Schlumberger reduces seismic fleet as deepwater exploration spending falls

The world’s largest oilfield services company Schlumberger has announced it will be reducing its WesternGeco fleet as lower commodity prices lead to short-term cost cutting measures by exploration companies.

According to the company’s President of operations and integration Patrick Schorn Schlumberger will be restructuring WesternGeco marine seismic fleet by retiring older vessels with low towing capacity and high operating costs.

At the same time WesternGeco says it will be converting the remaining lower-end vessels to source boats while at the same time canceling most of the third party charters.

Through the restructuring Schlumberger will reduce its fleet size to 9 survey and 6 source vessels by the end of 2014 from the previously held 15 survey and 8 source vessels by the December 2013.

This is as the company expects exploration success to drop in the coming months with only 3 billion barrels of recoverable and condensate oil having been recovered in 2014 the lowest in 25 years.

“These results are clearly not sustainable from a long term reserve replacement standpoint but we do expect lower exploration activity levels to carry forward into 2015,” Schorn said at the Cowen Energy conference yesterday.

Schorn is however quick to point out that its deepwater exploration activities for Sub-Sahara Africa especially in Western Africa remains strong.

The restructuring Schlumberger says will cost it approximately $800 million in the fourth quarter of 2014 which will mainly affect the explorer-class vessels.

Other than the reduction in the fleet Schlumberger will also be reducing the head count that will cost the company approximately $200 million but result to a more efficient workforce.