Schlumberger: Oil industry in deepest financial crisis

Houston

Schlumberger Ltd expects oil producers will be in no rush to get rigs back online once crude rallies. The fragile financial state of oil explorers means there will be a noticeable lag from when oil prices climb and when exploration and production (E&P) companies invest again, the world's largest oil services company said on Monday at the Howard Weil Energy Conference in New Orleans.

"Today, the E&P industry finds itself in the deepest financial crisis on record, with profitability and cash flow at unsustainable levels for most oil-and-gas operators, which in turn has created an equally dramatic situation for the service industry," Schlumberger CEO Paal Kibsgaard told investors. "Going forward, the industry is likely facing a 'medium-for- longer' oil-price scenario, subject to periods of volatility, as the national oil companies within Opec can still generate significant returns for their owners in such an environment, due to the low cost base of their conventional resources."