Schlumberger's Profits Increase Due to Global Demand for Oil Drilling
In Houston, Texas, the leading oilfield services company, Schlumberger (SLB), announced a 14% increase in profits for the first quarter, aligning with what analysts predicted. This growth was primarily driven by heightened demand for oil and gas drilling in the Middle East and Africa, compensating for a decline in North America.
Schlumberger maintains its earlier forecast of mid-teens percentage profit growth for the entire year. They anticipate a seasonal uptick in drilling activity in the Northern Hemisphere during the second quarter, alongside robust international operations.
CEO Olivier Le Peuch highlighted that with the rising demand for oil, operators might boost investments in production and reservoir recovery to enhance efficiency and prolong the lifespan of their assets.
International revenue surged by 18% to $7.06 billion, while North American revenue decreased by 6% to $1.6 billion, mainly due to lower natural gas prices and industry consolidation.
Looking ahead, Schlumberger predicts mid-single digit growth in international revenue and low-single digit growth in North America for the second quarter.
Although SLB's stock dipped by 1.9% to $49.97, the company plans to return $7 billion to shareholders over the next two years, partly because of its recent acquisition of ChampionX for nearly $8 billion.
Third Bridge analyst Peter McNally described Schlumberger's performance in the quarter as solid but not extraordinary. He also mentioned uncertainties regarding the Middle East's outlook due to constraints imposed by the Organization of the Petroleum Exporting Countries (OPEC) and rising geopolitical tensions.
Despite Saudi Arabia's plans to reduce maximum sustained production capacity and focus on gas development, Schlumberger remains optimistic about its growth prospects in the country and the broader Middle East, except for potential challenges in Egypt.
For the quarter ending March 31, the company reported earnings of $1.07 billion, or 74 cents per share, compared to $934 million, or 65 cents per share, last year. Adjusted earnings per share stood at 75 cents, meeting analysts' expectations. Revenue slightly exceeded projections, reaching $8.71 billion compared to an expected $8.69 billion.