Schlumberger Ltd. (NYSE: SLB) reported first-quarter 2020 results before markets opened on Friday. The oilfield services firm reported adjusted diluted quarterly earnings per share (EPS) of $0.25 on revenues of $7.46 billion. In the same period a year ago, Schlumberger reported adjusted EPS of $0.39 on revenues of $8.23 billion. First-quarter results also compare to the consensus estimates for EPS of $0.24 on revenues of $7.52 billion.

The company took an $8.5 billion pretax charge it said was primarily related to “the impairment of goodwill, intangible assets, and other long-lived assets. This charge, which is almost entirely non-cash, was driven by the significant decline in market valuations during March 2020.” On a GAAP basis, Schlumberger posted a net loss of $7.38 billion ($5.32 per diluted share). Adjusted pretax net income in the quarter totaled $351 million, down from $545 million in the same period a year ago.

CEO Olivier Le Peuch noted that operating cash flow more than doubled from $326 million in the first quarter of 2019 to $756 million. Free cash flow rose from negative $283 million a year ago to $179 million.

CEO Le Peuch also commented:

The operating environment that has now emerged is characterized by simultaneous shocks to both supply and demand. The spread of COVID-19 has caused more than 50 countries to implement lockdown measures affecting three billion people. Worldwide economic activity is falling sharply, and oil demand destruction is leading to an unprecedented supply-demand imbalance in the range of 20–30 million bbl/d. This is translating to near term uncertainties in activity and budget projections.

Schlumberger cut its dividend by 75%, from $2.00 annually to $0.50, as the company turns its “strategic focus to cash conservation and protecting our balance sheet.”

Schlumberger said it expects to spend approximately $1.2 billion on capital spending in 2020, down from $1.7 billion in 2019. The company did not offer further guidance in its press release, but consensus estimates call for second-quarter EPS of $0.11 and revenues of $6.61 billion. For the full year, EPS is forecast at $0.50 on revenues of $26.89 billion.

Investors not only liked what Schlumberger had to say in its earnings report, they also liked the evidence that the company did not sit on its hands but acted reasonably quickly to both the COVID-19 outbreak and the collapse in oil prices. Even a dividend cut and an $8.5 billion charge were forgiven.

Shares traded up about 5.5% in Friday’s premarket at $14.85. Schlumberger stock’s 52-week range is $11.87 to $46.18. The 12-month consensus price target was $20.27 before results were announced. The share price has dropped by nearly 70% in the past 12 months.

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