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The world's largest oil fields service company Schlumberger reported shutdown damaged Q1 earnings Friday. The report reflected the expected reduction in North America land activity and seasonal activity in the Northern Hemisphere accelerated by the oil price collapse.

Schlumberger Vintage

Schlumberger Ltd NYSE: SLB Reported Before Open Friday

$0.25 EPS Matched $0.35 EPS AND $7.5Bil Missed $7.6 Billion as Forecast in Revenue 

Earnings 

Schlumberger Limited (NYSE:SLB) reported for the first quarter of 2020 adjusted earnings per share that dropped 17% to 25 cents from 30 cents in the year-earlier period on a 5% drop worldwide in revenue, to $7.5 billion.  Schlumberger's earnings roughly matched the estimate of analysts surveyed by Zacks Investment Research and revenue came in just below Zacks' $7.6 billion estimate.

The unadjusted Q1 net loss totaled $8.1B, or $5.32/share, vs. net income of $509M, or $0.30/share, in the prior-year quarter, after booking an $8.5B charge related to goodwill, intangible assets and other long-lived assets driven by the significant drop in oil prices.

Schlumberger Earnings Trend Q1 2020

Schlumberger Ltd NYSE: SLB

Market Reaction> Pre-market 15.08 USD +1.03 (7.33%)

Highlights

  • North America revenue fell 17% Y/Y to $2.28B
  • Iinternational revenue rose 2% to $5.12B.

Schlumberger Q1 2020 Earnings

Outllook

In addition to the dividend cut, Schlumberger says it will reduce structural and variable costs, and restructure its organization to include furloughing personnel, cutting salaries, lowering headcount and closing facilities, without offering specifics. Referring to the Saudi-Russian oil price war and the COVID-19 pandemic

"This double black swan event created simultaneous shocks in oil supply and demand resulting in the most challenging environment for the industry in many decades," CEO Olivier Le Peuch said. "Customer feedback and our analysis indicate global capex spend is expected to decline by about 20% in 2020, with the largest share of the reduction affecting North America, which is estimated to drop by about 40%."

Prior to these lockdown affected times 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 CEO and Chairman Paal Kibsgaard stepped down on Aug. 1. 2019 COO Olivier Le Peuch took over as chief executive and joined the board.

 

Source: SLB, AlphaStreet

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