The exact magnitude of the reduction depends on changes in “customer plans,” the company’s chief executive, Olivier Le Peuch, said in a presentation he’s giving Tuesday at a Houston energy conference.
The company’s capital expenditures will be allocated “almost entirely" toward international markets, he said.
In the U.S., the company expects a “rapid reduction in rig count and completions activity,” Le Peuch said. That count could drop to 2016 levels, he warned.
Overseas, “the escalating Covid-19 situation will impact field crews and some operations,” the CEO said.
“We’re preparing for more logistical disruption as countries implement stringent restrictions. And we’re planning for reduced activity due to customer budget cuts.”
The extent of the reductions is unclear as customers review their plans, Le Peuch said. To be sure, there are “certain countries where Schlumberger is well positioned that will be more resilient,” he said.
The company’s manufacturing and supply chain are recovering to pre-crisis levels in China, Le Peuch said.
Schlumberger isn’t the only company in the oil patch to announce cutbacks. Chevron (CVX) - Get Report said Tuesday that it would suspend its stock buybacks and slash capital spending by $4 billion this year.
U.S. West Texas Intermediate oil prices have cratered 45% over the past month amid a price war between Russia and Saudi Arabia.
At last check, Schlumberger shares traded at $14.21, up 11%. That compares to a 7.02% gain for the S&P 500 index.