Oct 22, 2021
Schlumberger Sees Recent Demand Recovery Fueling Spending Growth
, Bloomberg News
(Bloomberg) -- Schlumberger, the world’s biggest oilfield contractor, failed to raise the bar in terms of third-quarter sales, but is betting on the future and calling for greater spending growth over the next few years.
“The industry macro fundamentals have visibly strengthened this year, particularly in recent weeks -- with demand recovery, oil and gas commodity prices at recent highs, low inventory levels, and encouraging trends in pandemic containment efforts,” Chief Executive Officer Olivier Le Peuch said in a statement Friday. “These favorable conditions are expected to materially drive investment over the next few years -- particularly internationally -- and result in exceptional multiyear capital spending growth globally, both on land and offshore.”
The company reported a third-quarter profit before one-time items of 36 cents a share, matching the average of analysts’ estimates, and revenue of $5.85 billion, missing the $5.94 billion average estimate. The shares fell 0.3% in pre-market trading.
The Houston- and Paris-based company is the final of the big three oil-services providers to report third-quarter results in what has been a lackluster start to the earnings season. Baker Hughes Co. and Halliburton Co. left investors largely underwhelmed this week with profits and forecasts that did little to raise the bar from three months earlier, while also reporting setbacks from Hurricane Ida.
Among rivals, Schlumberger has the largest exposure to overseas activity, generating roughly 80% of sales outside the U.S. and Canada. As publicly traded U.S. oil explorers continue to show austerity through subdued output growth, the biggest oilfield contractors have been pivoting to more international work.
The oil-services sector appears to be struggling and a full-fledged recovery may not be as close as some investors previously thought. The hired hands of the oil patch are facing rising costs of raw materials and clients who are locking in record cash flow while pushing back on higher service pricing. And oilfield contractors are still trying to catch up to exploration companies that are sending juicier profits backs to shareholders.
Schlumberger, which has 25 “buy” ratings from analysts, five holds and one sell, has boosted shares by more than 50% this year.
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