The world's largest oil driller just gave a very bearish presentation on the future of the industry

The world's largest oil driller is expecting the industry to worsen in the second half of the year.

Schlumberger CEO Paal Kibsgaard gave a presentation at an industry conference Monday, and much of his outlook was very bearish.

He started with the fact that the oil industry is in "the deepest financial crisis on record" that is making it impossible for most oil and gas operators to stay profitable.

And Kibsgaard sees no meaningful improvement in drilling activity until 2017.

Oil prices, even after a rebound in recent weeks, are still down 61% from the pre-crash peak in June 2014.

Here's a highlight of what he said about the future of the industry (emphasis added):

This 'hold-your-breath and-hope-for better-times-soon' playbook has in the past allowed the industry to live through shorter-term demand downturns while waiting for business to return to normal. The major difference in the current industry situation is that we are unlikely to see oil prices returning to the $100 level because this downturn is not driven by lower demand or by external factors. It is instead an immediate result of OPEC's decision to protect market share rather than oil price which clearly demonstrates that they still have a firm grip on the global E&P industry.

This shift is likely to have deep and long-term consequences for the industry similar to how limited access to reserves in the 1990s drove international and independent oil companies to pursue unconventional and deepwater resources.

Kibsgaard said the industry is now in the third and worst phase of this crisis:

The current downturn has now persisted for 17 months since the US land rig count peaked in October of 2014. Using this rig count as a proxy, we have seen three distinct phases as the downturn has deepened. The third and most severe phase is taking place within this current quarter with the global activity impact and rate of disruption reaching unprecedented levels, showing an industry in a full-scale cash crisis.

Kibsgaard also challenged the idea that the oil crash has forced oil-service companies to be more efficient, thereby lowering their costs amid a cash crunch. He said that rather, service companies have had to make concessions to lower costs to attract the few clients left as drilling activity died down.

And he thinks that when drilling picks up again, these cost-saving benefits will be reversed.

Kibsgaard said if non-OPEC production continues to fall, and demand rises - as the International Energy Agency is projecting for this year - oil prices should continue to rally.

Schlumberger now expects first-quarter sales to total $6.5 billion, missing analysts' forecast for $7 billion. Its shares were little changed in early trading.