SLB SLB, an American oilfield services company, is undertaking a significant internal reorganization, including a continued reduction in workforce, according to a Reuters report. The Houston-based company is implementing a new global structure as part of its ongoing cost-saving measures, reflecting a cautious outlook for industry growth amid concerns about an oversupplied oil market.
Per the report, as part of its restructuring, SLB is establishing a new performance function, which will be led by a newly appointed chief performance officer. This division will encompass multiple operational aspects, including security, operational integrity and global business services. The company’s internal communication emphasized that the primary objective is to integrate this structure across its business units, including functions, divisions, basins and geounits.
SLB has been executing restructuring initiatives over the past year, incurring $237 million in severance costs in 2024. While the exact number of job cuts in this latest round remains unclear, the company expects to finalize the reorganization by the end of the month, with personnel updates anticipated by the end of the quarter. As of February 2024, SLB employed approximately 111,000 people.
A company spokesperson noted that SLB continuously adjusts its workforce and operational structure to optimize efficiency and align with shifting business conditions. The company’s proactive restructuring aims to enhance value for stakeholders while navigating an uncertain market.
Meanwhile, geopolitical challenges persist as SLB continues operations in Russia despite U.S. sanctions. The company acknowledged that while its business remains compliant with new regulations, revenues from Russia are declining.
With the oil market facing potential oversupply and industry players exercising caution in spending, SLB’s restructuring reflects a strategic move to maintain operational efficiency and financial stability in a challenging environment.
Currently, SLB carries a Zack Rank #4 (Sell).
Investors interested in the energy sector may look at some better-ranked stocks like SM Energy Company SM, Sunoco LP SUN and Range Resources Corporation RRC. While SM Energy and Sunoco presently sport a Zacks Rank #1 (Strong Buy) each, Range Resources carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
SM Energy is set to expand its oil-centered operations in the coming years, with an increasing focus on crude oil, especially in the Permian Basin and Eagle Ford regions. The company’s attractive oil and gas investments should create long-term value for shareholders.
Sunoco is a leading wholesale motor fuel distributor in the United States, boasting a vast distribution network spanning 40 states. With long-term contracts servicing more than 10,000 convenience stores, it distributes over 10 fuel brands, ensuring a stable revenue stream. Sunoco is poised to benefit from the strategic acquisitions aimed at diversifying its business portfolio.
Range Resources is among the top 10 natural gas producers in the United States. Its diversified portfolio is spread between low-risk and long reserve-life Appalachian assets. The company’s extensive inventory of Marcellus resources with low breakeven points is a significant asset. With expanded LPG export capacity, RRC is well-positioned to meet the rising global demand, capitalizing on the role of natural gas as a clean-burning fuel amid a low-carbon shift.
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