HOUSTON, Jan. 22 (UPI) -- With North American investments at historic lows, there are few signs of short-term recovery in the energy sector, services company Schlumberger said.
Schlumberger, one of the largest companies in the upstream sector, reported revenue for the fourth quarter came in at $7.7 billion, a 9 percent decline from one year ago. North American operations accounted for the bulk of the drop, with land-based revenue falling off in the region by 45 percent.
The company said the decrease in land activity was the sharpest in 30 years as capital spending by North American players declined more than 40 percent last year.
Last year's rig count in the United States was off nearly 70 percent from 2014 and Schlumberger said the "massive over-capacity" in the market suggested there were few signs of a pricing recovery on the immediate horizon.
"The worsening market conditions added further pressure to a deepening financial crisis in the exploration and production industry, and prompted customers to make further cuts to already significantly lower exploration and production investment levels," Schlumberger Chairman and CEO Paal Kibsgaard said in a statement.
Baker Hughes, a Schlumberger rival providing rig data for the industry, said the average U.S. rig count for December was 714, down 62 percent from the previous year. Halliburton and Baker Hughes aim to merge in an effort to streamline operations during the market downturn.
Schlumberger said the North American decline was partially offset but "robust" activity in countries like Saudi Arabia. Riyadh, the de facto head of the Organization of Petroleum Exporting Countries, has defended a strong production policy on the expectations that the market will rebound with stronger demand.
Most market analysts expect a balance between supply and demand will return in the latter half of 2016 or early 2017, though crude oil prices will remain at low levels when compared with peak 2014 prices above $100 per barrel.
"In anticipation of an extended activity weakness in the first half of 2016, we implemented another significant adjustment to our cost and resource base during the fourth quarter," Kibsgaard said. "This included a further workforce reduction of 10,000 employees, as well as greater streamlining of our overhead, infrastructure and asset base."