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Schlumberger Q2 profit tops views on strong international activity, deepwater drilling

Schlumberger Q2 profit tops views on strong international activity, deepwater drilling

Schlumberger (NYSE:SLB) reported Friday a higher second quarter profit and revenue, with results helped by one-time benefits and stronger international activity, both offshore and in key land markets. 

The world's largest oilfield services company also approved a new share buyback program of $10 billion to be completed at the latest by June 30, 2018. It bought back 6.8 million shares in the latest period, for $500 million, part of the previous $8 billion share repurchase program approved in 2008, which is expected to wrap up in the third quarter. 

For the three months to June 30, the company reported net income attributable to Schlumberger of $2.1 billion, or $1.57 per share, compared to $1.4 billion, or $1.05 per share a year ago. 

The oilfield services company recorded 51 cents per share of net credits in the latest quarter, versus charges of 2 cents per share in the year-ago period. 

Income from continuing operations, excluding charges and credits, was $1.54 billion, up 14 per cent year-on-year, while adjusted earnings per share were $1.15, up from $1.01 a year earlier, topping the $1.10 average of 33 analysts’ estimates compiled by Bloomberg.

Second quarter revenue rose to $11.18 billion compared to $10.34 billion in the second quarter last year. 

Oilfield services revenue climbed 8 per cent year-on-year to $11.18 billion, with pre-tax operating income from the unit growing 12 per cent to $2.28 billion. 

International area revenue of $7.70 billion grew 8 per cent sequentially, while North America area revenue of $3.36 billion increased 2 per cent from the first quarter. Geographically, the Middle East & Asia Area led the sequential increase with revenue of $2.7 billion increasing 11 per cent.

Schlumberger said Friday that the Middle East & Asia area results were due to exploration and drilling activity rebounding in China and Australia, and growth continuing in the key markets of Saudi Arabia and Iraq. 

In Europe/CIS/Africa, activity levels rebounded in Russia and the North Sea, while increased exploration in parts of Sub-Saharan Africa further boosted growth, it said. 

"In North America, we benefited from solid execution on land and further strength in deepwater activity to achieve solid overall progress despite competitive land pricing and the effects of the Western Canada spring break-up," said CEO Paal Kibsgaard. 

The chief executive said all areas showed strong execution, helping operating margins reach or exceed 20 per cent across all geographies. 

Looking ahead, he said: "We continue to see consistent growth as spending plans are confirmed by rig count outlooks and customer activity. We remain confident in the industry outlook, our strategic positioning in the markets in which we operate, the strength of our technology portfolio and in our ability to further improve our overall performance.”

Shares of the company rose 4.2 per cent in early deals in New York, to $81.76, while rival Baker Hughes (NYSE:BHI) shed 3.7 per cent to $47.26 as it reported Friday its second quarter profit fell 45 per cent on North American declines. 

Baker Hughes reported a profit of $240 million, or 54 cents a share, down from $439 million, or $1 a share, a year earlier. The most-recent quarter included seven cents a share in costs for bad-debt provisions and an inventory charge. Analysts had expected earnings of 65 cents a share. 

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“Our business model relies largely on legacy offshore assets that we purchase and refurbish."

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