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Schlumberger Q1 earnings drops 20% on reduced North America activity

Schlumberger’s (SLB) adjusted income for the first quarter of 2019 slid 20% year-over-year to $421 million or $0.30 per share as North America revenve dropped 3% annually. Revenue increased 1% year-over-year to $7.88 billion. Earnings have come in line with Street’s views of 30 cents per share, while revenue topped the target of $7.81 billion.

Schlumberger stock, which was down about 1% after the earnings announcement, turned to positive territory in the pre-market trading hours.

Schlumberger (SLB) Q1 2019 earnings infograph
Schlumberger Q1 2019 Earnings Infograph

“From a macro perspective, we expect the oil market sentiments to steadily improve over the course of 2019, supported by a solid demand outlook combined with the OPEC and Russia production cuts taking full effect, slowing shale oil production growth in North America, and a further weakening of the international production base as the impact of four years of underinvestment becomes increasingly evident,” said CEO Paal Kibsgaard.

Schlumberger views E&P investments in the international markets to increase by 7% to 8% in 2019, supported by a higher rig count and a rise in the number of customer project FIDs. In North America, Schlumberger expects future E&P investment levels to likely be dictated by free cash flow and sees E&P investments in North America land down 10% in 2019.

Revenue from North America was 3% lower sequentially, driven by softer pricing and lower activity for both hydraulic fracturing- and drilling-related businesses.

International revenue increased 3% year-on-year to $5 billion. Reservoir Characterization, Drilling, and Production combined to deliver year-on-year revenue growth of 8%, on track with Schlumberger’s aim of reaching high single-digit growth in the international markets in 2019.

Schlumberger stock had gained 31% since the beginning of this year and dropped 31% in the past 12 months.

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