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The world's largest oil fields service company Schlumberger reported better than expected Q4 earnings Friday. Revenues in all four reporting segments of Schlumberger fell. Strength came from digital solutions and multiclient seismic license sales.

Schlumberger Vintage

Schlumberger Ltd NYSE: SLB Reported Before Open Friday

$0.22 EPS Beat $0.17 EPS AND $5.532 Bil Beat $5.231 Billion as Forecast in Revenue 

Earnings 

Schlumberger Limited (NYSE:SLB) reported for the fourth quarter of 2020 adjusted earnings per share of 22 cents per share beating the consensus estimate of 17 cents but down from 39 cents a year ago. Total revenues were $5,532 million, which beat the consensus estimate of $5,231 million but also was down 33% from the year-ago quarter’s $8,228 million.

The better-than-expected results were attributed to contributions from digital solutions and multiclient seismic license sales. This was offset partially by lower evaluation work and stimulation in Qatar and Saudi Arabia.

 

Schlumberger Ltd NYSE: SLB

Market Reaction > Close $24.41 ▲ 0.22 (0.91%)

Highlights

Revenues in all four reporting segments of Schlumberger declined in the fourth quarter. .

Reservoir Performance unit

SLB was affected in the Reservoir Performance segment from lower evaluation work and stimulation in Qatar and Saudi Arabia. An increase in North American OneStim activity along with higher intervention activities from start-up developments in Ecuador and Colombia negated the improvement partially.Revenues at the Reservoir Performance unit declined 41% year over year to $1,247 million. Moreover, pre-tax operating income was $95 million, down 58% year over year.

Well Construction unit

The Well Construction unit was affected by sasonality in Russia, This was offset partially by increased activities related to drilling, fluids and measurement in Latin America, North America, Asia and the Middle East. Revenues at the Well Construction segment fell 38% from the year-earlier quarter to $1,866 million. Pre-tax operating income fell 51% year over year to $183 million.

Digital & Integration unit

Despite lower revenues, Digital & Integration is the only unit that witnessed higher year-over-year income from digital solutions and multiclient seismic license sales. Revenues at the Digital & Integration unit totaled $833 million, down 25% from the year-ago period. However, pre-tax operating income of $270 million was up 4% year over year.

Production Systems segment

Higher sales associated to subsea and surface production systems across all operating regions were bright lights in the Production Systems unit. Revenues at the Production Systems segment amounted to $1,649 million, down 23% from the year-ago period. Moreover, pre-tax operating income declined 24% from the prior-year quarter to $155 million.

SLB Q4 2020 earnings.jpg

Cash Flow

Despite the company’s $144 million of severance payments through the December quarter, the oilfield service firm was able to generate free cash flow of $554 million.

Financials

Capital expenditures in the quarter were recorded at $258 million. As of Dec 31, 2020, the company had approximately $3,006 million in cash and short-term investments plus $16,036 million of long-term debt. This represented a debt-to-capitalization ratio of 57.5%.

Outllook

Schlumberger projects 2021 capital investment at $1.5 to $1.7 billion, in comparison to last year’s $1.5 billion. The company believes that there has been an increase in optimism for fuel demand recovery in 2021, thanks to the rise in oil price owing to the rolling out of coronavirus vaccines and economic stimulus measures.

Schlumberger added that it will take no later than 2023 for crude demand to rebound back to the pre-pandemic levels of 2019. This in turn will boost oilfield services and activities in North America and international markets.

 

Source: SLB, AlphaStreet

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