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The world's largest oil fields service company Schlumberger reported better than expected Q3 earnings Friday. The report reflected the expected reduction in North America land activity and seasonal activity in the Northern Hemisphere.

Schlumberger Vintage

Schlumberger Ltd NYSE: SLB Reported Before Open Friday

$0.39 EPS Beat $0.37 EPS AND $8.2Bil Beat $8.5 Billion as Forecast in Revenue 

Earnings 

Schlumberger Limited (NYSE:SLB) reported for the fourth quarter of 2019 a 9.4% rise in adjusted quarterly profit with buoyant demand in international markets making up for lower drilling activity in North America. Net income fell to $333 million, or 24 cents per share, in the fourth quarter ended Dec. 31, from $538 million, or 39 cents per share, a year earlier. The year-ago quarter included a gain from an asset sale.

Excluding charges and credits, net income rose to $545 million, or 39 cents per share, from $498 million, or 36 cents per share. At $8.2 billion, fourth-quarter revenues were up 1% from the year-ago period beating expectations of $8.12 billion. Revenues in the international markets increased 8%, while North America revenues dropped 13%.  

 

Schlumberger Ltd NYSE: SLB

Market Reaction> Pre-market $39.80 USD +1.02 (+2.63%)

Highlights

The company continues to get hurt by the negative sentiments in the U.S. on the oil & gas industry, which is particularly sensitive to the global economic slowdown. The oilfield services industry continues to face low capacity utilization and depressed margins due to lower exploration and production capital expenditure.

Schlumberger Limited Q4 2019 earnings

  • Full-year worldwide revenue of $32.9 billion was flat year-on-year, with international revenue growth of 7%
  • Full-year GAAP loss per share, including charges & credits, was $7.32
  • Full-year EPS, excluding charges & credits, was $1.47
  • Full-year cash flow from operations and free cash flow were $5.4 billion and $2.7 billion, respectively
  • Fourth-quarter revenue of $8.2 billion decreased 4% sequentially, with international revenue growth of 2%
  • Fourth-quarter GAAP EPS, including charges & credits, was $0.24 Fourth-quarter EPS, excluding charges & credits, was $0.39 Fourth-quarter cash flow from operations and free cash flow were $2.3 billion and $1.5 billion, respectively
  • Board approves quarterly cash dividend of $0.50 per share ;

Schlumberger CEO Olivier Le Peuch commented,

“Full-year revenue for 2019 was $32.9 billion, a level essentially flat with 2018. Overall performance was positive—particularly in the international markets—and we generated $2.7 billion in free cash flow, which was a remarkable achievement under these market conditions. Full-year pretax segment operating margin of 12%, however, was slightly down year-on-year.

“International revenue, excluding Cameron, grew 8% and was consistent with our expectations of high single-digit growth. Most of our international GeoMarkets benefited from these favorable market conditions, and almost half of them registered double-digit, year-on-year revenue growth driven by exploration activity, offshore operations, and acceleration of the industry’s digital transformation. Compared with the first half of 2019, international pretax segment operating margin improved by 100 basis points (bps) in the second half of the year—a firm step toward our strategic target of margin expansion.

“In contrast, after two years of strong growth, North American revenue fell sharply, driven largely by the land market weakness affecting our OneStim® pressure pumping business, as customers reached their budget limits earlier in the year and remained highly disciplined on capital spend.

Schlumberger CEO and Chairman Paal Kibsgaard stepped down on Aug. 1. 2019 COO Olivier Le Peuch took over as chief executive and joined the board.

Outlook The company expects the rate of exploration & production capital expenditure growth in the international markets to be in the mid-single-digit range this year, considering a potential increase in oil prices due to the recent escalation of geopolitical risks. It also sees a reduction in investment and activity in the first half, mainly in the Middle East and Russia, in line with the OPEC+ agreement on production cuts. After falling to a multi-year low, Schlumberger shares have been on the recovery path since the last earnings report. In the past twelve months, however, they dropped 11% and underperformed the market. ;

Source: SLB, AlphaStreet

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