Schlumberger slashes 9000 jobs as oil continues to slump

Photo of author

By Jacob Maslow

Fracking for shale gas
Fracking infographic

The current Saudi Arabia-US shale oil faceoff in the global oil markets is fast racking up casualties. It is translating into real pain in the job market. First, North Dakota’s oil rigs have declined to their lowest levels in five years. Each rig lost means lost jobs. Second, the job losses aren’t restricted to just the companies that actually get the oil out of the ground. Oil-related or oil services companies are also feeling the pain. Case in point: the world’s biggest and most respected oil services firm, Schlumberger (NYSE:SLB), announced it will be cutting 9000 people from its payrolls. The oilfield services provider apparently doesn’t see the decline in oil’s fortunes reversing anytime soon. The 9000 job cuts is quite steep and reflects around 7 percent of the oil services giant’s global personnel. As more and more of Schlumberger’s customers cut back on capital expansion and drilling plans, the company is under pressure to reduce costs further.

This massive layoff announcement isn’t the only bad news to hit Schlumberger lately. The company already announced that it will be taking a huge $1 billion charge in the fourth quarter due to the slump in global oil prices. Expect similar news from other oil and oil-related companies. This is particularly troubling since Schlumberger is one of the bluest of the blue chip energy sector stocks out there. If this company’s hurting, one can only imagine the dire straits less solid energy sector companies might be in. It would not be surprising to see quite a number of consolidations, if not bankruptcies, in the energy sector in the following quarters.
As I have mentioned in a previous post, you might want to consider shorting energy or energy-related stocks that are currently overpriced. Just use the method I outlined. There are quite a number of them since the market hasn’t yet fully priced the impact of oil’s crash into the value of those affected equities.
Images Courtesy of DepositPhotos