OPINION: An $11 billion loss for Schlumberger would have been a bit like the mighty New Zealand losing to lowly Georgia in the Rugby World Cup under way in Japan.

The top team in the oil services sector has come crashing down to earth, after mistimed acquisitions in a troubled market.

And yet, rather than the crowd — in this case the analysts on Wall Street — booing in derision, there have been cheers all round.

Schlumberger's shares rose sharply as chief executive Olivier Le Peuch used the third-quarter results to promise to sell under-performing assets and ensure that shareholders get a better deal.

There was also every expectation he would take advantage of his newcomer position to “kitchen sink” every loss he could find with the knowledge the blame would all land on his predecessor, Paal Kibsgaard.

This is standard boardroom stuff, but the scale of the corporate losses were not, having only been seen very occasionally in the past with an oil supermajor such as ExxonMobil or BP.

Few believed the total cost of impairments at Schlumberger would reach $12.65 billion and the overall loss, at least on paper, is surely the largest in oil services history.

The recent rise in the share price should also be put in context. Schlumberger's stock is still valued at around $33 per share, well under half of where it was a little over a year ago.

It is not just problems for Schlumberger when the US shale boom goes sour due to bottlenecks and pressured oil majors favouring share buybacks to please investors over exploration spending.

Its largest rival, Halliburton, this week reported its third-quarter profit had slumped from $435 million to $295 million and it planned $300 million of cuts, warning of a difficult fourth quarter to come, while Fluor has announced plans to dispose of up to $1 billion-worth of assets to improve its financial performance. But still it looks like Schlumberger completely overestimated the prospects for growth.

Kibsgaard bought Smith International in 2010 and Cameron in 2016 when oil prices were well over $70 per barrel. Now the value of those and other businesses has been massively adjusted downwards.

Brent crude is below $60 now and was down at $50 last January, encouraging customers to demand that oil services costs are kept lower than ever.

Le Peuch has promised to sell off businesses and improve the financial performance.

Schlumberger has already lined up a $415 million disposal of Middle East drilling rigs to Taqa of Saudi Arabia, and a deal has been struck to sell its Drilco oil pipe manufacturing business to Houston-based Wellbore Integrity Solutions.

Le Peuch says Schlumberger is fundamentally in decent financial shape but he admits the external environment is “uncertain”.

The North American onshore drilling market remains troubled, with US land rigs numbers 25% down on a year ago - and falling.

The bright spot has been Asia, which helped drive up international revenues for both Schlumberger and Halliburton.

But these are tough times and there are increasing signals that slowing global economic growth could soon stall completely.

Schlumberger has a proud track record of success, but as the New Zealand “All Blacks” would say: you are only as good as your last game.

Olivier Le Peuch has promised to sell off businesses and improve the financial performance.

(This is an Upstream opinion article.)