Schlumberger Ltd CEO Paal Kibsgaard expects oil markets to turn positive in 2016 but said there would not be a "significant" recovery in oilfield activity until 2017.
Shares of the company, which reported a better-than-expected profit and unveiled a $10 billion share buyback program on Thursday, rose as much as 8 percent to $66.22 in morning trading on Friday.
A supply glut, combined with weakening demand, especially in China, has sent oil markets into a tailspin. Global oil prices have slumped nearly 73 percent since June 2014.
Demand for the services of Schlumberger and its rivals fell as oil companies slashed spending by 50-70 percent.
The company, like much of the oil industry, expects to see investment in exploration and production fall for a second consecutive year in 2016.
While North American oil companies scaled back spending, they have also steered drilling rigs to the most prolific shale spots and fracked wells more intensely, keeping output high.
Production in North America and outside of OPEC is resilient because oil companies, looking to maximize cash flow, are keeping "taps wide open," Kibsgaard said on a post-earnings conference call on Friday.
"We still expect positive movement in oil prices during 2016 with specific timing being a function of the shape of the non-OPEC decline rates," Kibsgaard said.
Kibsgaard said he was "optimistic" that the company had completed the workforce reductions needed in the downturn.
Schlumberger said on Thursday it cut 10,000 jobs in the fourth quarter, increasing the layoffs to 34,000, or 26 percent of its workforce, since November 2014.
(Reporting by Swetha Gopinath and Narottam Medhora in Bengaluru; Editing by Kirti Pandey and Saumyadeb Chakrabarty)
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Published Date: Jan 22, 2016 23:30 PM | Updated Date: Jan 22, 2016 23:30 PM