The oilfield service sector continues to benefit from the rising crude prices, which has been encouraging petroleum companies to ramp up spending on production. Supported by strong business growth in key markets, especially North America, Schlumberger (SLB) reported higher earnings for the second quarter that matched Wall Street estimates.
The Houston, Texas-based company reported adjusted net income of $594 million or $0.43 per share, up from $488 million or $0.35 per share in the second quarter of 2017. Earnings were in line with analysts’ forecast.
Reported earnings were $0.31 per share, compared to a loss of $0.05 per share a year earlier. The improvement in bottom line reflects an 11% increase in revenues to $8.3 billion, led by a 30% production growth. However, operating margins came under pressure from costs related to project start-ups and operational delays.
The improvement in earnings reflects an 11% increase in revenues, helped by strong production growth
The company’s North American operations witnessed a 43% growth aided by new tender wins and improved contract portfolio. While the other geographical segments recorded moderate increase, revenues in Latin America plunged 12%.
“With a number of large-scale project awards absorbing our remaining spare capacity in both drilling and production services, our equipment will be fully deployed during the fourth quarter, after which we expect a further strengthening of the international pricing recovery,” said Schlumberger CEO Paal Kibsgaard.
Schlumberger repurchased 1.5 million shares for about $103 million during the June-quarter. Earlier this week, the company declared a $0.50-per share quarterly dividend, to be paid on October 12 to shareholders of record on September 5. For the whole of 2018, the management expects capital expenditure of about $2 billion, broadly unchanged from the previous two years.
Halliburton (HAL), which competes with Schlumberger, will be reporting its second-quarter results on July 23.
Over the past one year, Schlumberger shares remained broadly flat. The stock ended Thursday’s trading session slightly lower and gained modestly in early trading on Friday after the earnings announcement.