Schlumberger, the largest oil-field service company in the world, lost $10.1 billion in 2019 as a result of hefty write-downs on two past acquisitions and weakening demand for hydraulic fracturing services in the United States and Canada.
Source: Houston Chronicle
The company’s 2019 loss on $32.9 billion in revenue compares with a $2.2 billion profit on $32.8 billion in revenue in 2018. The company’s year-end figures translated into a loss per share of $7.32 compared with earnings per share of $1.53 last year.
Those results were mixed compared with Wall Street’s year-end expectations for nearly $32.9 billion of revenue and earnings per share of $1.45.
Year-end earnings were dragged down by an $11.4 billion loss during the third quarter, when the company wrote down the value of two past acquisitions and saw nearly a year of weakened demand from its North American hydraulic fracturing business.
“These charges were largely noncash and primarily related to goodwill, intangible assets, and fixed assets. They did not impede our ability to generate strong cash flow as we demonstrated in the second half of the year,” Schlumberger CEO Olivier Le Peuch said in a statement.
Looking at the company’s fourth-quarter performance, Schlumberger made $333 million on revenue of $8.2 billion. The figures were mixed compared with the $498 million profit on $8.2 billion of revenue during the fourth quarter of 2018.
The fourth quarter is usually a tough one for oil-field service companies, because customers reach their budget limits at the end of the year. Crude-oil prices remained near $50 per barrel for most of 2019 — further weakening demand for hydraulic fracturing services in the United States and Canada.
Schlumberger ended 2019 with a 10 percent decline in revenue in North America. Market weakness in the region was partially offset by 8 percent growth in international revenue, particularly in the Middle East, Europe and Latin America.
“We ended the year building on the strength of our international franchise, driven by the breadth of the international recovery, after four consecutive years of declining revenue,” Le Peuch said.
During the third quarter, Schlumberger wrote down the value of business units formed by the 2010 acquisition of Houston oil-field service company Smith International and the 2016 acquisition of Houston offshore service company Cameron International.
Headquartered in Paris but with its principal offices in Houston, Schlumberger is the largest oil-field service company in the world with more than 100,000 employees in 85 nations.
