Schlumberger Expects ‘Super Cycle’ As Demand Pushes Earnings Above Forecast

21. Januar (Reuters) – Schlumberger (SLB.N) Surpassing expectations with a rise in fourth-quarter earnings on Friday as higher crude oil and natural gas prices boosted demand for the world’s largest oilfield services company.

Oil prices are up about 50% over the past year and are trading at a seven-year high on a COVID-19 vaccine-driven demand rebound and tight inventories. The global rig count was 1,563 at the end of the fourth quarter, up about 42% from a year ago, data from Baker Hughes shows.

“Barring further COVID-related disruptions, oil demand is expected to exceed pre-pandemic levels before year-end and continue to increase in 2023,” said Olivier Le Peuch, Schlumberger Chief Executive.

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Current market conditions are “strikingly similar to those of the industry’s last super cycle,” he added.

Schlumberger expects capital expenditures of between $1.9 billion and $2 billion in 2022, up from nearly $1.7 billion in 2021, and plans to increase spending by at least 20% in North America, Le Peuch said when speaking to investors .

Schlumberger shares fell 1.75%, while Brent oil futures fell about 1.45% to $87.14 a barrel.

The exterior of a Schlumberger Corporation building is pictured January 16, 2015 in West Houston. REUTERS/Richard Carson/File Photo

Wall Street analysts said the results were positive, except for a decision to leave the dividend unchanged after the company generated about $1.3 billion in free cash flow for the quarter and $3 billion for full-year 2021.

“A dividend increase was expected. I believe they will increase the dividend once leverage targets are met,” said James West, senior managing director at Evercore ISI.

According to Refinitiv IBES, Schlumberger’s fourth-quarter adjusted net income rose to $587 million, or 41 cents a share, beating Wall Street’s estimate of 39 cents a share. The company topped last year’s fourth-quarter earnings of $309 million, or 22 cents a share.

Fourth-quarter revenue of $6.23 billion also beat analysts’ forecast of $6.09 billion.

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In North America, strong offshore and land drilling activity and an increase in exploration data licensing for the US Gulf of Mexico and the Permian Basin led to a 13% sequential revenue jump.

Schlumberger also said it sold $109 million of Liberty Oilfield Services stock during the quarter, increasing its stake to 31%. Last year it completed the sale of its US fracking business to Liberty in exchange for a 37 percent stake.

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Reporting by Arunima Kumar in Bengaluru; Editing by Amy Caren Daniel, Mark Porter, Paul Simao and Alexander Smith

Our standards: The Thomson Reuters Trust Principles.

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