Illustrating the headwinds facing the oil & gas sector, oil service giant Schlumberger Ltd. (NYSE: SLB) reported third quarter results which showed a sharp drop from last year.

Revenue fell 33% from last year to $8.47 billion and operating income fell 49% to $989 million. EPS was down 48% to $0.78 but topped the consensus of $0.77.

On a sequential basis, revenue fell 6% and EPS declined 11%.

CEO Paal Kibsgaard said that the business environment deteriorated further in the third quarter.

The fourth quarter doesn't look much better, Kibsgaard said, although he said the balance of supply and demand is starting to tighten.

For oilfield services the company said the coming quarters "looks increasingly challenging with activity expected to be reduced further, as lack of available cash flow exhausts capital spending for a number of our customers, leading them to take a conservative view on 2016 E&P spending in spite of any gradual improvement in oil prices."

Amid the conservative budgets for next year, the company warned investors they are "entering another period during which we will continually adjust resources in line with activity, as the recovery now appears to be delayed."