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The world's largest oil fields service company Schlumberger reported in line Q2 earnings Thursday. The report reflected the expected reduction in North America land activity and seasonal activity in the Northern Hemisphere. Revenue saw the first decline in 10 quarters.

Schlumberger Vintage

Schlumberger Ltd NYSE: SLB Reported Before Open Friday

$0.35 EPS as Expected AND $8.27 Billion Beat $8.11 Billion Forecast in Revenue 

Earnings 

Schlumberger Ltd. (NYSE: SLB) reported second-quarter earnings of 35 cents a share, retreating for a third straight quarter. Revenue fell a fraction to $8.27 billion, ahead of views but the first decline in 10 quarters. North America revenue fell 11% to $2.801 billion.

Analysts had expected Schlumberger earnings per share to fall 19% to 35 cents as revenue slips 2.3% to $8.11 billion. 

Schlumberger Ltd NYSE: SLB

Market Reaction> Pre-market $47.91 +0.50 (-1.05%)

Highlights

  • The results was benefited by double-digit growth in the Mexico & Central America GeoMarket due to high offshore exploration-led activity for the IOCs and increased Integrated Drilling Services (IDS) onshore activity.
  • For the second quarter, revenue from North America fell by 11% year-over-year
  • Pretax segment operating income of $968 million increased 7% sequentially
  • Cash flow from operations and free cash flow were $1.1 billion and $0.5 billion, respectively
  • Quarterly cash dividend of $0.50 per share was approved
  • Latin America revenue climbed by 21%.
  • Revenue from Europe/CIS/Africa increased by 6%
  • Revenue from Middle East & Asia rose by 4%.
  • Drilling revenue increased by 8% as the performance was benefited from contract awards and the deployment of drilling systems and fluids technologies.
  • However, production revenue declined by 5% due to the impact of the spring breakup in Canada and softer hydraulic fracturing pricing.
  • Cameron revenue decreased by 4% due to reduced activity in North America.

Schlumberger Q2 2019 Earnings

Outlook

From a macro perspective, the company expects oil market sentiments to remain balanced. The oil demand forecast for 2019 has been reduced slightly on trade war fears and current global geopolitical tensions, but the company does not anticipate a change in the structural demand outlook for the mid-term.

On the supply side, Schlumberger continues to see US shale oil as the only near- to medium-term source of global production growth, albeit at a slowing growth rate, as E&P operators continue to transition from an emphasis on growth to a focus on cash and returns, with consequent restraining effects on investment levels.

These effects, combined with the decision by OPEC and Russia to extend production cuts through the first quarter of 2020, are likely to keep oil prices range bound around present levels.

On July 17, 2019, Schlumberger’s board of directors approved a quarterly cash dividend of $0.50 per share of outstanding common stock. The dividend is payable on October 11, 2019, to stockholders of record on September 4, 2019.

Schlumberger CEO and Chairman Paal Kibsgaard will step down on Aug. 1. COO Olivier Le Peuch will take over as chief executive and join the board.

 

 

Source: SLB, AlphaStrret

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