Schlumberger on Thursday unofficially kicks off what is expected to be a grim earnings season for the US energy sector.

Earnings of companies listed on the S&P 500 energy index are forecast to decline 107.1 per cent in the first three months of 2016 from the same time a year ago, when earnings fell 54.6 per cent, according to S&P Global Market Intelligence.

The sector is expected to log a quarterly loss of 38 cents a share — the first quarterly loss since the data provider began keeping records in 1999, writes Mamta Badkar in New York.

Earnings estimates have been revised sharply lower over the past 12 months as the protracted slump in crude prices continues to weigh on sales and the bottom lines of energy companies. As of April 2015, earnings were expected to rise 39 per cent but by January earnings were forecast to fall 42.5 per cent.

The energy sector remains the biggest drag on the broader S&P 500 sector, with EPS projected to decline 8.3 per cent, compared with a 3.6 per cent decline when excluding the sector.

Meanwhile, revenue of energy companies is expected to decline 22.8 per cent for the quarter.

Crude prices had rallied in recent weeks on expectations that a meeting of major oil producers in Doha on Sunday would result in some sort of agreement on an output freeze. But Saudi Arabia’s insistence that Iran be part of the agreement resulted in a deadlock and prompted oil to resume its decline.

In response to the 62 per cent fall in oil since mid-2014, energy companies have cut costs by shedding jobs — more than 180,000 energy related jobs have been lost globally over that period — reducing capital spending and even scaling back or suspending their dividends. The coming weeks will show if those efforts have been enough.

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