Amid U.S. oil price crash, cost cutting ripples through industry

(Reuters) By Edward McAllister – Any lingering doubt about the depth of the crisis facing the U.S. energy industry is quickly evaporating as even the biggest firms slash spending amid the steepest oil price crash since the recession, sending ripples across the vast sector. In a stark sign of how a sudden, 60 percent drop in oil prices is biting, oil services giant Schlumberger Ltd on Thursday said it will reduce spending this year by 25 percent and fire 9,000 workers worldwide, surprising investors with the size of the cuts. As activity slows and drillers idle rigs at the fastest pace in more than 20 years, the magnitude and speed of the changes are surprising firms that provide some of the raw materials and equipment essential to drilling that even two months ago hoped to dodge the ill effects of the slowdown. “There is total chaos and uncertainty and it is impacting the whole ecosystem,” said Aamer Sarfraz, chief executive of United Guar, which provides guar gum used in fracking to major oil service firms, but not Schlumberger. Schlumberger’s announcement lays bare the strain that a supply glut and subsequent dive in prices is putting on the engine room of the … continue reading

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