Oilfield services company Schlumberger (NYSE:SLB) reported today that its second quarter revenue dropped 35% compared to the year ago period as oil prices remain depressed and production and drilling activity have pulled back. North American revenue was down 58% compared to the second quarter of 2019, and down 48% compared to the first quarter of 2020. 

The company announced that it has reduced its workforce by 21,000 employees, or about 20%. It recorded $3.7 billion in impairment charges in the second quarter, including over $1 billion associated with severance payments for the workforce reduction. 

oilfield service worker standing in front of drilling wells

Image source: Getty Images.

Activity in the oil sector has dropped dramatically as oil prices plunged earlier this year. The latest rig count data from Baker Hughes (NYSE:BHGE) shows about a 73% reduction in the United States and Canada compared to a year ago. 

Schlumberger CEO Olivier Le Peuch said, "This has probably been the most challenging quarter in past decades." Commenting on the dramatic sequential drop in activity from the first quarter of 2020, he added, "This speaks volumes about an industry confronted with historic oil demand and supply imbalances caused by demand destruction from the global COVID-19 containment effort."

Le Peuch noted that as COVID-19-related lockdown measures ease, oil demand is "slowly starting to normalize." According to the International Energy Agency (IEA), 57% of global oil demand is determined by mobility, which ground to a halt with many stay-at-home orders globally.

The company noted that conditions for the third quarter indicate a modest increase in North American fracking activity, but warned that a potential resurgence in COVID-19 cases poses a negative risk to that forecast.