringing the total reduction to 50,000 since the oil price peak in 2014. The company has aggressively cut costs to boost margins, helping its profit top Wall Street’s expectations since Kibsgaard became CEO. Net loss attributable to the company was $2.16 billion, or $1.56 per share, in the second quarter ended June 30, compared with a profit of $1.12 million, or 88 cents per share, a year earlier.
The company reported a net loss primarily on a $1.9 billion pretax charge related to assets it deemed as not recoverable. Excluding items, the company earned 23 cents per share, above analysts’ average estimate of 21 cents, according to Thomson Reuters I/B/E/S. Revenue fell 20.5 percent to $7.16 billion, still above the estimated $7.13 billion. Shares of the company closed down 0.7 percent at $80.02 on the New York Stock Exchange.