Schlumberger to cut more jobs, sees recovery pushed to 2017

REUTERS - Schlumberger Ltd, the world's No.1 oilfield services provider, said it would cut more jobs and consolidate its manufacturing and distribution network as it did not expect a recovery in demand before 2017.

The company's shares fell as much as 4.6 percent to $72.63 in late-morning trading. Rivals Halliburton Inc and Baker Hughes Inc were also down about 4 percent.

"The likely timing gap between the oil price recovery and the subsequent increase in oilfield services activity in combination with a more conservative spending outlook from our customers is causing us to now take further action," said Chief Executive Paal Kibsgaard said on a conference call on Friday.

Exploration and production spending is expected to fall for a second consecutive year in 2016, a first since the 1986 downturn, Kibsgaard said.

However, the OPEC members' current spare capacity is less than 2 million barrels per day, compared with more than 10 million bpd in 1986.

Schlumberger, whose comments are closely watched for a glimpse into industry trends, said the first quarter of 2016 would be weaker than the current quarter as customers tighten purse strings further, hurting the usual year-end sales of software, products and multi-client licenses.

The company said it would take a charge to cover severance costs for additional headcount reductions in the fourth quarter.

The company, which has already cut 20,000 jobs, or about 15 percent of its workforce, did not say how many jobs it planned to cut in the next round.

"If they are going make a reduction, it is going to be a sizeable reduction to lower the cost structure and given the expected decline, 10 percent is a reasonable number," Edward Jones analyst Rob Desai said.

Deep cost cuts helped the company marginally beat analysts' earnings estimate in the third quarter, although its net income halved from a year earlier.

Kibsgaard said on Friday the market conditions are ripe for companies such as Schlumberger that have significant free cash flow to explore more acquisition opportunities.

Schlumberger said in August it would buy equipment maker Cameron International Corp for $14.8 billion to bolster its pricing capability.

(Reporting by Sayantani Ghosh and Amrutha Gayathri in Bengaluru; Editing by Robin Paxton, Saumyadeb Chakrabarty and Don Sebastian)