Schlumberger, the largest oil field service company in the world, is planning a major overhaul of its business units that will now be split into four new divisions that will operate in five geographic territories.
Citing future challenges in the energy industry, the Houston and Paris-based company reported Thursday that the companywide restructuring would take places over the next few months.
“The restructuring is aligned with the company’s performance strategy, and our aspiration to become the performance partner of choice for our customers,” the company said in a statement.
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Under the company’s plan, Schlumberger plans to dissolve its four existing businesss units in favor of four new ones: digital & integration, reservoir performance, well construction and production system.
The company is also dividing the globe into five basins: Americas Land, Offshore Atlantic, Middle East & North Africa, Asia and Russia & Central Asia. With each of those areas having different needs, Schlumberger is created 30 “GeoUnits” that will provide fit-for-basin technology for customers.
“In addition to alignment with our customers’ workflows, the company restructuring will benefit our customers through greater ease of doing business, improved responsiveness, and better alignment with customer requirements,” the company said.
Already getting nods of approval from investors, Schlumberger’s plan comes at a time when the coronavirus pandemic has cut global demand for crude oil, exacerbated a supply and sent prices crashed to their lowest point in more than 20 years. The resulting industry downturn has caused the company’s customers to cut back on spending.
Vebs Vaishnav, an oil field service company analyst with Scotiabank, said the restructuring plan will make customer interactions easier and that financial reporting for the new divisions will begin in either the fourth quarter of this year of the first quarter of 2021.
“This will not only help from a revenue perspective, but also provide upside to initial $1 billion cost savings,” Vaishnav said.