Schlumberger (NYSE:SLB), a leading provider of technology and services to the oil and gas industry, has plans to restructure its business operations, and rearrange executive duties, according to a Reuters report. The moves come after CEO Olivier Le Peuch took over the position on August 1, 2019, and amid a sharp decline in oil prices and demand for its services amid the COVID-19 pandemic.
As oil prices dropped sharply, oil producers around the globe reacted by cutting production. The latest rig count from Baker Hughes Co. (NYSE:BKR) shows year-over-year reductions of 66% in the U.S., 63% in Canada, and 14% internationally.
In dealing with the industry slowdown, Schlumberger has already announced cost control measures including cutting jobs and furloughing some personnel, closing facilities, and cutting salaries. The Board of Directors and executive officers have also taken compensation cuts. At its first-quarter earnings call on April 17, 2020, the company also said it would cut its capital spending plan by 30% and research and development spending by 20% in the second-quarter.
The new restructuring will consolidate the company's 17 product lines into four divisions based on customer "workflow," according to the report. A company memo explains that Schlumberger "also will create five "basins" groups over 30 geographic units, replacing what it had called GeoMarkets and sub-GeoMarkets teams."
The memo also reportedly said CEO Le Peuch has picked two executives to head business and regional operations groups, which will be in place by July 1. The current executive vice president (EVP) of Reservoir and Infrastructure will become EVP of Services and Equipment over the four new business divisions, and current EVP of Operations will become EVP of Geographies, leading the regional operations group, including sales and commercial areas.