The world’s largest oilfield services company thinks the crude oil market has bottomed.
“In the second quarter market conditions worsened further in most parts of our global operations, but in spite of the continuing headwinds we now appear to have reached the bottom of the cycle,” said CEO Paal Kibsgaard in the earnings statement released on Thursday.
Schlumberger joined Halliburton, the world’s second-largest oilfield services company, in calling the bottom. On Wednesday, Halliburton CEO Dave Lesar said in the company’s earnings statement that he believed “the North America market has turned.”
The worst crude oil crash in decades began in mid-2014, and forced oil companies to find ways to maintain cash flow and possibly stay profitable, including job cuts and rig shuttering.
Oil prices have gained about 22% this year, and amid supply disruptions, were nearly double compared to the cycle low at one point.
To weather the downturn, Schlumberger has lowered prices for its clients and allocated capital mostly to assets with the highest return. It has also trimmed costs via its headcount, announcing an additional 16,000 layoffs on Thursday. These steps, and higher oil prices, give the company confidence that it would withstand “the weakness that will persist through 2016 as expected.”
Higher oil prices also give Schlumberger the chance to renegotiate some of its contracts with oil explorers that may not make financial sense for it going forward.
Schlumberger reported a second-quarter loss per share of $1.56, down 278% from a profit in the previous year, and a 20% year-on-year drop in revenues to $7.16 billion ($7.15 billion forecast.)