The largest oilfield service provider, Schlumberger (NYSE: SLB), reported better-than-expected gains on Friday for the fourth quarter and, like its rivals Halliburton and Baker Hughes, expects spending and activity levels gain momentum this year.
Schlumberger’s earnings per share (EPS), excluding charges and credits, increased 37% sequentially to $ 0.22, exceeding the $ 0.17 estimate by Refinitiv IBES.
Schlumberger’s revenue also increased, by 5 percent sequentially, driven by strong activity and solid execution in North America and international markets. North America revenue increased 13% in the fourth quarter compared to the third quarter.
The world’s top three oilfield service providers – Schlumberger, Halliburton and Baker Hughes – all reported losses in the third quarter. However, these losses were significantly smaller than seen in the second quarter, “the most challenging quarter in decades,” as Schlumberger Chief Executive Olivier Le Peuch said. Losses were smaller between July and September also because of massive spending cuts after oilfield service companies laid off tens of thousands of workers.
For the fourth quarter, all three oilfield service providers this week reported an increase in third quarter revenues and expressed optimism that oil demand, as well as drilling activity, will increase this year. Baker Hughes recorded its first quarterly net profit since oil prices fell in March, while Halliburton reported adjusted net profit, with North American revenue growing 26 percent sequentially to $ 1.2 billion.
Schlumberger expects oil demand to recover to 2019 levels no later than 2023 or earlier, Le Peuch said in today’s fourth quarter earnings report.
“In North America, the momentum for spending and activity will continue in the first half of 2021 towards maintenance levels, although moderated by capital discipline and industry consolidation. At the international level, following the seasonal effects of the first quarter of 2021, and as OPEC + responds to the strengthening of oil demand, higher spending is expected from the second quarter of 2021. The accelerated activity will extend beyond the short-cycle markets and will be broad, including offshore, as witnessed during the fourth quarter, ”said Le Peuch.
By Charles Kennedy for Oilprice.com
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