For Schlumberger Ltd. (NYSE: SLB), navigating terrain overflowing with oil and gas, unmatched demand and cash-strapped clients resulted in a net loss of $1.02 billion and a layoff of 10,000 employees in fourth-quarter 2015.

But the company remains focused on technology, where a strong appetite remains among companies in search of greater efficiency and cost savings despite spending slowdowns. From synthetic diamonds to analysis of fluid trapped in rock, the company spent a half billion dollars on acquiring tech in 2015 along with nearly $15 billion to acquire Cameron International (NYSE: CAM).

New technology sales for the company represented 24% of the company’s total revenue for 2015, which Schlumberger CEO Paal Kibsgaard noted was higher than that seen in the 2008-2009 downturn.

“During this downturn, the level of new technology sales, which is basically technologies that we have commercialized in the past five years, is at a significantly higher level than what we’ve seen in previous downturns,” Kibsgaard said on a conference call Jan. 22.

Such technology could prove beneficial during good times and bad.

Yet the continuing downturn muted year-end product and software sales. Each of Schlumberger’s three groups brought in less revenue: the reservoir characterization group reported $2.15 billion in revenue, down 7% sequentially; while the drilling group reported revenue of about $2.95 billion, down 8% sequentially. Revenue fell by 10%, compared to third-quarter 2015, to about $2.67 billion for the production group.

While asking about technology adoption rates on the call, Evercore analyst James West pointed out that the earnings press release was “was littered with technology success stories. It seems like the technology adoption rate has picked up significantly during the downturn.”

Kibsgaard seemed to agree.

  • In the Midland Basin’s Wolfcamp formation, motorized rotary steerable system technology established a record rate of penetration by drilling an average of 245 ft per hour to a total depth of more than 7,100 ft in 29 on-bottom hours.
  • A fluid and cuttings separator technology launched in May 2015 reduced fluid discard rates by up to 50% and with oil-on-cuttings levels reduced by about 35% on operations in the Woodford, Eagle Ford, Haynesville and Permian shale basins.
  • Offshore Norway, reservoir mapping-while-drilling technology enabled the real-time delineation of layers in a reservoir at distances in excess of 30 m while steering the laterals to maximize reservoir contact, while conical diamond element technology contributed to improved rate of penetration, Schlumberger said describing its work with Det Norske Oljeselskap ASA on the Ivar Aasen Project.

Gaining Ground

The world’s largest oilfield services company, which is poised to get even bigger with the expected closure of its acquisition of Cameron by the end of March, added to its technology toolkit in the fourth quarter spending about $500 million on technology acquisitions. In November, Schlumberger bought Fluid Inclusion Technologies, which specializes in analysis of trapped fluids in rock material and advanced borehole gas analysis.

Other moves included partnering with Ikon Science to develop quantitative seismic interpretation capability in the Petrel E&P software platform. Schlumberger continued to extend its reach in 2016, with Golar LNG announcing on Jan. 22 an agreement with Schlumberger to develop greenfield, brownfield and stranded gas reserves.

But its closely-watched $14.8 billion deal with Cameron could give birth to more new technology.

“We are very excited about what we can do by joining the R&D forces of the two companies and creating the integrated drilling and production systems that we have laid out earlier,” Kibsgaard said on the call.

Schlumberger’s downhole portfolio combined with Cameron’s surface expertise could result in a pore to pipeline one-stop shop for oilfield services onshore and offshore. The two, which already worked together as part of OneSubsea, said in August they agreed to merge. Cameron would become Schlumberger’s fourth group.

“As the pending Cameron transaction progresses, pre-close integration plans are substantially complete, and we will be ready to close once all regulatory approvals are received,” Kibsgaard said. “We expect this to occur in the first quarter of 2016.”

Approvals have been received from regulators in Brazil, Canada, Russia and the U.S. But he said additional anti-trust approvals are needed in a few more countries.

Financing for the U.S. subsidiary that will make the acquisition has also been secured.

“The large stock component of the deal, with 78% in stock and 22% in cash, has largely insulated us from market volatility,” Kibsgaard said.

Falling Revenue

Along with oil’s downward spiral, falling currency in Venezula, activity slowdowns just about everywhere and a hard-hit pressure pumping segment in North America have hurt the services giant’s bottom line.

Schlumberger said “robust activity” endured in the Middle East, including Kuwait, Oman and Saudi Arabia.

For the quarter, total revenue fell to about $7.74 billion, down 9% sequentially and down 39% year-over-year.

In North America, Schlumberger officials have said they have stacked rigs rather than operate at a loss. However, in some cases the company has worked for less than commercial prices with the view that doing so is an investment decision.

“While revenues in North America and in the international areas have declined by 39% and 21%, respectively, decremental operating margins have been limited to 32% in North America, and 25% internationally. These figures are substantially better than those we delivered in the 2009 downturn,” Kibsgaard said.

“The strength of these results demonstrates the resiliency of our business portfolio in the face of the activity, pricing and foreign currency challenges of 2015,” he added. “Our performance was driven by excellence in execution, prompt and proactive cost and resource management, and the growing impact of our transformation program.”

Schlumberger closed out 2015 with about $5 billion in free cash flow and has plans to buy back $10 billion of its shares. The company cut 10,000 in the fourth-quarter 2015, bringing the total to 34,000 since November 2014.

Velda Addison can be reached at vaddison@hartenergy.com.