Schlumberger’s strategy for the short and long term involves exercising capital discipline and executing its capital-restructuring programme. As revenue for the company decreased 28% from US$7.45bn to US$5.35bn, Q1 to Q2 2020 respectively, Schlumberger continued work on implementing the latter part of its strategy by permanently removing a total of US$1.5bn in fixed cost both in the US and internationally, with US$1bn in severance benefits related to 21,000 loss jobs.
Digital technology is also another element of the company’s restructuring program, propping up the shortfalls caused by the workforce reductions internally, and supporting customers who similarly have had to tighten budgets and manage supply. New technology, particularly in the area of reservoir evaluation and digital solutions has met with some success among client, offering technological solutions and enhanced performance, maintaining business continuity for customers.
Schlumberger’s executives have also commented that capital discipline and resource efficiency also are important factors in preserving and improving the bottom line long term. This means strict adherence to strategic goals when reconciling opportunities. Projects meeting return margins will move forward and large contracts must have competitive yields, and closely managed for scope and budget creep. In a contracted competitive market, Schlumberger successfully added at least 4 contracts to their portfolio in Q2 2020 including:
- US$320 mil 5 year contract with optional1 year extension awarded by Kuwait Oil Company for the provision of coiled tubing and stimulation services using technologies such as OpenPath Sequence* and Active*.
- A design, engineering, procurement and construction US$125 mil contract awarded by OQ, the recouped company of Oman Oil and Orpic Group for the Bisat field.
- Five contracts awarded by SBM Offshore for processing technologies to be used on floating production, storage and offloading (FPSO) vessels.
- A US$143 mil contract awarded by China National Offshore Oil Corporation to subsidiary OneSubsea for an engineering, procurement and construction contract for supply of an integrated subsea system for Luefeng 22-1 field in South China Sea.
Schlumberger has met Q2 with successful contracts and adoption of their technology however, as damage control to the balance sheets costs were cut severely. With approximately 40% of cuts achieved and COVID-19 still a dominating force is Schlumberger’s actions enough to leave 2020 in the black.