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Schlumberger reported quarterly results on Friday.

Richard Carson/Reuters

Oilfield services giant Schlumberger NV on Friday outlined plans for deeper spending cuts after recording a $3.7 billion charge and a second straight quarterly loss on thousands of job cuts and a pipeline outage in Ecuador.

The large loss capped second-quarter reports from U.S. oilfield services providers that laid bare the damage wreaked by the coronavirus crisis. Producers cut spending about 40 per cent this year as energy prices and demand sank on pandemic-related shutdowns.

Schlumberger has cut some 21,000 jobs, a fifth of its workforce, amid the steep drop in activity. Second quarter charges included $1.02 billion for severance costs, $977 million for asset impairments, and $730 million on Latin America projects, where a landslide disrupted a major customer.

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Although crude prices have recovered from the historic declines in March and April, they are down around 33 per cent for the year. Schlumberger plans to cut another $300 million from this year’s spending, bringing total cuts to a 45 per cent decrease from last year.

A COVID-19 resurgence could upset the company’s outlook for a near-term normalization of oil prices, Chief Executive Olivier Le Peuch said in a statement. He did not offer an earnings outlook for the rest of the year.

Schlumberger, which is continuing to restructure to adjust to the price crash, said North American revenue fell to $1.18 billion in the second quarter, less than half of what it was a year earlier, with only slightly better conditions expected in the current quarter.

Conditions are set “for a modest frac completion activity increase in North America, though from a very low base,” Le Peuch said, referring to work to complete shale oil wells.

Schlumberger stock was down slightly at $19.23 per share in early trading on the New York Stock Exchange. Wall Street praised the spending cuts.

“Hefty cost reduction efforts drove much healthier than anticipated (adjusted) earnings results,” wrote Tudor Pickering Holt & Co analysts in a note.

The world’s largest oilfield services provider reported a net loss of $3.43 billion, or $2.47 per share, for the second quarter, compared with a profit of $492 million, or 35 cents per share, a year earlier.

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Excluding charges, the company earned 5 cents per share.

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